Jobs are our greatest worry

The biggest weakness of the economy is the chronic joblessness of a vast proportion of the people, economist and Vice Chancellor of the University of Ghana, Prof. Ernest Aryetey, has pointed out.

He expressed worry that, as head of a university, he knows that 50% of graduates who leave the country's universities will not find jobs for two years after their national service, and 20% of them will not find jobs for three years.

“It reflects the biggest weakness of the economy of Ghana,” he said at the launch of the State of the Ghanaian Economy report by the Institute of Statistical, Social and Economic Research (ISSER) in Accra.

The report is ISSER's 20th publication since the series began in 1991.

“For 20 years, we've always said that unemployment deserves much bigger attention in policy than it has been given; and for 20 years we have said that the policies we have been pursuing are not tailored towards job-creation,” the former director of ISSER said.

“The policies have been structured to create a free-market economy, but the market is not free because of structural constraints.”

The industrial sector remains weak, he said, and has not been expanding enough to create the jobs that are needed.

“Today, any serious industrial policy is one that focuses on how the state and the private-sector can work together to generate jobs.”

What compounds the challenge of unemployment, also, is that there are no statistics on the problem in Ghana - a fact that was recently confirmed by the Minister for Employment and Social Welfare, Enoch Teye Mensah, during an appearance before Members of Parliament.

But the extent of joblessness and under-employment is evident in the huge numbers of youth which line the streets “selling things nobody will buy,” Prof. Aryeetey said.

In the parts of Africa where data are available, unemployment rates are very high. In South Africa, the region's largest economy, one in three persons in the active labour force is unemployed. Globally, the rate is at 6.1%.

“So one can imagine where Ghana is now that the global rate is at 6.1%,” said Dr. Felix Asante, a senior research fellow of ISSER.

Despite more than two decades of positive growth, the economy is yet to achieve the desirable structural transformation that is needed to move the country into the state of a modern, industrialised and prosperous economy, he said.

ISSER has found some common social challenges that have persisted in the 20 years since it has been reviewing the economy's performance, he said. Among these are poor health and educational outcomes.

Elitism persists in education at the basic level with most pupils unable to read and write after school, it was found. There is a chronic shortage of health facilities, and primary health-care provision is still inadequate.

Labour and capital are not sufficiently productive, according to the findings, and the general infrastructure of the economy is stretched due to rapid urbanisation and a growing population.

For each year since 1984, the economy has recorded positive real growth - averaging some 5% per annum. But much of this was a period of reform during which the public-sector undertook severe retrenchment, and the private-sector was opened up to competition from producers in all parts of the world.

In the initial years, the reforms seemed to stem the decline in industry and manufacturing; but since then the economy's manufacturing capacity has shrunk, reaching a low of 6.8% of GDP in 2010. Between 2006 and 2010, the share of manufacturing output in GDP slumped from 10.2% to 6.8%.

Dr. Asante said the biggest potential source of jobs is industry -- and not services, which currently dominates activity in the economy.

In June, the government launched an industrial policy that it said is purposed “to transform Ghana into an industry-driven economy capable of delivering decent jobs under conditions of widespread, equitable and sustainable development.”

Job-creation is also the main theme of the government's 2011 budget and economic policy statement.

“It will be interesting to see the extent to which policies mentioned translate into jobs and youth empowerment,” Nana Owusu Afari, president of the Association of Ghana Industries, said of the budget's intentions.

State support is critical, he affirmed, to expand industry and create sustainable jobs.

Story by The B&FT/Ghana