and Focus on Real Job Creation

By: Gabby Asare Otchere-Darko

In his State of the Nation address this year, President John Mills admitted that his administration was yet to make any impact in the jobs market but expressed optimism. “As the measures we took to halt the decline in the economy last year such as lower interest rates and increased credit to the private sector begin to translate into a much more conducive employment generation environment, we expect a turnaround in the jobs market. Meanwhile I have directed all sectors to mainstream job-creation into their programmes and Ministers are required by the middle of the year to produce sector blueprints for the creation of jobs.”

Yet, his Information Ministry has gone as far as to tell Ghanaians that the turn around in the jobs market has already begun in a big way even before the Government’s concerted policy on job creation has been formulated.

On Tuesday night, Paul Adom Otchere hosted Deputy Information Minister Sammy Okudzeto Ablakwa on his Good Evening Ghana programme to tell the public about what government was doing in erecting the building blocks of a better Ghana.

1.6 Million Jobs The discussion predictably narrowed down to a claim made by the Deputy Minister on the front page of the Daily Graphic last Friday that through government policies 1 million 600 thousand employment places “have so far been created for the youth” in Ghana since President Mills took charge last year. This translates into an average of 33,000 new jobs being created daily since January 7 2009.

The Danquah Institute would like to state that these jobs statistics from Government are regrettably inconsistent and irreconcilable with the trend of figures available through government departments other than the Ministry of Information. They therefore appear to have been released for their anticipated propaganda value than any credible attempt to make them reflect anything close to the real situation on the labour market.

Mr Okudzeto Ablakwa said in the Graphic interview that the government’s agenda to create jobs was on course, as the Youth-in–Agriculture programme (block farming concept) had so far created 47,000 jobs. He explained that in the road sector, capital intensive interventions which included feeder roads, urban roads and highway contracts had so far generated 950 jobs, while the labour-based segment had generated 555,000 jobs.

Additionally, he stated, the oil and gas sector had so far created 1,000 jobs, ranging from onshore activities, while the Eco Brigade and the Civil Service had engaged 10,000 and 982 people, respectively.

Mr Okudzeto Ablakwa said President Mills, conscious of the massive unemployment situation in the country, had adopted “pragmatic solutions” to solve the problem or “reduce it to the barest minimum” and stressed the need for the collaboration of all towards the achievement of that goal. Details of those ‘pragmatic solutions’ are yet to be made public to those who are at the forefront of creating jobs, the private sector.

1.3 Million Construction Jobs On TV Tuesday night, Mr Okudzeto Ablakwa went as far as to claim that 1.3 million of the new jobs he claims have been created were in the road sector. How was this possible? He said there were over 180,000 registered contractors working in the road sector and that they have created such new jobs.

1.6 million jobs created in one year. That is a remarkable achievement by any stretch of the imagination, especially in a global recession year like 2009. Moreover, President John Mills has himself admitted that Ghana has also been affected badly by the global recession: “No country has been immune from the world economic meltdown,” he said at his 2010 State of the Nation Address.

More Questions than Answers While one may be instinctively inclined to see this 1.6 million as a remarkable achievement by an economy that we were told was broke and has been slowly but surely recovering from a recession, the Danquah Institute, however, believes that the 1.6 million employment figure churned out from government deserves a deeper scrutiny from the country and better explanations from Government; it asks more questions than it seeks to answer. For example:

Are these really new jobs that have been created since 2009 in addition to existing jobs?

How many jobs were lost during the same period?

If they are indeed real net gains, how then does Government reconcile the jobs created in the public sector in 2009 with the Breton Wood conditionalities involving a net freeze in public sector employment?

How many jobs were created in 2008 and previous years?

How many jobs were lost in 2008 and previous years?

Is it not time to task and resource the Ghana Statistical Service, probably through the Labour Market Information System (LMIS), to come out with quarterly employment/unemployment figures?

How can Government reconcile these declared remarkable gains in the jobs market with the sluggish domestic economic performance of 2009?

Has Government commissioned any research on the impact of last year’s high inflation, high interest rates, low business and consumer confidence, suppressed public sector spending and delayed payments to contractors, etc, on the labour market and if so what were the findings and recommendations?

Would it surprise government to know that 1.6 million new jobs represent the biggest ratio of jobs creation in any country in the world in 2009 and that the figure represents more than a 15% rise in Ghana’s estimated total employment rate, including the informal sector?

Is government aware that 1.6 million represents an employment figure higher than the total number of workers in Ghana registered as making statutory contributions to the Social Security and National Insurance Trust (SSNIT) and if so what have been the efforts to have all these new job entrants captured under the workers’ contribution scheme?

We see the 1.6 million jobs creation figure as quaint, unordinary and a very strange claim for any government to make, especially for a year marked by austere fiscal measures to tackle a sizeable budget deficit and other macroeconomic challenges that the Ghanaian economy was facing.

Comparing Ghana’s Employment Claims to South Africa’s It may help to compare Ghana’s employment creation claims to that of South Africa, the continent’s largest economy. Employment in Africa's biggest economy edged up 0.2%, representing 18,000 new jobs on the quarter in the final three months of 2009 to slightly more than 8.16 million, according to figures released this week from Statistics South Africa.

Yet, in spite of huge expenditure lay out by the country hosting the World Cup this June, a total of 870,000 jobs were lost last year, with 351,000 of that being formal jobs. That 351,000 figure translates into jobs lost of 4.1% from December 2008 to December 2009. Again, South Africa has a working age population (15- to 65-year-olds) of more than 30 million; Ghana has less than half of that number.

Incidentally the two areas which suffered severe job losses in South Africa (manufacturing and construction) did not fair any better in Ghana, too. The NDC had, in the 2009 budget, predicted construction growing by 8%, yet it was the worst performed area in 2009, registering -1% growth, followed by hotels and restaurants, registering a mere 2% growth. These areas which registered the lowest performance last year are the very areas with the capacity to create hundreds of thousands of jobs, both directly and otherwise.

By the 2000 Population and Housing Census, about half of Ghana’s population, 9,039,318 Ghanaians, was considered employed or economically active. Also, only 5.9% of them, numbering 533,811 were earning their living in the public sector, with another 258,928 (2.2%) working with parastatals.

Ghana Living Standards Survey Also, estimates from the Ghana Living Standards Survey (GLSS) indicate that 9.4 million adult Ghanaians aged 15 years and above were economically active in 2006. Based on the 2006 estimated population of Ghana of 22.3 million, Ghana’s working population was put at 13.4 million. Out of this, about 3% were estimated to be unemployed (i.e. had no work, available for work and actively looking for work) in the narrow sense, compared to “broad unemployment” rate of 6.4%. The narrow unemployment rate among the youth aged 15-24 was 6.4% as against 13.4% broadly unemployed. In the urban areas, 22.5% of the youth were classified as unemployed in the broader sense compared to 12.8% who fell in the narrow unemployment rate.

What the above estimates show, if they are anything to go by, is that in spite of the population growing by some five million or so and the economy growing from $4 billion to $16 billion, Ghana’s employment rate grew only very marginally from the 2000 census figure of 9 million to 9.4 million by 2006.

Moreover, what the 2000 figures showed was that 7.3 million (80.3%) of the jobs were within the informal sector, with only 7.8% in the formal private sector and 5.9% in the public sector. With the so-called 1.6 million new jobs not making any inflationary difference to the list of SSNIT contributors, it should be asked whether by any chance it is a deliberate policy by government to further widen the informal sector of the economy. How then does this sit comfortably with Government’s focus on expanding the revenue net to raise funds to support its budget?

It is also significant to note that the only area that Government was able to show details of data of jobs created actually paled in significant comparison with jobs created in that same sector in previous years. Government spokespersons have readily showed which regions the 982 public sector jobs were created. But, available data from the Ministry of Employment & Social Welfare indicates that, for example, in December 2004, the Ministries, Departments and Agencies (MDAs) employed a total of 328,733. This shot up by 8,880 to 328,733 by December 2005. Again, by 2007, the MDAs employed 376,211 people. By December 2008, an additional 26,744 more staff members had been added to the list pushing it up to 402,955. Add subvented agencies and others to it then the figures push up further to 477,736.

What these figures do is to make the 1.6 million job creation claim by Government appear rather curious and orphanic in the scheme of things. What the spectacular 2009 job statistics from Government seem to do is to offer the impression that the Mills administration’s has a histrionic lack of elementary understanding of labour market fundamentals.

In our comments last November on the 2010 budget read by the Minister of Finance, we said that “based on Government’s own projection of a Gross Domestic Product figure of Gh¢21 billion, in dollar terms, Ghana’s GDP would be 12.27% lower in 2009 than it was in 2008. Using the prevailing rate of 1$ to Gh¢1.45, this values the Ghanaian economy of 2009 at US$14.6 billion, about $1.8 billion lower than 2008, when the GDP was valued at US$16.4 billion.”

Ghana’s Economy Shrunk by $2bn in 2009 In short, the Government is telling us today that the very economy which shrunk by nearly $2 million jobs managed somewhat miraculously to create almost an equal number of jobs, 1.6 million at the same time.

Until 2009, for nearly a decade, Ghana’s economy witnessed significant, consistent nominal growth in both cedi and dollar terms. What we witnessed last year was a worrying but explainable departure from that trend to a reversal of the situation that prevailed before 2001, at least in dollar terms.

Thus, assuming since 2000, the Ghanaian labour market had been growing by a mere 60% a year of the 1.6 million figure Government is claiming for last year, almost the entire Ghanaian population, including toddlers, would have by now been enjoying gainful employment.

By the 2009 provisional figures available in 2010 budget, total revenue and grants for the period were 3.5% below target; domestic revenue was 11.3% below target; import revenue was 4.6% lower than anticipated; international trade taxes lower 16.3% lower than target; NHIL was 15.5% lower on target; receipts on non-tax revenue were also lower. Domestic VAT was projected to be 15.2% lower than budget target, and grants and loans targets were also projected to be missed.”

Even looking ahead, total budget for the MDAs for 2010 is a mere 1.9 percentage points higher than what it was in 2009.

There is every indication that current trends in jobs creation are largely seasonal, casual and not ambitious enough for a developing economy in a well-considered hurry. This goes against the NDC campaign promise to shift from “artificial jobs” to sustainable jobs for the youth.

In 2008, John Dramani Mahama, the then running mate to John Evans Atta Mills, stated that if voted into office, the National Democratic Congress would “gradually phase out” the National Youth Employment Programme, which was employing nearly 110,000 Ghanaians at the time. He said this at the Youth Explosion conference organised by the Word Miracle Church International on 11th July 2008 at the Trade Fair Centre at La, Accra.

Government Policy on Employment Last year, the Mills administration outlined its employment vision as thus: “The government policy on employment is to create and promote productive employment opportunities in all sectors of the economy, with the overarching goal of enabling all persons who are available and willing to work, secure a sustainable livelihood through full productive and freely chosen employment.”

Thus, Government reaffirmed its commitment to the attainment of “full employment” in Ghana by putting every Ghanaian who can work and wants to work to work.

Furthermore, Government has cited the example of the construction sector for evidence of growth in the labour market. “They are very visible for Ghanaians to see,” according to Mr. Okudzeto Ablakwa.

Yet, much of the evidence points to a publicly declared policy of discontinuation of several road construction contracts last year, including some major projects, which severely suppressed that industry into negative growth in 2009.

Whilst we welcome a renewed interest on the part of Government to continue with these projects and initiate some new ones, as well, it would be useful to know the number of jobs that were lost last year as a result of that suspension fiat before the full implications of any jobs created this and subsequent years could be better appreciated.

The decision by Government earlier in the month to pay road contractors their outstanding arrears, starting with the release of GH¢20 million from the Road Fund as part payment, was positive in reviving and saving jobs. We welcome that, too.

It is, however, recalled that on 4th August 2008, before the Association of Road Contractors (ASROC) Ghana, and the Association of Building and Civil Engineering Contractor of Ghana (ABECEG), the then Presidential Candidate of the NDC, Prof. Mills promised them that an NDC government would not only ensure prompt payment but also pay interest on payment delayed. There has been subsequent silence on the interest payment pledge.

According to the Association of Ghanaian Industries, “The SME sector had several near collapse cases caused by unfair competition, high interest rates and the other challenges” outlined in the AGI business climate survey.

“In addition some exports such as bauxite, exports under AGOA, and manufactured exports were severely affected. In addition the index of the Ghana Stock Exchange, a very good indication of overall corporate performance has declined by about 50%.

“In both cases there is relatively high unemployment, which results in an absence of demand and thus no incentive to produce or manufacture or offer services, and thus the unemployment remains high,” according to the AGI.

Labour Market Information System (LMIS) During his turn on the ‘Meet the Press’ ministerial series, on Tuesday 18th August, 2009, the then Minister of Employment & Social Welfare, Amoanor Kwao, spoke blithely of plans to get a systematic hold on reliable date on the employment situation in Ghana. He conceded that the problem of inadequate, inaccurate, and diffused labour market statistics has affected effective planning over the years.

He confirmed that the Ministry and its tripartite partners were implementing a Labour Market Information System (LMIS) which began in 2006 to address the challenges. The LMIS, he explained, is basically focused on data collection, processing, analysing and dissemination of Labour Market Information for use by stakeholders. The Ghana Statistical Service is a key partner in this programme.

“A significant feature of the LMIS is the provision of opportunities for job seekers, employers and potential investors to interact via the web. A labour market information system home page has been successfully developed and it is on trial. The website address is www.lmisghana.org.gh,” the Minister said.

What is the current state of the LMIS programme? At least, it is obvious that the website, has made very little impact on the labour market and its menus are yet to be loaded with relevant contents. LMIS statistics on the site indicate merely 55 Job Seekers, 22 Available CVs, 11 Employers and 6 Available Job vacancies.

So far, the evidence is that the Ghanaian economy is struggling with low consumer spending, low production and retail sales, the very factors that hurt jobs while Government attempts to bring down the budget deficit. These difficulties are not resolved by the manufacture of propaganda jobs or the temporary fix of casual labour.

Indeed, President Mills has admitted that “The National Youth Employment Programme and the Youth In Agriculture Programme are only temporary expedients out of what is a major problem of unemployment that we inherited in January last year. “

Ultimately of course, he adds, “the solution lies in skills training and an expansion in the economy to increase the jobs available. We are tackling this in a three-pronged approach of an expansion in the service industry, an expansion and improvement in the manufacturing sector and an expansion of the agro-industrial sector.”

Jobs creation, quality and accessible education and healthcare and a serious and furious attack on poverty are what Ghanaians were made to expert from their government of social democrats.

But, we shall also insist that a free market, respect for contractual obligations and the general observance of an atmosphere which encourages and rewards entrepreneurship and generally boosts investor confidence in our economy prevail for the creation of sustainable jobs.

Within one year, from 2008 to 2009, the Ghana Stock Exchange turned from being the world’s best performing bourse to the world’s worst. That certainly does not encourage investment. Government should focus more on what brings jobs than what propagates phantom jobs.

The author is the Executive Director of the Danquah Institute, an Accra-based liberal policy think tank.