Freeway How not to do it

July 18th 2011

Creating employment sounds simple. That,surely, is a task for governments. As the country’s largest employers, and the managers of national finances, governments must take the lead.

Expanding the nation’s infrastructure by building schools, hospitals and roads will in itself create employment. And encouraging foreign investment will provide a further boost. That at least is the theory. But does it work? A recent letter to The Post newspaper remarked on “the number of people roaming the streets” in Zambia, and continued, “It’s all because the government cannot create and provide any employment, and as such it’s just as good as not having a government at all.”

Why are governments not able to live up to such expectations? Because their financial resources come from taxing and borrowing, both of which actions involve taking money from individuals and businesses, who would otherwise spend it more productively.

But governments must be seen to act. So what is their usual response? They regulate employment by making laws to require ‘good’ employment practices and ‘decent’ wages.
But this, far from facilitating employment, actually discourages it. For it makes workers more costly to recruit and employ, as indicated by articles in this issue of the journal.

That tends to create ‘two nations’, the gainfully employed and the permanently unemployed. Most of the latter, because they lack training and experience, cannot obtain employment at the remuneration required by law. The minimum wage, far from benefiting them, has made it far harder for them to find employment.

Are the trade unions not able to help? Alas, they do not even want to do so. Their sole concern, understandably, is to improve the pay and conditions enjoyed by union members. They have no interest in nonmembers. So the unemployed, since they lack an organisation to voice their interests , tend to be completely ignored, except at election time, when politicians make empty promises to create more jobs.

Is the current well intentioned practice of regulating salaries and conditions of service frustrating employment, rather than facilitating it? If so, it requires urgent review.

“This article is written by the Zambia Institute for Public Policy Analysis and syndicated through”