‘Quick fix’ solutions for high unemployment not sustainable – Industry expert

Econsult has said that the unemployment crisis currently bedevilling Botswana cannot be solved quickly or easily. In a feature ran in its quarterly economic review newsletter for the first quarter of 2015, the private economic and development consultancy firm was emphatic that any solution should focus on the long term to ensure sustainability. It warned that any attempt to find “quick wins” will not guarantee sustainable, high quality jobs but instead will distract attention from the underlying reforms that are needed.

The think tank points out that unemployment in Botswana is high as demonstrated by a number of surveys. While household surveys have shown a drop in unemployment over time, for example the 2009/10 Botswana Core Welfare Indicators Survey (BCWIS) which showed a drop in unemployment compared to the previous similar survey in 2002/3, the think tank is quick to point out that “house-hold surveys are based on a sample of the population and therefore have a margin of error, and [that] censuses are more comprehensive and accurate, [because they are] based on the entire population.” And, indeed, according to Econsult, the National Population and Housing Census shows that unemployment remained virtually unchanged between 2001 and 2011. The Keith Jeffries led outfit posits that the face of unemployment is youthful and female, emphasizing that the youth unemployment rate is three times that for adults. “Of those who are unemployed in Botswana, the majority (61%) are aged 15-29,” reads the feature, further warning of negative effect on both social cohesion and future output if youth unemployment is not addressed urgently.

The feature points to low employment growth in the formal sector, averaging 2.3% between 2001 and 2011, which is lower than the 3.6% annual growth rate of total employment. Employment growth rate in the same sector also dropped from 59% in 2001 to 52% in 2011. Fastest growing sectors in terms of employment growth, according to the feature, are mining, private education and utilities, with over 4% growth, but the issue is they remain very small. “Sectors like construction and health had negative employment growth rates. Parastatals play an important role in job creation, as existing organizations expand and new ones are established,” reads the feature, which emphasized that government has reached saturation levels and, therefore, cannot be depended upon for employment creation. “Future job growth is tied to diversification and growth of the economy and, particularly, employment creation in the private sector,” suggests the Econsult trio of Jeffries, Bogolo Kenewendo and Thabelo Nemaorani.

The feature estimates that about 40 000 young people graduate from education and training annually, 30 000 of which enter the labour. Only 5000 of these will get formal employment jobs, with of these 2000 are created by the economy while 3000 is freed up by retiring workers. The rest, the think tank says, will end up unemployed, in the informal sector, or in agriculture. Econsult extends its discussion about employment growth beyond just job creation; it also focuses on job losses. For the quarter under review, it says, an estimated 1350 jobs were lost. “It is estimated that in mining and related industries alone over 1000 jobs have been lost in recent months, mainly from the closure of the Teemane Manufacturing Company (350) and Discovery Metals Limited (400), coupled with retrenchments in some other diamond manufacturing companies. In other manufacturing, there have been reports of 150 jobs lost due to the closure of Cadbury Botswana. Services have also been affected; some 200 jobs have been lost due to business closures and retrenchments,” reads the feature. At present, according to Econsult, there are simply not enough high quality jobs being generated for all the people that want them. It therefore points to a need for policies that are supportive of job creation by the private sector, through the creation of an appropriate enabling environment and the provision of incentives for the private sector to operate and grow in Botswana, providing sustainable jobs for the long term. Among some factors that have led to this scenario, Econsult says, are: 1. low productivity in agriculture, which means that income-earning opportunities are limited despite a high demand for labour in the sector, 2. slowing private sector growth hence limited creation of net new jobs, 3. mismatch between the supply of skills coming out of the education system and the kind of skills needed in the labour market resulting in graduates who do not easily find employment, and 4. fundamental concerns with the education system including the quality and curriculum at all levels.

In the feature, the economic think tank suggests a number of remedies: 1. Timely implementation of doing business reforms as recommemded by the National Doing Business Council (NDBS) which include reducing licence restrictions, assessing the impact of any proposed new regulations on the private sector, electronic business registrations and paying of taxes, improving public service efficiency and making the public service supportive of the private sector, easing cross border trade requirements, and stable access to utilities (power, water, bandwidth), 2. “Roll out the red carpet and not red tape” for foreign investors, 3. Relax immigration restrictions to make it much easier for foreign investors to come and setup business in Botswana, and 4. Avoid using the immigration system to throw out existing foreign investors, as has been the case recently, as this has been a major contributor to job losses.

Furthermore, Econsult has opined that existing schemes that are meant for employment creation should be reformed and “stop running them like social welfare programmes [and] make them more employment and productivity focused.” For instance, the think tank suggests, the Internship Scheme should be made more employer-friendly, with employers given more choice in selecting the graduates that are placed with them, and Ipelegeng participants need to be engaged in productive activities that add value to the economy, where there is some sort of skills transfer. The same applies to Tirelo Sechaba and Government Volunteer Scheme.

The think tank also pointed out that lack of data on the labour market undermines evidence-based decision making. Econsult suggests “more frequent labour force surveys, informal sector studies and tracer studies which will tell us what happens to school leavers and tertiary education graduates once they leave education: how long do they spend unemployed, what kinds of jobs do they end up doing (are they related to their training?), and what level of wages/salaries do they earn in different occupations?”