Home Letters 50,000 jobs are justifiable, Irfaan is standing on solid ground
Please permit me to respond to an article entitled “Irfaan Ali has selected two of the worst planks on which to walk”, which was published in a section of the media on April 8, 2019. In the letter, the writer raised a valid point on the possibility of the creation of 50,000 new jobs. However, I beg to differ that such a figure is no nowhere close to an exaggeration. First, I would like to remind the writer that it is of public knowledge that the APNU/AFC Government, since taking office, is responsible for the extirpation of over 30,000 jobs. And in the interest of refreshing the minds of our readers, the composition of such a figure includes the direct dismissal of over 7000 sugar workers, 1974 Amerindian CSOs, hundreds of miners and loggers, and even some of our public servants. Indirectly, when accounted for the spinoff effect, the total number of jobs lost easily exceeds the 30,000 estimates. And note also, this figure was also cited in the 2014-17 Global Human Capital Index Report on Guyana.
Reinstating 30,000 Jobs
Hence, these jobs could be easily reinstated with a few policy adjustments such as repeal all 200 tax measures, re-opening of the sugar industries, tax optimisation, expansion of the housing drive, FD special incentives, and other forms of quantitative easing such as increased liquidation of our commercial banks. Essentially, the 30,000 job losses could be reinstated by simply remedying all incoherent policies implemented by the APNU/AFC Government. In the interest of space, I will not dwell on the corollaries of such policies and since it is also well articulated in the media. Now, before I examine the origin of the remaining 20,000 jobs, I would first like to shed some light on our economy.
Job losses and deteriorating economy
Overall, the impact of the 30,000 job losses is evident in the deterioration of our economic structure. Starting with the manufacturing sector, in the 2018 mid-year report, it has been reported that our manufacturing sector contracted by over 3.7 per cent or $23.6 billion. What this tells us is that our value-added production is on the decline. And given the composition of our manufacturing sector, we are essentially referring here to the rice millers, sugar estates, lumber yards etc, industries that are directly engaged in the production of value-added. Hence, it now becomes clear that since the output level of the manufacturing sector is on the decline in tandem with its share of total employment, then inevitably, our economy is actually deindustrialising, an outcome that would see Guyana losing out on the opportunity of using manufacturing as an “engine of growth”. Now, given our soon to be oil-driven economy, such predisposition could become one of our greatest impediments towards a mature and successful service-driven economy. In the long run, our economic structure could further deteriorate since a relatively small and weak manufacturing sector will become prone to crowding out. The theory in short and is as follows: increased spending in the non-tradable sector (service) would lead to an appreciation of value relative to the tradable sector (manufacturing). As prices increase, such as wages, under the assumption that the elasticity of labour substitution is less than unity, workers would move to the non-tradable sector. In layman terms, we could see, for eg, a labour choosing to drive taxi over cultivating rice. In the long run, our over-reliance will increase on oil in tandem with the import of foodstuff.
Apropos to our balance of payment at the end of 2018, a deficit in excess of US$189 million or 239 per cent has been recorded when compared to 2017, in tandem with US$463 million or 97 per cent more when compared to 2017. Such an outcome has been furthered exacerbated by the mere fact that in excess of US$104 million was utilised from our Net Foreign Reserve in 2018 to service our debts, taking the revised balance to a mere US$240 million or 40 per cent less when compared to 2014. Other noticeable declines, when compared to 2017, include that of export by more than US$48 million and public enterprises and Bank of Guyana revenue by more than $3.3 billion and $1.8 billion respectively. There is a slew of other indicators that could be provided but in the interest of space, I will also stick to the aforementioned. Hence, essentially what is being conveyed is that there is ample evidence of gross underperformance of our economy. And given our existing economic trajectory, our oil windfall might be more of a curse than a blessing. In order to mitigate such, urgent steps must be taken in order to remedy our existing economic framework. An outcome that is not impossible, but requires fiscal discipline, which unfortunately this Administration doesn’t seem to possess.
Getting to 50,000 jobs
The other part that I would like to quickly touch on, is how the remaining 20,000 jobs will be created. To understand how such a plan would unfold, I would like to bring to your attention a few areas of wasteful spending. First, the combined increase of the 2019 recurrent expenditure is more than $19 billion. In other words, expenditure on drugs, rental of buildings, security, celebration etc in 2019 is expected to increase by $19 billion. Moreover, our traditional sectors such as rice, sugar, bauxite, gold and forestry, since 2014 we have lost in excess of $58 billion or 13 per cent of our 2019 GDP when adjusted for inflation. What this means is that in addition to gross underperformance, there is a lot of economic slack within our economy. Essentially, a large share of our resources, both human and capital, lay idle. Now, if you look at the amount of revenue we have lost, and note, I have conveniently omitted to account for the increase in taxation, the figure easily surpasses $78 billion. That is additional funds we could easily amass by simply pursuing the coherent policies. And note, our economy could accommodate a massive increase in expenditure without fear of overheating because of the existing economic slack. Macroeconomic prudential coupled with strategic investments and policies geared at enticing private investment and consumption are more than capable of delivering in excess of 20,000 jobs. The housing drive alone, which is one of Irfaan’s specialties, will deliver a sizable amount of jobs. This has been done and is well within the grasp of re-executing. In relation to foreign direct investment, it is public knowledge that the PPP had plans, as enshrined in their 2015 manifesto, to set up a free-trade zone, and undertake massive infrastructural and transformational projects such as the Linden/Lethem road and the speciality hospital project. In the business sector cheap credit, which again could be easily attained by simply increasing GoG deposits in our commercial banks, investment and expansion could further be spurred. Such an outcome would favour our business sector, and business once again would flourish in tandem with disposable income from the creation of the new jobs. Hence, given the massive level of underemployment and idle capital, which is an indisputable claim, Guyana is capable to absorb a huge increase in investment. And note, we are yet to account for the oil windfall and astute local content policy that would ensure our nation fully benefits from its oil endowment. Thus, the forward and backward linkages that would ensue, including the spillover effect to other industries and sectors, will push the number of jobs well above 50,000! It is a pity that a majority of us are still oblivious, I would like to assume, of this vision.