By Dr. Fuein Vera Kum (PDF Here)
The link between economic growth and job creation is not always straight forward. While economic growth is good for job creation, it is important that growth occurs in sectors that have a potential to absorb labor on a large scale. For example, growth in the manufacturing and service sectors have a positive impact on job creation .
Job creation – an element of growth
Job creation is a cornerstone; an important component for long-lasting development and growth. Employment creation is a priority for donors and governments, as outlined in the 2011 World Development Report .Moving forward, employment creation requires numerous interventions; ranging from direct short or long-term strategies by state or non-state actors, to policies that promote self-employment. These interventions may include the promotion and creation of small and medium-sized enterprises, to macro-level policy measures that help to stimulate employment growth. In effect, growth is not a means to an end–it is designed to help people, promote development and, hence, reduce poverty.
The World Development Report 2013 stresses the role of strong private sector led growth in creating work, and outlines how jobs that do the most for development can spur a virtuous cycle. The report finds that poverty levels tend to drop as people work their way out of hardship . In doing more of the same kind of job over the years, the level of efficiency of every worker tends to increase. Better and more productive jobs appear and, hence, the economy tends to flourish. The main focus of any job creation strategy is to stimulate healthy economic growth. Healthy economic growth is sustainable growth.
Creating more and better quality jobs is a key element necessary to boost economic growth. Job creation requires a stable framework coupled with well established structural policies that can encourage innovation, a variety of skills and business development. The necessity of generating jobs and income as the country’s working-age populationincreases will require harnessing the job-creating energies of the private sector as well as the strategy-setting skill of the public sector.
Recently, there has been a sharp decline in unemployment levels in Cameroon. For example, between 2001 and 2014, the country recorded a 16% decline in unemployment. With a current 4.3% level of unemployment [4, statistics showthat the government is working towards curbing unemployment, especially among the youths. If the aphorism that “youths are the leaders of tomorrow’ is anything to go by, then the government has to make considerable effort to ensure that youths are gainfully employed and can stay productive at their jobs. Hence, creating better-paid opportunities for them is of paramount importance since jobs are the best insurance against poverty and vulnerability. It is the role of the government to create and provide a supportive environment for growth. The question still remains – is this level sustainable in the long run?
The economic growth pattern in Cameroon has been strengthened over time; ranging from 3.2% in 2010 to 4.1% in 2017 with an expected forecast of 4.2% in 2018 . This increase has been based mainly on public investment in major sectors of the economy; among them the construction of the Kribi Deep Seaport and the Lom Pangar power station as well as other road construction projects nation wide. Prominent sectors of the economy that contribute to growth are the service sector which represented 46.4% of GDP in 2011, as opposed to 43.2% in 2010. The secondary sector represented 26.4% in 2011 down from 27.7% in 2010 .Arguably, growth largely driven by public investment strains a country’s fiscal accounts and leads to an increase in its national debt. However, Cameroon’s economic growth has not translated to poverty reduction or to a change in the social status and standard of living of Cameroonians. This in reality is due to an unfavorable business climate (including the dearth of infrastructure) and a flawed governance strategy .Notwithstanding, Cameroon has the capacity to develop and to build on its vast potential for growth and development that which cuts across important natural resource endowments to a massive youth population.The population in the age brackets 15 -35 increased significantly in recent years and urban youth unemployment was estimated at 20%, while rural unemployment was 5% . Accounting for this disparity in levels of unemployment between the urban and rural areas is the fact that young people move away from the rural areas to the urban areas in search of better paying jobs. Urban unemployment was fueled by this rural-urban drift, and the restructuring of modern sector jobs. This tends to exert much pressure on the relatively few jobs found in these urban areas. This, in one way or another, causes a strain in the resources available in these urban areas.
In his own words, President Paul Biya, on February 10, 2018, declared that in 2017, 473,303 jobs were created for the youth of the country .The essence of this is to curb the level of unemployment in the country; a policy that will go a long way to ensure that all those who are able and willing to work find paying jobs for themselves. The perennial question relates to the sustainability of the created jobs. That is assuming they actually were created.
In order to achieve growth and development as well as pursue its 2035 vision of an emerging Cameroon, there is need to build on the human capital investments and a suitable institutional framework for the exploitation, transformation and efficient management of natural resources in the country.
Therefore, government can pursue these job creation strategies by implementing tax policies and tax incentives that favor new businesses, especially the very small sized medium enterprises and the SMEs to flourish. Such policies will encourage new investors to venture into business and, hence, create more jobs for the economy. Secondly, the educational system of the country should be revised and streamlined in a way that promotes the spirit of entrepreneurship in students–the goal being to graduate more job creators than job seekers. In this light, educational syllabus should prioritize science, technology and other technical disciplines that train students to be self-employed and entrepreneurial upon graduation from school. Government can also encourage and promote capacity building among students. This will help graduating students to be competitive in both national and international labor markets. As such companies coming into the country to invest will be able to find and recruit the required expertise they need. Government should stimulate private sector led growth, which will require an improved business environment and sector governance, lower cost of inputs and a better-educated workforce .At the same time, government should boost investment in infrastructure to continue modernizing transport and communication. This will engage the private sector and spur hiring across the country.
In conclusion, there is only so much that the government can do. Ultimately, job creation will depend on the real job creators as such strategies employed by the government to promote economic growth may not necessarily lead to job creation. However, job creation strategies would definitely spur growth. Thus, government can lay the groundwork under which the private sector which employs 90% of the population works and can better generate jobs, growth and innovation. Jobs equal hope. Jobs equal peace. And, finally, jobs can make fragile states become more stable.
Dr. Fuein Vera Kum is an Economic Policy Analyst at the Nkafu Policy Institute
Dr Fuein Vera Kum is a Research Fellow at the Nkafu Policy Institute. She joined the institute as Economic Policy Analyst in 2017 with a focus on health economics and development policy. She holds a Ph.D in Economics from the University of Benin, Nigeria.
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