THE MYTHS OF JOB CREATING GOVERNMENT

Author(s): Jasper and Edem Promise. 

Across the globe, it is perhaps true the majority especially the youth are in search of a job. However, no nation is poor because other people has monopolize the wealth of the nation.

This myth has been with us for some time and now palatable to the ears and feelings of citizens especially, in the context of developing economies that the government is capable of creating jobs.

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Over the years governments all over the global, especially developing economies have been burdened to fulfill this myth. Any time you are told government is creating or will create job, just know that it is a hoax. Government exists to create conditions that will help the firm (here l referred to businesses) to flourish in order for them to employ labour. Where this significant arrangement failed, the influence of the firm to support wealth creation of a nation goes down and living conditions of the citizenry is affected negatively. In really, the government create an enabling environment here in refers to us policies and ensuring the enforcement of such policies and regulations. The irony is that, politicians in these countries always imply the issue of job creation in their manifestos and or what can be otherwise referred to us campaign promises. Unfortunately, there are always missing phrases on regulations and policy implementations to ensure stable economies and which will eventually protect businesses in the countries.

The panic reaction is government providing short-term gap measures to lessen the plights of the citizenry. Government means of providing these services are through loans, aids, grants, foreign direct investments, taxes and levies. When government promises jobs, then it’s a hoax asserted Brennan Sorge.

All over the world, new forms are constantly being made, and older ones are dissolving, but all are shapes assumed by one thing - the thought of man. What do we think about the new order?

Today, the world has enter the forth industrial era thus Industry 4.0 (the era of automation and optimization). Are the youth prepared especially in Africa to respond to the new business models?

Currently, most developing countries have over exploited the debt instruments both at domestic and international levels. Despite, developing countries especially in Africa for the past decade had seen their gross domestic products grew at estimated average of 5% year on year, these countries have not recorded much development over the same period.

In these countries, you would have witnessed high unemployment, inequality, crime, corruption, "political supremeness", economic and political instability, high poverty and related incidences etc.  These are common spectacles and denominators we all have witnessed in these countries and of course some of us are living in. The condition created is referred to as “growth without development ".

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The bizarre situation of governments of these countries is, the large part of the gross domestic income is being used to service the accrued interest due. And the rest is consumed by over bloated government "wage expenditure". Most of the foreign direct investments either go to government initiated projects and public wages which are not economically viable or to support the activities of transnational organizations that at a period repatriate these investment in a form of profits to their mother companies. Hence in these countries capital flight is high. The reason being that, the economies of such countries is volatile and or unstable. As a result, the local currency is under pressure. Another ‘window’ is high currency instabilities and depreciation of local currency against all major trading currencies. And this frustrate local and start-up businesses forcing them to closure.

To madden the situation at the same period, the growing middle class is growing love to spend. Tastes and preferences are so important for understanding the behavior of the middle class. Since the firm is non-functional in these countries, government import bills are sky rocketing and partly contributing to the instability of the local currencies as being witnessed in these developing economies.

Government behaviour had also affected the financial sector. The biggest client of the financial sector in these countries is government. In that regards, the common spectacle is that interest rates remain high even though inflation is going down and the central banks in these economies base rates are being lowered. The nonperforming loans provision on the balance sheets of these banks is heartbreaking. Businesses can't procure capital at such a cost. The situation then force businesses to diverse into new areas of businesses - importation. Most businesses, will prefer to import finished goods from countries like India, China, Bangladesh, Thailand, and Taiwan and focus on the distribution channels as route to turning around capital invested.

The agriculture sector which used to be the royal diadem of these countries is deteriorated over the period. It is claimed to be the reservoir of labour employment now marginalized and only lips service is paid to it. The value chain is not developed to benefit the labor absorption. Even those with courage and pushing their souls to survive are beginning to look for other alternatives. Some of the issues faced are post-harvest losses, inappropriate technology and innovation, high input prices, lack of access to market, poor yield quality, etc. As a result, the consumer price indices in these countries are very high. This serves as a fuel for the high inflation witnessed in these countries. In some of these developing countries facing leaping economics and volatility, cost of living is high and standard of living becomes low. For example, with statistic from numbeo.com comparing India and Ghana, Consumer Prices Including Rent in India are 55.42% lower than in Ghana. However, Purchasing Power in India is 198.38% higher than in Ghana. To put this in perspective, in my experience in India, Bangladesh, Colombo etcetera, cost of goods and services are on average 2-3 times cheaper compare to Ghana. Transportation for a destination of 5 kilometers cost 10 rupees (that’s about an equivalent of GH₵ 0.80 (80 pesewas, Ghana currency)) while in Ghana the same destination length of 5 kilometers cost 2 Ghana Cedis).

The fortunate or unfortunate situation is that some of these countries have discovered new resources such as petroleum, iron ore which are largely non-renewable resources with expiry dates stamped on them.

Government is at a point of looking to more sustainable ways to finance its expenditure. The first option these countries may be looking at critically is taxes and levies. And this create tax burdens on the majority. And government has never been creative about anything in its operations in these countries. With this underlying forces and factors, we foresee citizens of these countries paying more for services rendered by government to them. The other challenge existing in this countries is the tax loop-holes created. While the large part of this countries’ economies are made of the informal sector, there is high in-adequateness of regulations and proper management of these sectors.   

This will usher these economies into what we coined as Citizens Tax Fatigue. Currently, sections of the citizenry have started complaining about the unfolding phenomenon. Citizens may refused to pay the taxes and levies because of loss of trust in their governments. Therefore, it is imperative for government to allow the legal system work to give confidence to both citizens’ confidence and trust and as well business communities to operate.

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For the government of these countries to get out of this predicament, they need to create the right conditions such as the right public policy, ensuring citizen participation, enforcement of regulations and creating a friendly start-up environment among others in order for the firms to flourish. In so doing, labour can be employed meaningfully. Income levels will increased over time. Citizens living conditions will therefore be expected to improved greatly hence meeting the standard of living. This comes as a summary to Jim Fitzgerald in his work ‘’Who Is Responsible For Job Creation?’’ - That Government holds the key to engineering growth and the failure to create jobs is a significant result of failed policies. The corollary is that failed government policies are, also, responsible for job losses and businesses collapse. That is, businesses are pawns of government, marionettes manipulated by the government. Businesses cannot grow unless governments adopt the “correct” combination of policies. In some quarters, that means eliminating corporate taxes. In others it means granting tax credits. That is, job creation is not possible unless business is given the freedom from any responsibility it may have to contribute to the very society that makes their success possible. This means more citizens will get the needed job. There seems to be no expectation that businesses, currently are thriving on most of these countries policies hence making it somewhat difficult for both businesses and citizens.

Finally, government revenue from taxes and levies will increased. To translate this into perspective, these economies would be better placed to achieve "growth with development" by satisfying the aforementioned conditions. In so doing government will become less burden to function the way it is designed to function. In the long run, the economies of these countries will be well position to favor employment of it citizens and creation of more industries. The engine of every country’s economies were/are built by the private sector participation. No countries government can promise to provide jobs to it citizen if there are no better policies and good government machineries protecting and providing the enabling conditions to businesses to function.

Therefore, for citizens in these countries to thrive, there need to be citizen participation in government and hence citizenry must hold their government or leaders responsible and accountable for right policy implementation for businesses to dominate. By doing that, jobs can be created. The role of government is to prepare and adopt policies that support business growth. The myth of government job creation is therefore a hoax!!!

About the Authors:

Jasper Tetteh Ahafianyo holds a Master’s Degree in International Public Administration and Management from Tsinghua University, Beijing, China and Bachelor of Science Degree in Finance from the Ghana Institute of Management and Public Administration. Jasper worked with the School of Public Service and Governance, GIMPA as the Program Advisor in charge of Danida Fellowship Training programs, and other capacity building programs. Jasper now works with the YALI West Africa Regional Leadership Center as the Curriculum and Content Development Manager. He has over ten (10) years of teaching, consulting and advisory experiences. Jasper also has practical experience in writing teaching cases with the Beijing Case Center located at the School of Public Policy and Management, Tsinghua University.

Promise Edem Nukunu is a published Author. He has three books to his credit including ‘Driving into Greatness’ and ‘Fighting for Freedom’. A Co-founder of CedarHill Education and Research Institute and serves as the Head of Training and Capacity building for Medical Journalists’ Association-Ghana. Edem is a YALI fellow and successfully completed Public Policy and Management program from the YALI Regional Leadership Centre at The Ghana Institute of Management and Public Administration (GIMPA). He holds a certificate in several management areas including a professional Certificate in Social Entrepreneurship and Project Management.