78 Millions Infused into Liberian Economy

78 Millions Infused into Liberian Economy but where are the Jobs, Madam President?

Today, Liberia has about 1.13 million people who are willing and able to work, but majority of them have no gainful employment. So every day, millions of our unemployed brothers and sisters – including those entering the workforce for the first time and others who lost their jobs due to the incompetent management of our economy anxiously scan the pages of newspapers and websites for job advertisements; less than five percent of applicants will be successful, but at least 100 of thousands more unemployed people will join them in the new year of 2014. Why are unemployment and inflation rates rising while productivity continues to decline? Why have our vast resources not created massive employment opportunities for Liberian? The most despairing aspect is the fact that the worst affected are Liberian between the ages of 21 and 40 years – the future leaders of our country.

In 1962, our population was about 1 million, a large percentage of which was employed. The employment to population ratio grew until the early 1980s when it started to decline. Presently, Liberia’s total population is nearly 4 million. Out of this total, 1.13 million is the labor force of the country, and only 195,000 people are in paid employment. According to ILO 70% of Liberia’s population is under the age of 30. The effects of unemployment on the person and the country can be catastrophic. At current rates, even if government policies, enabling environment and direct efforts manage to create one hundred thousand new jobs a year, it would take 40 years to close the existing job gap. Except that by that time, at least millions more Liberians would have joined the workforce.

According to the Labour Force Survey carried out in 2010, the labour force participation rate was 62.8 per cent, the employment-to-population ratio was 60.5 per cent and the unemployment rate was only 3.7 per cent. The labour force participation rate in urban areas at 54.9 per cent is lower than the corresponding rate in rural areas (71.2 per cent). The male labour force participation rate is higher than the female rate (66.1 and 59.9 per cent, respectively), but the unemployment rate of women is higher than that of men (4.1and 3.4 per cent, respectively). The vulnerable employment rate – the share of own account workers and contributing family workers in total employment – is high at 77.9 percent, as is the share of workers engaged in the informal economy (68.0 per cent).

Perhaps, today’s figures are too scary for government to release, but unemployment is too critical for government to play political ostrich with. The average years of studies and Return on Investment (ROI) for a university degree in Liberia are both 5 years, yet it takes an average Liberian graduate an average of another five years to find what can be considered a stable job. Many others, especially those without political ‘godfathers’ remain for longer periods without jobs no matter how qualified they may be. Not only are large numbers of Liberian graduates are unemployed or underemployed; many are unable to apply the skills learnt in school. There are also large segments of the employed population who are simply wasting away, doing things they really have no business doing – just to remain alive.

Another worrying issue is our national productivity output gap. Unemployment causes substantial economic losses. We should be producing goods and services for at least another 3 plus millions people, but because unemployed people do not earn money, that gap remains unfilled. And there seems to be no hope in the immediate future. All government’s promises of ‘creating jobs’ have remained unfulfilled. Anyone familiar with data on unemployment will know that all the supposed falls in the unemployment rate are statistical manipulations because they do not reflect any actual job gains. The jobless rates in Liberia have not fallen! Liberia Institute for Statistics and Geo-Information Services (LISGIS) announced that the official unemployment rate of Liberia has declined from 85% to 3.7%; one wonder what kind of country is our in which leaders are far away from reality.

The Statistics House wanted the international partners to believe that things are getting better in Liberia, when by any stretch of the imagination huge majorities of the people are living in poverty. College graduates are walking the streets and cannot find jobs, not to mention high school graduates. Proof of the desperation was demonstrated by the “Vacation Job” scheme started by the President Madame Ellen Johnson Sirleaf. The scheme was intended to offer ten thousand vacation jobs, but over twenty five thousand applied. As a result of the excess, the management of the scheme was in crisis and the end result was the cancellation of the entire process by the President.

The millions of people with no jobs represent a serious impediment to Liberia’s economic development. Apart from the immense waste of the country’s human resources, it generates losses in terms of lower output which results in poorer incomes and increased poverty. It also causes social decay and inhibits national cohesion. In fact, unemployment in Liberia is a national security threat. So what should government do to create jobs? In virtually every economy, it is small businesses and entrepreneurial ventures that account for nearly 70 per cent of new jobs, not the government and not the large companies. It is therefore sensible to remove the obstacles to doing business and sustaining small and medium enterprises. These obstacles include infrastructure constraints, especially electricity, a dysfunctional and corrupt public service that frustrates businessmen, and lack of affordable, long term finance for any venture other than trading!

Liberia was ranked 144 out of 175 countries in the IFC Ease of Doing Business Index in 2013, far below Ghana (62); Botswana (65) and Sierra Leone (137). In the World Economic Forum (WEF) Global Competitiveness Index 2012–2013: Africa and selected comparator economies, Liberia ranked 111 out of 131, while South Africa moved up four places in the same period, and is now in the top 50. In terms of competitiveness within Sub-Saharan Africa, in 2013, Ghana, Zambia, Botswana, Namibia, Kenya, The Gambia, Rwanda, Gabon are ranked well ahead of us. The WEF’s observation about Liberia’s dismal position has Madam Sirleaf’s work cut out for her. We need to improve protection of property rights, fight corruption, attack undue influence and government inefficiencies. Liberia was ranked low in terms of security, infrastructure, health and primary education quality.

One of the much-touted actions of government of recent was the provision of USD 78 million in order to infuse the economy. The Finance Minister justified the government action by the stating the “urgency need to pay vendors and civil servant salaries especially during the festive seasons to give more purchasing powers to the people, which will ensure revenue for government in return.” Raw cash does not create jobs, but entrenchment of consistent and right policies, frameworks and regulatory environments do. Why should government borrow just to pay public sector wages, while spending on capital projects that would create direct jobs and the environment for indirect jobs, remain critically underfunded?

Employment and unemployment are indicators, not predictive factors for economic success. In most places in the world, job growth leads to economic growth and vice versa. So we cannot claim that our economy is growing when it is not creating jobs. Government needs to raise capital expenditures substantially – by building more schools, roads, bridges, water systems, electricity networks and other projects that facilitate job creation. Worrying about deficits but doing nothing about business opportunities amounts to doing nothing about the economy.

The creation of an environment in which innovation and entrepreneurship (meritocracy) flourish – thereby creating jobs and stimulating economic growth is the responsibility of government: only a naive leadership would abdicate the responsibility of providing jobs for men and women who are willing and able to work. It has come to a point where government must tie every dollar of public expenditure to job creation: If several companies are bidding for a public contract, apart from lower costs and competence, one of the criteria should be the number of jobs each firm would generate. Government must consider awarding the contracts to the firm that promises to create the most jobs – and follow up to ensure that the jobs are actually created. If this strategy is adopted by the Liberian government in the award of contracts, more jobs would be created weekly and this would have multiplier effects on the economy as well.

At the moment, many sectors capable of creating jobs for Liberians remain untapped. Tourism alone can create millions of jobs, but which tourist will visit a country that is as unsafe as Liberia? Agriculture – potentially the largest employer of labour has been left largely at subsistence. Yet, this is a sector that can earn more foreign exchange for Liberia than Iron Ore or rubber. Education – where thousands of vacancies also exist or can be created is chronically underfunded, and the informal sector – which is three to four times the size of the formal economy, has been left to its own devices because formalization channels are difficult to reach – so an important source of tax revenues remains ignored.

There is an urgent need to reform the various agencies involved in creating employment and alleviating poverty. Youth, Employment, Skills (Yes), Technical, Vocational Education and Training (TVET) as it currently stands can only create what amounts to a drop in an ocean; the

The Division of Micro, Small and Medium Enterprise (MSMME) must help nurture small and medium businesses in Liberia because MSMME is key to job creation and the Bank of Industry must step up to save the real sector from imminent collapse. In short, all these agencies must come together – urgently – to review the job creation master plan for Liberia. We need to create a minimum of 3 million jobs every year to begin to tackle the unemployment situation in the country.

It is easy to say we should give President Sirleaf more time, forgetting that she has led this country for nearly 7 years. The question on the lips of Liberian is: Madam President, where are the jobs you promised?

Happy 2014 to all Liberians!