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Introduction
Business
Page today concludes the article begun last week about the
unavailability of unemployment figures and the little attention given in
official documents to setting any clear targets to reduce the level,
even as part of the much publicised efforts to reduce poverty. The
Guyana Revenue Authority and the National Insurance Scheme are two
agencies which on a monthly basis receive information which could offer
some reasonably accurate indicator of the state of the employed
workforce. However as this column has pointed out, an Annual Report of
the GRA is required to be tabled in the National Assembly by the
Minister of Finance.
However,
so far not a single report has been tabled and the Minister appears
disdainful of calls for him to comply with the law without a word of
concern being expressed by the opposition political parties, the trade
union movement or the private sector. The National Insurance Scheme also
receives (or is supposed to receive) monthly remittances for employed
and self-employed persons. In addition, because of the statistics which
the NIS is required to maintain for actuarial
purposes and in order to facilitate the remittance process, it also
records and issues an identification number for new registrants.
NIS Reports
While
Business Page recently had to comment critically on the misleading dates
used by the NIS in forwarding its annual reports to the Minister of
Finance, those reports show on an annual basis not only new registrants
but also cumulative numbers. Since these reports are from entities over
which he has ministerial responsibility and entities over which he has
ministerial responsibility contain information that is objective and
reliable and therefore more useful, one would expect that they would
form the basis for any serious planning done by the Minister. This,
however, has not been the case, and this column is not aware of a single
instance where such data have ever been quoted in any public
pronouncements by this or indeed previous governments.
Private investment?
Under
the heading 'Job Creation' in Budget Speech 2003, the Minister referred
to five areas of job creation: businesses facilitated by Go-Invest and
the Institute of Private Enterprise Develop-ment, small business
development and training, jobs emanating from the public investment and
maintenance programmes and the Temporary Employment and Mainten-ance
Programme. Yet only two sets of numbers were quoted by the Minister both
from sources that are speculative and/or meaningless.
The
Minister announced that private investment in the economy facilitated by
Go-Invest was expected to grow to nearly G$18B, creating "over 2800
jobs" at about $6.5M per job! These figures are of course submitted to
Go-Invest by potential investors in project documents designed to win
government backing and quite possibly incentives. Does the Ministry or
the agency undertake any follow-up work to verify the projections and
statements? Can there be any serious credence placed on numbers that
raise questions about whether the potential job numbers are understated
or the investment overstated or indeed both? Where is the evidence of
the US$90M of new investments in 2003 facilitated by Go-Invest, or is
this playing with numbers?
Micro-enterprise
The
other number quoted is in relation to projects funded by IPED and which
is always stated as "jobs created/sustained." According to the Minister,
the number of jobs created and/or sustained was 7,113 in 2002 as a
result of financing of loans amounting to $670M - at an average of
$94,193 per job. Now quite what does this mean? How many new jobs are
created - ten, one hundred or one thousand? IPED's efforts at financing
the micro-enterprise sector are indeed commendable, and its record quite
impressive, but it should surely refrain from the misrepresentation of
data that it must know are critical to an understanding of the wider
economic and national interest. While IPED's high-interest lending rate
policy has been widely criticised even in official circles, its loose
use of numbers regarding employment is both convenient and helpful to
the government which obviously and uncritically embraces them.
Declining numbers
The more
objective NIS data paint a picture that is vastly different. The Annual
Reports of the NIS show that the number of new registrants of employed
persons in 2001(6,915) has been falling steadily since 1996 and is
considerably down on the numbers registering in 1992 (10,712) and 1993
(15,517). The statistics on the number of self-employed persons
registering annually is even worse with only 332 in 2001 compared with
1030 in 1992. In cumulative terms the position appears less serious with
the number of active employed persons actually increasing over 1992
(+6.6%) but decreasing since 1996 (-5.4%). Compared with 1992, the
cumulative number of self-employed persons has increased quite
substantially (220%) but since 1996, the number of active self- employed
persons with the NIS has declined by 31.4 per cent.
While
statutory bodies will always have some difficulties in registering
members of the public, the decline can only partly be attributed to NIS
inertia since the same process produced significant increases from 1993
to 1996.
Private sector
There is
also some corroboration between these numbers and the findings of the
annual Business Outlook Survey Report done by Ram & McRae, in which
respondents had reported increases in their staffing up to 1997 and
decreases thereafter. Now even if the numbers are better in 2001 than
they were in 1992, what about all the persons who have entered the job
market in the past ten years including those who write the CXC
examinations annually?
The
success of any poverty strategy depends on the creation of jobs for the
majority of the unemployed and the capacity and willingness of the
private sector to generate those jobs. Here the story is also not a good
one.
Training
Despite
the ever present platitude which appears in directors' reports that the
company's employees are its most valuable asset, employers have
consistently said that in the event of a business downturn, staff cuts
are among their top two preferred options. Expenditure on training
currently makes up only a tiny part of the annual expenditure of any of
our companies. Pre-privatisation, the state-owned companies expended
considerable sums for training their staff, many at the University of
Guyana which the private sector now loves to criticise.
The
army, the police force and the public sector, including teaching and
nursing, still probably train a much larger number of persons annually
than the combined private sector which has developed an impressive
capacity for poaching the better-trained persons from the public sector.
In the areas of employment generation and training, the private sector
has been a major disappointment, with its emphasis on short-term
maximisation of shareholders' wealth, tax minimisation and capital
export by a large number of the players in the sector.
What can be done?
The
undeveloped political culture has of course retarded economic progress,
and helps to explain the sluggish performance of the economy over the
past five years. But this is only part of the problem, since the economy
had been losing steam after the expected rebound from the economic
disaster of the seventies and eighties. In truth, only the most extreme
pessimist would have believed that there was any direction the economy
could go but up, particularly given all the adjustments which the poor
and the employed class (referred to as working class pre-ERP) were asked
to bear.
Experimental models/false assumptions
The
country has become locked in a model of experimental economic
development dictated by the IMF and the World Bank, based on several
simplistic and sometimes misleading assumptions, including the ability
of market forces to produce balanced economic development. Even the
advocates of such economic recovery programmes, however, saw so-called
safety nets such as SIMAP and now the PRSP as inherent to economic
development, though they like to represent such nets as temporary. These
are, however, only temporary in name, going through several
reincarnations.
Another
of the false assumptions is that the private sector is inherently
superior to the state, particularly when it comes to ownership and
management of economic activities, and that the state's role must be
relegated to facilitator and provider of physical and other
infrastructure.
Appalling record
Taken to
its logical (?) conclusion, this ideology will see the private sector
running education, health, police, the army and ultimately the
government, raising interesting possibilities about the fate of the
professional politician! While bad governance and political interference
and control certainly created a poor image of state-ownership, referred
to by the ANC of South Africa as "an inferiority complex about public
ownership," many of the privatised entities have been no more successful
than when under state control. This holds true when profits are measured
in accounting terms, and their record is even more appalling if
considered in economic terms, when other factors such as employment
creation, capital retention and human development are taken into
account.
Conclusion
The
market model of development has also placed capital out of the reach of
the masses of people ignoring the immense potential of the co-operative
movement which is often more suited for this country's level of
development. Just think of the potential implications of a fundamental
restructuring of the country's social security system including
unemployment benefit underwritten by the government. Could it then play
with the unemployment numbers?
The
assumption is also made that privatisation is the only way to mobilise
investment and management, an assumption to which Guysuco has proved a
major exception which could have been replicated many times over with
the right level of political will and commitment. But with the proceeds
of privatisation already spent, and reduced control over major economic
sectors lost, how much better off are the workers and, not unusually in
many cases, former workers?
The ERP
had a number of features which were both commendable and necessary, but
which also contained serious flaws. When combined with the country's
backward political culture and unrestrained private sector behaviour,
these makes the high level of unemployment unsurprising. Does anyone
care? If so, can we start with a serious and honest effort at
determination of the available working population across region, gender,
age, qualifications, etc, to form the basis not only of a real economic
and social development programme, but also for the formulation of sector
policies on industrial, regional and other areas of development.
Understanding where we are is an important step in getting where we want
to be. Accurate information would be a good place to start.
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