Just whisper - what is the unemployment figure?

Part I

Introduction

Last Friday, November 7, the Labour Department of the US Government released the unemployment rate and changes in payroll for the month of October, just seven days later. It was a song and dance by and for the Bush administration, drowning out the ever worsening news coming out of Iraq, with the November toll of deaths in the first seven days already the highest in the six months since the infamous ‘Mission Accomplished’ pronouncement aboard the USS Abraham Lincoln.
This piece is not about either of those two events, significant as they are for both economic as well as geopolitical considerations. Rather it is intended to emphasise the importance which any serious country would place on unemployment. The taking over of the airwaves by the Bush administration is a response to critics who have been emphasising the jobless growth over the past few months. Not that one sparrow makes a summer, or that the fall in the unemployment rate from 6.1% to 6.0% is where the administration would wish it to be one year before the 2004 presidential elections.
As CNN Money pointed out, “job growth is crucial for the health of the economy,” and that while the economy’s growth for the third quarter was the strongest in nearly twenty years, the economy still lost 41,000 jobs. Equally importantly, the US economy needs 150,000-160,000 jobs just for new entrants to the market, let alone to make any serious impact on the unemployment figures. So that while the October figures were obviously good news for President Bush, unless the number of new jobs increases quite dramatically over the next few months, the very expensive tax cuts by the administration would hardly have been justified on economic grounds.

Where are the figures?

In Guyana on the other hand, unemployment is hardly ever discussed in official, or indeed any circles for that matter. I recall sharing a panel discussion on youth employment with Minister Gail Teixeira some weeks ago, and was quite surprised at her reaction to those of us who took the view that the unavailability of data on unemployment limited the scope of the discussions. With the usual mindset that even the most sincere and innocuous comment is a criticism of the performance of the PPP/C, the Minister’s retort was that the problem was not the availability of data but that the comments would only come from those who did not know where to look! Even allowing for the fact that one should not have to go searching several disconnected documents to find what is absolutely critical information for planning purposes, but accepting that the Minister could be right, I referred to several recent documents including the Budget Speech 2003, the undated Guyana Poverty Reduction Strategy Paper and more recently the Millennium Development Goals. In none of these official documents does one come across any data on unemployment, and hopefully the Minister would be kind enough to point the nation to the information.

Guinea pig

To understand the lack of attention to unemployment we should go back to the genesis of current policies - the Economic Recovery Programme (ERP) of 1989 - inherited and continued by the current administration with an almost evangelical fervour. The key elements of that programme were liberalisation of the exchange and trade system; removal and restrictions of capital flows; removal of price controls and subsidies; and reform of tax policy and administration. The first three could easily be summed up in one word ‘globalisation,’ which more and more countries are recognising as having favoured the richer nations, while even in the poorer countries in which its advocates claim some success, the empirical evidence is that it has favoured the rich while widening the gulf between the haves and have-nots.
When Guyana accepted the IMF/World Bank/rich countries’ imposition, it really had no choice, and being one of the first of the poor countries to do so, it was implicitly agreeing to be a guinea pig for an experiment with very loosely defined objectives or rules. Indeed, since it was understood that the multi-national companies and financial houses would be in charge, it was naive to expect any grand plan since there was no single authority in charge of the process. The most that could be hoped for was that we would have some kind of global regulators such as the WTO, Rio/Kyoto and the UN to restrain excesses.
Recent developments in Latin America in particular have demonstrated the other side of such experimental economic policies, with the result that left-leaning political parties are scoring electoral successes which would have been unthinkable a few years ago. Chile, the home of Pinochet, Brazil, Venezuela and Bolivia now have governments that have challenged the philosophy of globalisation. As usual Guyana is at least ten years behind the rest, still willing to eat at the not-so-healthy trough of the USA.

Lost jobs

That lowering the rate of employment could not be a direct goal of the economic strategy is clear from the privatisation process accompanying the ERP. Has anyone stopped to think of the number of jobs lost as a result of the sale of the nation’s resources in the name of economic progress? Has an evaluation been done of the social and economic impact of privatisation? Did the policy make any effort at retraining the several thousands who were terminated, to equip them for other jobs? In fact do we know how many new jobs have been created since the ERP and what is the net gain? Are these not issues which we need to openly and honestly discuss as we seek to rebuild our economy?

National Development Strategy

Then we had the National Development Strategy (NDS) which from time to time is resurrected purely as a matter of convenience. The stated objectives were to achieve sustainable growth rates; reduce poverty; achieve geographical unity; ensure equitable geographical distribution of economic activity; and diversify the economy. Perhaps one can measure of the chances of success of the NDS by looking at its prerequisites - prudent economic policy and management; good governance with inclusivity, participation, accountability and transparency; development of strategic investments in the infrastructure sector to complement rapid private sector development. Indications of these being central to our current national policies are few indeed. Even at the official level, the NDS is seen as containing recommendations on which there is disagreement and as having limitations which the Poverty Reduction Strategy Paper (PRSP), another expensively-produced report, claims to address.

PRSP

The PRSP in various incarnations has itself been around for some time and claims to set the priorities and to develop an action plan for implementation. Few would feel heartened by the title of this very important blueprint, which suggests that we are locked into some kind of perpetual poverty mentality. Is it being fair to say that here again, some form of generic framework was conceived by the IMF and World Bank as a precondition for further debt-relief? And the organizational structure to oversee the PRSP must rank among the best bureaucrats’ dreams. As the document proclaims, the strategy for public participation led to the creation and/or strengthening of four units to implement or monitor the participation process, namely the Donor Coordinating Unit, the PRS Steering Committee, the PRS Secretariat and Resources Teams. As though the Office of the President does not have enough on its plate, the whole exercise is located within that office which is not particularly well-known for its flexibility, effectiveness or competence.
One of the main goals of the PRS focuses on ‘sustained economic expansion within the context of deepening participatory democracy,’ a term over which there seems to be endless conceptual difficulty, particularly between the two major political parties. While some may argue that the resolution of this difficulty does not pose an insurmountable hurdle to the achievement of the PRS’s goals, its boast that “for the last ten years Guyana’s macroeconomic management has been good” hardly seems consistent with the poor economic performance over the past five years. The PRS accepts that there is a strong correlation between GDP growth and poverty reduction, and that there needs to be a “restoration of growth rates to pre-1997 levels” which were in excess of 7 per cent. It has projected average real GDP growth rate at about 4% per annum between 2002 and 2006 and ‘about 6.1% a year thereafter.

Lack of co-ordination

Clearly while there were all kinds of consultations among stakeholders in formulating or rather finalising the PRS, there does not seem to be the same or any degree of co-ordination at the inter-ministerial level. Or was it that those responsible for the PRS’s finalisation were not interested in what everyone else knew about the economy? These include the Minister of Finance who had set a target growth rate of 2% for 2002 and the Bank of Guyana (BoG) which in its 2002 half-yearly report had already signalled that 4% was just not on. For 2003, the Minister of Finance has projected a growth rate of 1.2.% for 2003 while the BoG has reported that the economy remained relatively flat for the first half of 2003 compared with a 1.4% growth during the same period last year. The economy will have to grow by about 6% in 2004 - 2006 if the PRS’s goal is to be realized - a rate that is not only challenging but unlikely as well.

Impact of failure

The question which the architects of the PRS must now answer is what would be the precise impact which the failure to achieve growth targets would have on the levels of unemployment and poverty? This is apart from the issue of addressing the condition of the employed poor who make up a large part of the population. Can anyone earning the minimum wage in the public sector and in the retail stores and sweat shops be considered anything but poor given the level of rents and utilities?
Cynics may want to draw a parallel between the PRS and the well-crafted and professionally presented business plans submitted to potential lenders for financing. No sooner is the money received than the plan is shelved never to be looked at again either by the borrower or the lender/donor, who is then too heavily involved and embarrassed to pull out. Given all the time and other resources that have been invested in the NDS and the PRSP, it would have been reasonable to assume clear linkages with the annual targets contained in the national budgets. The divergence is so wide that one is forced to conclude that whatever the intentions of the NDS in particular, both this and the PRS are not taken seriously enough by those responsible for the country’s management.  To be continued   (Back to top)