Ghanaian economist, Dr. Adu Owusu Sarkodie, called for strategic investments in the manufacturing and agricultural sectors to provide jobs for the populace during the Graphic Business/Stanbic Bank Breakfast Meeting on June 14, 2022.
He claimed that the country’s long-term inability to make strategic investments in the two industries was partly to blame for the unemployment problem.
Dr. Sarkodie stressed that the two areas, which he described as being labor-intensive, had been deprived of the necessary fuel to stimulate growth and create jobs due to a lack of investment.
He asserted that in spite of the economy’s recent period of steady expansion, the jobless rate has now reached an all-time high of 13.4%.
As a result, Dr. Sarkodie, a lecturer at the University of Ghana, Legon’s Department of Economics, urged focused investments in companies operating in the manufacturing and agricultural sectors to aid in their growth and promote job creation.
Second edition
The country’s top business and financial daily, the Graphic Business, and the nation’s top financial institution, Stanbic Bank Limited, organized yesterday’s event as the second instalment of their quarterly thought leadership program.
Entrepreneurs, academics, and corporate executives gathered at the event, which had the theme “Tackling unemployment to create wealth: Opportunities for Ghana,” to discuss the problem of unemployment and suggest solutions.
Dr. Sarkodie, the managing consultant of Purple Almond Consulting Services, spoke on “The causes of and solutions to unemployment,” Florence Hope-Wudu discussed “Insights on existing and new opportunities,” and Nana Osei Bonsu, the president of the Private Enterprises Federation (PEF), discussed “Avenues for jobs and wealth creation.”
Numbers
Dr. Sarkodie claimed that the unemployment situation was grave and quick action was needed to remedy it.
Data, according to him, showed that employment was only expanding at a rate of 3.3% in previous years, despite recent GDP growth of 5.5%.
It indicates that unemployment is increasing at a rate of 2.2%, he said.
He referred to the “elasticity of employment,” which refers to the amount of employment that would be created if employment increased by 1%.
According to estimates, Ghana’s GDP employment elasticity ranges from 0.4% to 0.6%. This indicates that only 0.4 to 0.6 percent of jobs may be added for every one percentage point increase in the GDP, the economist said.
Causes
Dr Sarkodie commented on the reasons for the weak employment growth despite the robust economic development, stating that the growth-intensive industries like manufacturing and agriculture were not developing as rapidly.
He lamented the over-reliance on the mining, oil, and gas subsectors for growth, pointing out that such sectors were poorly integrated into the larger economy, making it difficult for activity there to lead to significant employment creation.
According to Dr. Sarkodie, the extractive industry contributed 46% of GDP between 2017 and 2018.
“We were informed that the oil and gas subsectors alone accounted for 80% of the rebasing when we rebased in 2018. Therefore, the extractive industry, which only generates 0.8% of jobs, is the main driver of GDP growth.
He claimed that the manufacturing and agricultural sectors, which have the potential to generate more jobs, are not expanding at the same rate as the extractive industry.
Fiscal irresponsibility
The development economist also urged fiscal restraint to establish and maintain a stable macroeconomic environment with low inflation, a budget deficit, low debt, and stable interest rates to support job-creating growth.
He said that research from the Institute for Fiscal Studies (IFS) demonstrated how macroeconomic instability influenced unemployment.
In order to encourage investors and businesses to grow and create jobs, he urged for an established stable macroeconomic environment.