Feature Article of Thursday, 30 December 2010
Columnist: Sakyi, Kwesi Atta
Kwesi Atta Sakyi, LUSAKA, ZAMBIA 27TH DECEMBER 2010
Unemployment is a situation whereby job vacancies (demand) are les than the number of people who have been actively and persistently looking for employment (supply) for the last three months or more. We have different types of unemployment such as seasonal, frictional, geographical, structural, mass or cyclical unemployment. The latter is the worst kind which is often on a global scale. We also have residual unemployment found among the physically and mentally challenged and impaired. There is also voluntary unemployment among those who refuse to take up job offers either because they are lazy or they come from rich homes. Disguised unemployment is found in the agricultural and tertiary sectors where labor is under-utilized. These comprise those selling by the roadside as street vendors, self-employed part-time subsistence farmers, among many others. Seasonal unemployment occurs during the off season in sectors such as fishing, farming, construction and tourism. In Ghana, the worst type of unemployment is structural unemployment. Ghana, like any other developing country, has the government as the largest employer. However, this trend of monopsony has drastically changed over the last three decades because of pressure from the multilateral institutions such as the IMF and World Bank for the government to prune down the bureaucracy or cost of governance. Thus, massive labor cuts, retrenchment and pruning occurred in the formal sector. It is now the informal private sector which has to absorb the army of school leavers. This situation has led to a lot of corruption, nepotism and tribalism in the recruitment exercises undertaken in formal institutions such as the army, police, civil and public services. Instead of having meritocracy, we have had to settle for mediocrity, homeboyism and Pluto-bureaucracy. Only those with connections to the corridors of power get jobs in the formal sector, especially in lucrative ministries such as Finance, Home Affairs, Legal Affairs, Foreign Affairs and the top echelons in the police and army. The exercise of recruitment into the formal sector has been corrupted, prostituted, politicized, tribalised and to a greater extent trivialized. Certain jobs are meant for certain tribes, certain political parties, certain cronies from the same educational network or old boy associations. There has been no transparency and if you are very observant, you will notice that if you take a cursory count of people from a particular tribe in top positions in say IRS, Customs, Immigration or the army, you will find that the majority come from a particular tribe! I think there should be a quota system to ensure a fair representation of all tribes in Ghana in the government institutions. Of course, this should also not compromise the principles of transparency and meritocracy.
The 2007-2009 time period saw a global recession which had its origin in the USA. The ripple effect has been transmitted to all economies of the world. However, studies have shown that Arica suffered least of all the continents. This shows that there is big growth potential in Africa. Unemployment is highest during a recession or a depression or credit crunch when real economic growth is at its lowest ebb on the trade cycle. It may be caused by either large scale demand deficiency on the one hand or on the other hand, on the supply side, employers’ desire to adopt labor-saving or capital-intensive methods of production. Employers may substitute labour with machinery if that is cost saving, productive and efficient. They may shun labor where they think the labor union is too powerful or the minimum wage imposed by the government is unrealistic and not cost effective. Such employers and investors may even fold up and relocate to cheaper labor destinations such as India, China or any of the South East Asian countries. On the other hand, to comply with high national minimum wage legislation, some employers may retrench part of the labor force up to the point where savings in the wage bill may be used to top up and pay the minimum wage to the retained workers. Some time ago, Adam Smith stated in his famous treatise that, ‘the worker is well or ill-rewarded according to his real, not his nominal (money) income.’ Adam Smith pointed out that workers generally suffer from money illusion, thinking that the size of their wage packet matters more than the purchasing power of that wage. Hence, workers should be wary of nominal increments in their wages because no sooner had say the Single Spine Salary Scheme increased their take-home pay than the same pay was devalued or dabased by the effects of inflation. According to the iron law of wages, wages are inflexible downwards as workers will not agree to a situation whereby nominal wages are reduced through the shifts in market equilibrium caused by the dynamics of market forces or the invisible hand of the market.
On the supply side, unemployment may occur where potential employees lack the requisite skills and experience which the labor market is looking for and there is a mismatch of skills and experience on the one hand, and on the other hand there is a meticulous job specification and job description which most potential recruits cannot match up to. In present day Ghana, there is a teeming army of school leavers and dropouts who have choked the labor market and who act as albatrosses around our necks. The current education acquired by the youth is meant to make them entrepreneurs and self-starters yet there is no sign of success in this direction. In the first place, the mindset of our school leavers is to look for employment in the formal sectors in both the private and public sectors. Those who want to break out and set up start-ups find it extremely hard to access capital from business angels, venture capitalists and the traditional lending institutions. Besides, this army of job hunters may only find menial or unskilled manual jobs in nondescript areas in the informal sector. Some may end up as barbers, hairdressers, cooks, security guards, personal attendants, taxi and bus drivers, gardeners, farm laborers, factory floor workers, galamsay boys, street vendors, retailers, pupil teachers and nannies. All these jobs need to be properly organized professionally so that they can attract better conditions of service and sustainable wages. For example, where I have lived in Zambia for 20 years, the housemaid, house servant system is properly organized with vocational schools offering short-term courses for them and helping them with job placements. If the army of jobless youth is not well taken care of, some may grow up to become frustrated citizens and they may fall on hard times. They may jump on the line of least resistance. Some unfortunately may become armed robbers, prostitutes, pimps, political party foot soldiers or cadres, drug dealers, drug pushers and drug addicts. Others may become social hoodlums and may increase the dependency load of the few working relatives.
Those who are straight and narrow may be resourceful and may use their creativity to set up in business as artisans, intermediaries and entrepreneurs. Here, I pause to observe that as the structure of the economy moves from the primary and secondary sectors, we are bound to see boundless opportunities opening up in the tertiary or service sector where job opportunities can be expanded in the commercial, health, education, tourism, transport, ICT, insurance and financial sectors. As global trade is expanding via e-commerce, we expect an enlarged global seamless market. The government should, therefore, zero-exempt the inputs in these sectors such as cell phones, computers, educational materials, medical equipment, among others. Currently, our educational system, despite its constant reform, has not yet delivered its remit in a sustainable manner. It looks like it lays emphasis on quantity rather than quality. There is currently an apartheid or discriminatory educational system in place, one for the rich and the other for the poor. Merit is no more criterion for upward social mobility because the exorbitant fees in the quality private schools and universities cannot be afforded by all on equal footing. The public school teachers, though highly-trained, lack motivation because of relatively low levels of remuneration and poor conditions of service.
The plush private schools charge exorbitant user fees and are only accessible to the high-heeled and bourgeoisie. Even for some of these private schools, they have their downside as some proprietors have exploitative and capitalistic tendencies. In order to cut down costs, they employ SSS drop outs as teachers so as to keep profit margins high. Some of these untrained pupil-teachers resort to unorthodox teaching methods such as corporal punishment and teaching non-syllabus topics which are far above the grasp of pupils. This indicates that the responsible oversight and regulatory bodies have been lax in their monitoring, evaluation and supervision. Products of these so-called international schools are known to pass national entry and qualifying exams by swoting but when these same products ascend the academic ladder, they are found wanting as they are outperformed by those from the public schools. I think this assertion will need some researching into and empirical verification. Besides, it is averred that some of the proprietors engage in exam leakages in order to chalk impressive final exam results to gain a sizable portion of the lucrative market share. The goals of a sound educational system should be to train our children in body, soul and mind to be able to eke out a living for themselves and to be fit and proper citizens who are assets to the nation. A good educational system should imbue students with patriotic zeal and virtues. Education should not only be for selfish goals but also for inculcating the virtues of service, altruism, honesty, dignity of labor and acquiring the skills of effective communication and handling interpersonal relationships (harmonious relationship in a team in terms of tolerance and support.). From my observation and research into educational systems in some parts of the world, especially in Africa, I can conclude that our current system of education in Ghana has taken a nosedive. When Zain, now Airtel, conducted their African challenge brains trust competitions on TV across Africa last year, our university entrants did not do us proud as they were beaten hands down by contestants from countries such as Kenya, Nigeria and Uganda. This, in part, may be put down to the national economic harsh environment and partly also to the new third generation students who are into IT and MP3 fads so much so that they spend less time reading and researching.
EMPLOYMENT AVENUES TO EXPLORE
Our schools need to expose their products early to the labor market both nationally and globally by encouraging exchange programmes, internships, and aupairs, conducting job fairs and forging long term forward linkages with potential employers. Also there is the need to strengthen career counseling in our schools and tertiary institutions. The practical component of courses should be emphasized by restructuring our syllabuses and curricula to give them practical content such as having internships or hands-on assessment built into the award of certificates, degrees and diplomas. Career guidance and counseling staff should be attached to all our schools and colleges to help graduating students find niches in the labor market and also to admonish them if they have to proceed for further studies. As things stand now, our schools and tertiary institutions have become glorified ivory towers which are attenuated and sequestered from the labor market. I strongly recommend that the subject entrepreneurship should become a sine qua non (compulsory) in all our schools, both junior and senior. Our students should be told in plain language that it does not take a rocket scientist or a Harvard MBA to break through in the business world. All they need is basic education, innovation and creativity, grit and steeled nerves to succeed in a highly competitive world. Our students need to change their mindset of being employees to the vista of being employers. Take Sir Richard Branson of Virgin Group or Mo Ibrahim of former Celtel or Anita Roddric of Body Shop fame or Bill Gates of Microsoft or Steve Job of Apple McIntosh, among others. None of them acquired an MBA from HBS or LBS or Wharton or Chicago or Oxford. Yet they have made it big as business tycoons, magnates and moguls. What these people had in common was having a headstart in their high consumerism – minded societies and also having germane institutions to support start-ups. We can also see young technopreneurs springing up in India despite harsh socio-economic conditions. We need our banks and other financial institutions to craft out their products, tailor-made to meet the expectations of our young and budding entrepreneurs. Perhaps a ministry of youth entrepreneurship has to be set up to speed up the process of spreading the gospel of empowerment and start-ups. Also the youth need to be encouraged to embrace the taking of calculated risks in business. Perhaps, we could build up on the microfinance idea of Mohammed Yunus who started the microfinance model in Pakistan among rural peasant folks. Such micro-finance could be availed to school leavers and university graduates after submitting their business plans and proposals. Furthermore, our graduating students should be encouraged to stay longer in school to continue with their masters and doctorate programmes so that they increase their life-time earning potential and also be in a position to add more value to their activities in the value chain. Studies done in the past by economists such as Duesenbury, Ando and Modigliani, among others, resulted in concepts such as the Life Cycle and Permanent Income Hypotheses. Besides, the more education one acquires, the more the chances of increasing your longevity. This is a recent discovery and it accords well with the motivational theories of McCleland. McClelland categorized three needs namely, need for power, need for affiliation and the need for achievement. These are mutually exclusive and zero sum. Those with high need for power die early because power is monistic and it cannot be shared. Those with high need for achievement cut out their need for power and affiliation. Unless their need for power is for soft referent power. In academia they share ideas with nerds, wonks and swots. Girl child education needs emphasis and it should take pre-eminence to reduce the dependency load and also to fully increase the growth potential of our female population for national building. Women have more potential to contribute to the national kitty more than men can. The retention rates of our girls should be increased by giving more chances to the girl child to accelerate on the academic ladder. We need to break the glass ceiling and create equal employment opportunities at the workplace so that together we can build internal capacities for future growth.
NATIONAL YOUTH LEAGUE (NYL)
As part of the poverty-intervention mechanism, the government should set up a National Youth League, on the lines of the former Workers Brigade to provide an avenue for skills acquisition and identification of talent. Such an outfit will need to be apolitical and depoliticized with a dual purpose of instilling discipline in the youth through para-military training and also skills empowerment. Such an outfit could be used for disaster mitigation and national projects or assignments. The outfit could be decentralized in the 10 regions of Ghana. The national service scheme could be upgraded to extend their services to places outside our borders under a Pan-African Youth Exchange Programme. Technical staff could be sent to places such as Haiti, Liberia, Sierra Leone, Equatorial Guinea and Sudan. Such an enterprise could be coordinated with the support of the AU, EU and other cooperating partners for it to blossom into a Pan-African Youth Peace Corps (PAYPC).
LABOUR BUREAUX AND LABOUR CARDS
Our national ID Project should be completed to have a database of all workers so that if job vacancies show up, labor can easily be deployed to fill them. This will reduce both occupational and geographical labor immobility. The government should establish labor bureaux and exchanges on the lines of the former labor card system, so that skilled unemployed people could be registered and deployed to reduce idle labor time. Our educational system should move towards making our graduates mult-skilled to meet the current labor market trends of having flexible labor force as enunciated in Handy’s Shamrock or unglued or clover leaf organizational structure. The menace of unemployment can be reduced by being multiskilled. This is in contrast to being highly job specific or specialized according to Adam Smith’s archaic idea of division of labor. Nowadays, workers work in teams or cell groups and these are based on Japanese management ideas incorporated in concepts such as TQM, JIT, Kaizen, Kanban and supply and value chains. Our national labor exchange database should capture, categorize and store information on labor in both the formal and informal sectors such as artisans, designers and decorators, landscape designers and horticulturists, events managers, consultants, estate upgraders, taxi drivers, among others. There is a lot of market potential both upstream and downstream in the primary and tertiary sectors. The midstream sector is where we require huge capital investments unless we are lateral thinkers along the lines of nanotechnology and quantum physics. In this era of global warming, some countries such as the UAE are skipping the industrialization phase of the growth path and are concentrating only on the downstream sectors of their economies. Take the example of UAE (Abu Dhabi, Dubai and Qatar). Excess labor can be absorbed in the service or tertiary sector downstream. Here is where we need a lot of creativity in service delivery to position our service products as having unique selling points (USP) through product, price, place and promotional differentiation (4Ps). All those operating in the informal sectors should be asked to form associations which are registered nationally and they should set up their own internal regulations, standards and norms within the guilds or associations. These associations should stringently enforce their gatekeeping and sunshine rules in the sunrise industries. If possible, they should design their own syllabi and final exams which should accord with best practice and international standards. They can use internal and external benchmarking and yardsticks. They should push for writing their own manuals and course materials as it is done in India, in the process boosting the local publishing industry. Our universities should widen their faculties to meet market demand. They should start courses in beauty care, interior décor, massaging, photography, driving, fashion design, fabrics, publishing, and tannery, among others.
ROLE OF DISTRICT ASSEMBLIES
Our District, Municipal and Metropolitan assemblies should be viewed as national growth poles whereby their mandate could be extended to empower them to create jobs in their jurisdiction. They should also be allowed more financial space to increase their earning capacity so that they become autonomous and financially sustainable. Our current labor laws are archaic, retrogressive and punitive as they put a cap or ceiling on age. This is against the tenets of ILO and the Universal Declaration of Human Rights (1948). It is unfair to state that in the public sector someone who is highly qualified cannot be employed. This is robbing the country of needed expertise in service sectors such as education, health, law, among others. How can we attract those in the diaspora who have abundant expertise if such moribund and punitive laws stay on our statute books? I think the government needs to liaise with ILO to reform some of our punitive and retrogressive labor laws. This is one reason many diasporeans have become non-returnees. The government could borrow a leaf from the USA where during the Great Depression (1929 – 1933) under the watch of Presidents Hoover and Roosevelt, the New Deal was launched to stem the tide of cyclical unemployment. The government needs to launch a high profile unemployment campaign nationwide to unveil plans which will provide palliative to unemployed qualified Ghanaians. I am sure if say a four year employment plan is unveiled, it can lead to say five hundred thousand people being employed each year over a period of say four years. Since inflation rate has come down to a single digit, it will be prudent to expect an expansion of employment, following the analysis of the Philips Curve (A.W. Philips 1958). Of course, we know that there is the non-accelerating inflationary rate of unemployment (NAIRU) which is the Long-run Phillips Curve which empirically stands around 5% and it is explained by residual and frictional unemployment. The District Assemblies could liaise with the traditional rulers to acquire land for truck and market gardening, fish farming, livestock development and the development of local crafts and rural industries. It is heartening to note the launch of the Central Region Development Corporation as it is in line with my proposal. The structural type of unemployment in Ghana can best be tackled at the district level and also in the private sector. The efforts in the public sector should complement those in the private sector. However, the public sector should provide the lead and create an enabling environment for the private sector. Our Disctrict Assemblies should have the mandate to seek partnership with outsiders by way of wooing investors and twinning cities and towns with advanced cities in the world. There is need for a paradigm shift from central government being the largest employer of labor to a new era of the District Assemblies shouldering this onerous responsibility. But the question is, ‘Has the Central Government created internal capacities in the District Assemblies by way of legal reform and decentralization?’ How about the reform of the revenue allocation system? Do the districts have qualified personnel with the political experience and professional expertise? Do we have the critical mass in the districts to make certain enterprises viable? What obstacles are posed in the districts by the bothersome chieftaincy litigation disputes such as the protracted and intractable chieftaincy dispute in my home town, Winneba, which has been raging for more than half a century?
Overall, to overcome the ugly problem of mass unemployment in Ghana, we shall need transparent government institutions, respect for the rule of law, reform of our defective labour laws, reform of our land tenure system and independence of the judiciary. One area of concern to the private sector is that the tender system and the award of government contracts have not favored the local contractors and this has created animosity, charges of political manipulation and excessive bureaucracy. It seems we are our own enemies since neither politicians nor contractors have been honest in their dealings. Milton Friedman once said that the business of business is business while the business of government is looking after the public interest and governance. Let us draw a thin line of demarcation between business and politics just as it was in the past between church and politics. At the end of the day, the public or national interest is paramount as the nation of Ghana is far larger than the mere sum of our petty or parochial foibles, nuances and idiosyncrasies put together. Let us learn from the advanced democracies such as UK, Canada, Sweden, Germany, USA, Finland and France, among many others. When it comes to the national interest, there should be no compromise irrespective of our political colorations and divides, we are united in our national resolve to survive, grow and prosper. The issue of unemployment is a national headache, not an NDC or NPP or CPP headache. In unity we shall overcome all our obstacles. With regard to this topic, the critical questions we need to ask ourselves during this reflective festive season are:-
1. What market interventions are being planned by the Ghana government to deal with the teeming army of unemployed school leavers who are constantly pouring into the labor market each year?
2. How is the government going to manage immigrant workers or guest workers who are likely to cause an influx in the labor market with the advent of oil exploitation?
3. What internal capacities are being created at the local governance or district assembly level or in the private sector to provide employment avenues for our youth who need to be empowered and absorbed into the mainstream economy?
4. Why cannot the government set up a Ministry of Employment Creation, solely dedicated to job creation in the country?
5. Which economic model (mixed economy, free market economy, planned or commandist economy) is suitable for us in our current labor-surplus market which paradoxically faces labour deficit/deficiency in middle level technical skills?
6. What are the long term projections of the labor market in terms of demand and supply and what short, medium and long term planning interventions are being put in place on the ground to mitigate the bleak prospect of unfulfilled expectations or dreams of the Better Ghana Agenda?
7. What efforts are being made by government to liaise with the ILO and IOM (International Organization for Migration) to lure back to Ghana qualified and talented Ghanaians in the diaspora to fill up some of the labour gap?
8. What incentives are being offered to government employees to encourage some to take early retirement to pursue some of their dreams as entrepreneurs and employers?
9. What fiscal, physical, legal and monetary parameters are being laid down to protect local jobs for Ghanaians in certain sectors of the economy, especially small scale enterprises such as independent retailers, transport business, among others?
10. Lastly, but not the least, what turnkey projects of mammoth scale like Roosevelt’s New Deal in the 1930s are being envisaged by the Ghanaian government to arrest the dire problem of mass youth unemployment (the STX deal excluded)?
MERRY CHRISTMAS AND HAPPYAND PROSPEROUS NEW YEAR
By Kwesi Atta Sakyi B.A (Econs with Geog) Legon, NDP (Unisa),
MPA(Cum Laude) Unisa, Group Diploma, Bus Admin (Jersey), Cert A (4YR).
Mr Sakyi teaches Economics and Business and Management at the International School of Lusaka and until recently, a Lecturer at Zambia Centre for Accountancy Studies (ZCAS) and Evelyn Hone College, Lusaka. Mr. Sakyi has published two books in poetry with a third on the cards. He can be reached at: email@example.com