The unemployment rate is an economic indicator that refers to the number or proportion of people in an economy who are willing and able to work, but are unable to get a job. The issue of reporting job numbers in Zambia has been done mostly via political rhetoric rather than through official verifiable reports, leaving us blind from a policy perspective and relying on anecdotal evidence of how well our economy is performing.
One would expect that the gathering of credible jobs data would be an issue of high priority to the Central Statistics Office (CSO), however apparently that’s not the case. To date we haven’t seen any data from the past year let alone recurrent reports on numbers of jobs from the CSO. The approach usually taken by the CSO of periodic and inconsistent surveys always produces redundant data due to the huge time difference between data collection date and reporting date.
The manner in which the employment figures have been presented by the Zambian government has been unprofessional, and have shown serious flaws. We need to redefine and coordinate the roles of the Labour Office, CSO and important institutions that have access to employment data such as workers compensation, ZRA, NAPSA and Recruitment Agencies. Undoubtedly we have a number of statisticians available within the public service who can coordinate this data and produce scientific and credible reports. The challenge will always be how to measure the informal sector due to lack of data from these areas.
The latest ‘jobs reports’ have come through political rhetoric by senior ministers in the PF government. Within the past 10 months of PF rule, then Minister of Commerce Bob Sichinga claimed that PF had created more than 20,000 jobs, with the bulk coming from Maamba Colleries. In February 2013, President Sata claimed that since assuming office his Government had created 50,000 jobs. The latest Government report on jobs in April 2013 stands at 195,000, a miraculous rise of 145,000 in less than two months! The breakdown of this 195,000 reveals an interesting result: Central Government – 9716; Local Government – 5257; Private Sector – 24098; Through ZDA – 5510; New districts – 5858; Parsatatal sector – 29305 and; Arts 116,000.
To put it quite simply, the job creation statistics being claimed by the PF government are impossible and untrue.
There are a number of disputes over the latest jobs report. Its format is confusing and unprofessional. One would easily suspect double counting involving the figures for local government and for new districts. What could be the distinction between ZDA figures and private sector figures? The figures attributed to the Arts industry are too disproportionate to the rest and requires an explanation. We all know how employment in the arts industry is seasonal and require some special method of measurement. What investment activities in the arts are supporting this peculiar employment growth? This report has no touch of a qualified economist and appears to have been dreamt up. The ZDA figure represents pledges which in most cases are always overstated. Parastatals have employed 29305, a figure that cannot be absorbed by the current few parastatal which are already over-employed. Let’s have the names of these parastatals.
Now, let us try to numerically understand the employment situation. Zambia has a population of 13 million, with a labour force of about 50% of the population, leaving some 6 million people who are able to work. Of these 6 million, 14% are unemployed. That is almost one million people are actively looking for jobs. Of the employed about 700,000 are in the formal documented sector as stated by MMD Government in 2011. Leaving over four million in the informal sector. The facts on the ground are that people in the informal sector would abandon their ventures when they get a new formal job. The other important thing is that most informal sector jobs are seasonal and sometimes one-offs. So the creation of new jobs taking into consideration of the current Zambian labour maket structure is bound to be misstated.
Further there is need to understand the sensitivity of the SMEs or informal sectors to the performance of the exchange rate. This sector which is dominated by trading activities and high import content would argue that since PF came in, the exchange rate has not been in their favour and growth may have been hampered on that basis alone.
The report further attributes the increase in jobs to the creation of new districts. Again facts on the ground indicate that apart from the employment of District Commissioner and a few support staff the 5858 figure appears to be grossly overstated.
The government’s role in job creation comes in the form of conducive economic policy and government capital expenditure. The ability of government to create jobs depends on how viably they fund their projects. Government expenditure on infrastructure and procurement from local businesses need to be encouraged. The cost of running government must be curtailed to save up for commercial and capital projects. In addition, government needs to fund viable sustainable projects. Based on this argument the PF government needs to rethink the $ 15 – $ 20 million Mongu Stadium. The railway infrastructure investment of $ 120 million needs to be backed by a robust turnaround strategy than what is currently being proposed. The bloating of cabinet must be stopped and so should the unnecessary bye-elections. Importing of services by government must be reduced in the spirit of promoting the local industry.
The PF’s monetary policy appears not to be well coordinated or aligned to fiscal policy. Ministry of Finance has done a very bad job at aligning economic policy. The decision to impose a minimum wage did not take into consideration the management of inflation. Price control related pronouncements do not generate trust in the ability of Government to manage inflation. Investors don’t even have confidence in our industry policy especially after the Zamtel takeover. The ban on dollar transactions did not take into consideration that most businesses, including the parastatals, e.g. ZESCO and Zamtel had dollar denominated financing. As a country with substantial technology gaps and low rates of import substitution we can’t afford a weak currency for now. The country risk is a major consideration of any big business. Today we have businesses which are bigger than most national GDPs and the demand of such entities include stable leadership and good governance. Softy as it may seem, when local and foreign investors hold back as they are suspected to be doing, there is a slowdown in growth, trade and government revenue. This directly impacts on jobs.
The jobs report is a very important tool in assessing the performance of the economy, firstly because it easy to understand, secondly it gives an indication of level of consumption in the economy, which is a key economic growth factor and thirdly will give indicator in current economic policy is working. Statistics of the employment levels can be easily explain poverty levels more than GDP growth statistics. This is because GDP is an averaging ratio which can easily be influence by a few rich entities in the economy. A perfect example is how profits from the mines, despite ending up in foreign hands, will still be recorded as part of GDP.
Solution to unemployment is to implement labour intensive business ventures, retaining in Zambia as much production activities as possible and encouraging local procurement.
This article was contributed to Zambia Reports by a financial analyst who wishes to remain anonymous.
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