Transcript employment policies for sustainable development: the experience of

“APPROPRIATE EMPLOYMENT POLICIES FOR
POVERTY REDUCTION: GHANA’S
EXPERIENCE”
WILLIAM BAAH – BOATENG
DEPARTMENT OF ECONOMICS
UNIVERSITY OF GHANA
Organization
•
•
•
•
Introduction
Linking Growth with Employment
Economic Activity of the Poor
Employment Policies for Poverty Reduction
and obvious Pitfalls
• Concluding Remarks
Introduction
• Ghana is a 3rd world country with per capita income of
approximately $400 with a population of 20 million.
• An agrarian economy with average growth rate
refusing to beyond 5% mark since 1990
• Agriculture and informal sector are the two distinct
source of employment
• The economy is characterized by annual average of
230,000 new entrants into the labour market with
formal sector able to absorb just 2%
• Hence rising unemployment and underemployment
and growing informal activities with relatively low
wages
Real Growth Rate
10
6
4
2
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
-4
1980
0
-2
1979
Growth Rate
8
-6
-8
Ye ar
Unemployment Rates & Informal Share in Total Employment (% )
Unemployment
Informal Empl.
90
88.4
10.4
UnempRate
10
8
86.3
8.2
88
86
84
83.8
6
82
80.5
4
80.3
4.7
78.9
78
2.8
2
80
1.6
76
0.8
0
74
1984
1987
1989
1992
Year
1998
2000
Inf. Share
12
Distribution of Employment and GDP by Industry (%)
Year
1984
1992
1998
2000
Agriculture
Industry
61.1 (47.9)
12.8 (19.6)
62.2 (37.8)
10.0 (25.0)
55.0 (36.7)
14.0 (25.1)
50.7 (36.0)
16.3 (25.2)
Share of GDP in Parenthesis
Service
26.1 (22.1)
27.8 (27.0)
31.0 (29.1)
33.0 (29.7)
Fig. 8.3: Poverty Incidence by Main Economic Activity (%)
(Based on Upper Poverty Line of ¢900,000 per capita p.a.)
Incidence (%)
80
68.1
64.0
70
59.4
60
51.7
50
38.6
38.4
38.7
39.5
40 34.3
30.3
28.6
25.2
30
22.7
18.8 20.4
20
11.3
10
0
Public
Sector
Empl.
Private
Formal
Empl
Private
Informal
Empl
Export
Farming
Food Crop
Farming
Non-farm
self-empl
Main Economic Activity
NonWorking
National
1991/92 1998/99
Contribution of Employment Type to Aggregate Poverty (%)
(Based on Upper Poverty Line of ¢900,000 per capita p. a.)
Type of Employment
1991/92
1998/99
% Change
Public Wage Employment
9.1
6.2
-2.9
Private Formal Wage Employment
2.3
1.4
-0.9
Informal Wage Employment
2.3
1.9
-0.4
Export Farmers
7.8
6.9
-0.9
Food Crop Farmer
57.3
58.1
+0.8
Non Farm Self-employed
20.5
24.5
+4.0
Non-working
0.7
1.1
+0.4
Employment Policies
• Effective employment policies should involve the
interaction between labor demand & supply
• Strategies to promote labor dd. should include:
– Growth enhancement
– Improvement in labor productivity and absorption in paid
labor market
– Promotion of self-employment
– Introducing special employment programs for the youth and
the vulnerable
• Supply side
– Population control
– Human resource development-education and training
– Removal of institutional rigidities and regulations
• Ironically, Ghana has not had any employment policy
apart from various schemes undertaken to improve
labour absorption such as the National Service Scheme.
• Employment has been treated as passive outcome of
sectoral policies and disjoint.
• Pre-reform economic policy for employment generation
was dominated by
– the promotion of ISI with huge public sector investment and
state control
• Outcome was a dramatic increase in urban formal
employment particularly in the protected industries and
in the public sector.
• ERP/SAP were expected to lead to shifts in inter-sectoral
employment as relative prices changed in the product market.
• Outcomes:
– shifts in the distribution of the labour force was not significant with share of
agriculture remains high.
– The service sector (trade) has become the centre of employment with the
reduced absorption capacity of manufacturing due to over-liberalization of
external trade and high cost of production
– Informal employment and unemployment generally increased due mainly to
retrenchment and privatisation (accounting for 89% of the loss of 235,000
formal sector jobs)
– The results was high poverty incidence in the early 1990s (most of the
retrenched workers were cleaners, labourers, messengers, drivers, sweepers
and other grades in the lowest echelons in the public service with little or no
employable skills, hence joined the army of unemployed or informal sector
where incomes are low
– E.g. the % of redeployee HH in the lowest 3 decile of the income per capita
scale increased from 15% b4 redeployment to 32% after redeployment
– Wages of workers increased but matched by increased workload
Some Policy Intervention
• The agricultural sector programme, which focussed on national
food scurrility, and employment and income generation in the
rural areas through increased agricultural research and extension,
smallholder credits and the provision of other services.
• Alternative Employment Programme (AEP) aimed at placing the
outplaced public servants who would be affected by the PSMRP.
• Direct Employment Creation as a direct intervention measure to
address the minimal impact of growth on poverty and
employment. PAMSCAD
• Poverty Reduction Programmes through the National Poverty
Reduction Programme (PRP) and the Social Investment Fund,
developed in 1995, aimed at reducing poverty incidence,
strengthen the capability of the poor and vulnerable to earn
income, and reduce gender and regional disparities in well-being.
Employment Generation Under GPRS
• Employment creation is treated as the core strategy to
achieve poverty reduction
• Strategies adopted to meet the objectives include,
– improvement in macroeconomic stability for growth;
– modernizing agriculture; and
– Provide sufficient incentives to stimulate private sector
entrepreneurial development
– enhance skill and entrepreneurial development for the youth.
• Pitfalls
– Failed to show how employment would be generated with
specific targets for each sector (perhaps due to lack of
employment data)
– Informal sector was not seriously considered: did not
adequately target the poor (no subsidies and ready market
for food crop farmers)
– On the supply side, measures to minimise
institution rigidities was absent. New labour has
been passed but yet to see implementation
– Technical and vocational education and training
was not based on demand driven approach.
– Implementation of the GPRS has over
concentrated on macroeconomic stability.
– The anti-employment conditionalities demanded
by donors tend to be counter productive
– Lack of effective coordination in
implementation (e.g. NDPC and MFEP)
– lack of capacity and resources has also
undermined effective implementation
particularly at the at the district level.
• There is the need to build capacity for
implementation and monitoring in the next GPRS
• Employment consideration should be strong but not
treated as an outcome of sectoral policies
• Preparation of GPRS should be based on a sound
data base to be able to set employment targets
• Implementation and implementation of employment
strategies should be coordinated by Employment
Ministry.
• Training program should be driven by demand
considerations rather than supply
Concluding Remarks
• Critical examination of labour absorption or demand
among the various sectors of the economy
• Employment policies should be pro-poor (e.g.
development of the informal sector is crucial - agro
business, handicrafts including woodworks and textiles)
• Enhancing informal and agricultural sector activities
through the provision of effective entrepreneurial
training based on demand driven, improvement in rural
infrastructure, and reforming local government
regulations that adversely affect the operations of
informal enterprises
• Take a critical look at the trade liberalization policy
since it is killing some vital sectors (e.g. garment and
poultry)
• Re-orienting formal education by emphasising on
practical training and also encouraging the trainees
to take active interest in informal employment
• The Implementation of FCUBE should be seen as
working to increase the current school attendant
rate of about 65%
• Improving employment data collection and
analysis, and establishing a sound labour market
information system to enhance labour mobility,
minimise mismatch and policy design.
• Presidential special initiative should not remain a
pilot scheme
• Proper land policy