The emerging perspective of our unemployment situation

Lionel WIJESIRI

In a year of turbulence, both internally and externally, we have done reasonably well. But, for a more stable economy, we should plan to do better and bring down the rate to 4 percent within the next two years. That is going to be a tough assignment.

Sins of perception

In my opinion, the unemployment scene in Sri Lanka suffers from certain sins of perception. Let me list four of them. One, we still seem to have great faith in labour-intensive, low-productivity technology, and believe that is the best way to minimise jobless growth.

On the face of it, the argument seems reasonable: If labour productivity is reduced, everyone will get work to do. Fine! But when productivity decreases, national income too will, and the remedy becomes worse than the disease.

Two, the share of agriculture income in the economy is shrinking. In 2009, it was 33% of our national product while services were 41%. The current logic demands that we concentrate on employment generation in the services, and find ways of weaning labour away from agriculture towards services.

Three, we hold to the popular view that education, any type of education, will make a person employable. Sri Lanka is one of the few countries in the world where even highly educated persons often fail to get employment. They are unfit for any work, except office work and all of them cannot be absorbed in services. The extent to which education in the schools of Sri Lanka raises the productivity of the educated in the subsequent work opportunities is not clear. The educational planners have aimed to reorient education to include training relevant to the needs of the economy, but it has not been possible to implement the proposed policies.

Four, we have blind faith in dole. We may call it by any name - Janasavi, Samurdhi. Although doles have never delivered results, we return to "targeted subsidies" again and again. We are trying to stem the disease; we are not trying to promote good health.

New Ideas

We can overcome these complex failures only by introducing new ideas. We are in trouble today because we are unwilling to change in the past. Every new remedy will have its own faults. It is easy to pick on them. It is also comfortable to accept the faults of old habits. Yet, the question is not that of finding a perfect alternative, but a better one: we should not fear to try a better solution only because it is not as good as we want it to be.

Let me suggest a few steps: One, invest massively in rural connectivity. Two, reverse rural-urban migration. Three, bring educational institutions under the purview of a powerful Education Commission: make them accountable for the quality and content of what they teach. Four, promote multiplication of employment in agricultural sector as distinct from creation of employment in services. Five, offer employers attractive incentives to maximise direct (and indirect) employment. Seven, replace targeted subsidies by investment in public goods.

Agricultural Reforms

I am a firm believer of the theory which says that employment could be created through Agricultural Reforms. It is a proven fact that the pattern of growth in the Liberalization era has been that far fewer jobs were created for each increase in the National GDP. While liberalised economic reforms may have given a boost to industrial productivity and brought in foreign investment in capital intensive areas, the boom has not created jobs. This was not unexpected. According to a report by the Washington-based Institute of Policy Studies, the combined sales of world's top 200 MNCs is now greater than the combined GDP of all but the world's nine largest economies. Yet the total direct employment generated by these MNCs is a mere 18.8 millions-which is one hundredth of one percent of the global workforce. This is true for the Sri Lankan economy as well. The strong and rich are making the poor worse off.

Unemployment problem can be solved in Sri Lanka by initiating corporate agriculture system, improving marketing system and providing social security to farmers. Sri Lankan agriculture is a field, which can solve future unemployment situation in Sri Lanka, but this is the most neglected field by many previous governments.

Corporate agriculture system

The best course of action for unemployment could be the introduction of corporate agriculture where corporate sector will invest their money and technology in agriculture and share the profits with farmers.

Agriculture in Sri Lanka needs more support from corporate sector. Food processing is one example. In Sri Lanka, only a minimum of the agricultural output is processed. In developed countries, it is as high as 80%. This will give better returns to the farmers from their crops and can also eliminate middlemen since the industries will buy directly from farmers. Also, the government must invest in irrigation, technology, and more efficient, reliable and cost effective credit system.

The marketing system should also be improved. Another suggestion would be to bring in a comprehensive social security/ crop insurance scheme for every person involved in agriculture. That will at least mean that people would not have to live in acute poverty when their crop fails or a family disaster strikes. We can also help farmers in places where traditional crops have been a failure due to water scarcity, by helping them plant crops which need only a little amount of water.

We are good in terms of production but if an efficient system is laid out, it would be much better. Irrigation is the key. We have the natural resources, so we just need to utilize them better. Government should also provide more storage facilities for the crop produced, and we need to figure out a system through which we can store food better and process it better.

Agricultural credit system

The agricultural credit system should be tightened so that farmers get credit only when they make informed decisions. In this way, farmers will not be in heavy debt and will not be forced to kill themselves.

I think if these steps are introduced in an effective manner in the agricultural system, then agriculture business in Sri Lanka can provide employment to millions of people in the rural and semi-urban parts of the country, as the people who have come to the urban areas to gain employment in other fields will return to their villages.

It's time we look at an entirely new scenario: Agriculture (and not services) should be the prime source of employment. Most investment should be in low-cost rural areas and not in high-cost cities. Higher education should not be aimless: Students should have a right to know what they will get out of their investment of money and time.

Investors should not get low cost capital for capital-intensive projects but only for creating employment. Rural and urban development should be treated as complementary to each other and not in mutual isolation. There should be no targeted subsidies but overall development of the economy. The aim will be to create employment over a wide range of the economy and for all persons and not merely for the poor alone.

In general, there will be no compartmentalised thinking - no rural-urban; rich-poor; agriculture-non-agriculture. These should be substantial reversals of accepted practice. Undoubtedly, all these changes will have a cost, and deserve critical appraisal.

Implementing them will not be easy; they will pose new problems, will create new challenges. Those who criticise have two options: Check what is wrong, or seek what benefits can be extracted from these changes. Choose the former, we will sink deeper into the unemployment cess pit; opt for the latter, we may find a way out.