Unemployment Affect Economy

| May 8, 2015

The economy is faced with high levels of unemployment amidst a saturated job market in government and limited opportunities in the private sector, a quarterly commentary from independent firm, E-Consult says.

The bulletin, authored by Dr Keith Jeffries, Ms Bogolo Kenewendo and Mr Thabelo Nemaorani, said the country faced challenges due to high levels of unemployment especially amongst the youth.

It also said the available statistics might not paint the right picture as they excluded people who had given up hope. Quoting different sources such as the Botswana Core Welfare Indicators Survey (BCWIS) and National Population and Housing Census, E-Consult said job creation in the formal sector had been low in the last decade, below economic growth and labour force growth.

Annual formal sector growth averaged 2.3 per cent over the last decade, lower than the annual growth rate of total employment of 3.6 per cent. Mining, private education and utilities had created more jobs with over four per cent growth but they remained small.

“Sectors like construction and health had negative employment growth rates,” E-Consult said adding that parastatals played an important role in job creation, as existing organisations expanded and new ones created.

It was however noted that government could no longer play a major role in job creation as it was saturated and had a huge wage bill. It also said for fiscal reasons, there was an upper limit on job creation in government, that might have already been reached.

Approximately, 40 000 young people graduate from education and training every year and enter the working age population and it is estimated 30 000 of them join the labour force. The new job seekers either enter the formal sector employment or end up unemployed or working in the informal sector or agriculture.

Due to the age structure of the population, the number of people retiring is lower than the number entering the work force. Unemployment rate is reported to be at 20 per cent and E-Consult says the situation facing school and college leavers might be worse.

E-Consult further says there is need for policies that support job creation in the private sector, through the creation of an appropriate enabling environment and the provision of incentives for the private sector to operate and grow in Botswana, providing sustainable jobs for long term.

Due to saturation in government employment and huge wage bill, future growth can only be private sector led and therefore the sector needs to grow.

While the emphasis has been on job creation, E-Consult says focus should also be on preventing loss of employment as failure to do so would be like ‘pouring water into a bucket with holes’.

There have been numerous cases of company closures and downsizing as recently, about 1000 people in mining and related industries lost their jobs. That occurred mainly due to closure of Teemane Manufacturing Company and Discovery Metals Limited, coupled with retrenchments in some other diamond manufacturing companies.

Closure of Cadbury Botswana has resulted with 150 job losses and 200 people in the services have also lost jobs due to business closure and retrenchments.

The number of people who lost their jobs since the beginning of this year, as E-Consult says, stands at 1350, equivalent to the total growth in formal employment in the private sector over the year to September.

Source : BOPA

Source : Botswana Daily News

Category: Business & Finance

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