Economic growth fruitless if unemployment prevails - ADB officials

Channa Kasturisinghe

UNEMLOYMENT: The Asian Development Bank's (ADB) chief economist Ifzal Ali addressing the launch of an ADB publication on Asian labour markets recently in India said countries in Asia spend too much time worrying about issues such as fiscal deficits and inflation but they do not spend enough time tackling unemployment.

He said strong economic growth alone would not solve the problem and Governments need to make job creation a "central national objective" backed by time-bound policies.

According to ADB statistics at least half a billion people out of a workforce of 1.7 billion in the countries in this region including Sri Lanka are unemployed or under-employed and 245 million new workers are expected in the next decade.

Sri Lanka achieved over six percent growth in 2005 and Treasury Secretary Dr. P. B. Jayasundera last week said the country is poised for a seven percent growth in 2006.

Even if his assumptions on economic growth would be accurate the major challenge the country would be facing will be to cater to several thousands of youth who are waiting to enter the job market. However, we in Sri Lanka can be happy about the last years' performance as far as employment is concerned.

According to the latest figures issued by the Central Bank, the unemployment rate estimated by the Special Labour Force Survey declined to 7.7 per cent in August 2005 from 8.3 per cent in 2004.

This drop is mainly due to the Government's commitment in providing employment especially targeting educated youth. According to the Central Bank youth unemployment, which has been a long standing problem among educated youth eased to some extent with the implementation of the graduate employment programme in the public sector in 2005.

Moreover, the unemployment rate among persons with GCE (O/L) and GCE (A/L) and higher qualifications recorded the highest declines last year.

One major obstacle in providing jobs to youth is the lack of English and IT knowledge as a large number of opportunities exist in the corporate sector which seek youth these skills. This fact was recently highlighted by the ADBs country representative Alessandro Pio at a recent meeting.

Although, the country expect a higher economic growth this year the continuation of providing jobs to educated youth would be critically important in the back drop of escalating cost of living caused by factors such as world oil price hike.

The ADB Chief Economist rightly pointed out that failure to tackle joblessness "will undermine the very social fabric," increase political and social turmoil, paralyse policy-making, spur capital flight and "undermine the high rate of growth." Another fact he revealed was that it was becoming tougher to create jobs and each additional percentage point of economic growth creates less employment than in the past.

This is a challenge which is faced by not only Sri Lanka but also larger economies such as India and China. Ali's observations would be very useful to the present Government in Sri Lanka and all the political parties aspiring to come to power in future.

If they are to remain in power for long periods of times they should worry more about minimising unemployment.

Achieving a higher percentage of economic growth would not be sufficient to satisfy the youth who are striving to find a way of living.

According to Ali in India following the 2004 defeat of the Hindu nationalist Bharatiya Janata Party Government many voters said they felt left out of the boom.