Sunday, September 11, 2011

Free Education Plus Unemployment Equals Disaster

Last week I had the privilege of participating at the National Development Forum on the theme ‘Creating Employment And Broad-Based Economic Opportunities And Government Actions For Implementation’. My paper was titled ‘Self-Employment: The Answer To Unemployment.’

The essence of my presentation was that Papua New Guinea’s workforce of some 3.8 million people has three options.

The first is to look for and secure paid employment. This is a nightmare for the majority of people today, particularly school leavers, because there just aren’t enough jobs for everyone. My estimate is that only 500,000 people of the total workforce are on salaries and wages employment (In fact the total number of people is probably around 400,000, but I am being generous here). If these estimates are correct, currently only 13% of the working-age population holds a paid job. The unemployment rate is very high - around 87%.

The situation is getting worse by the year, considering that the education system produces some 53,000 school leavers (or job seekers) while the economy generates around 10,000 new jobs in a year. The result is that over 40,000 young people cannot find the jobs that were promised them by the system.

Large resource development projects cannot generate enough jobs, because they are very capital-intensive. A classical example is the much-acclaimed LNG project. This multi-billion Kina project is expected to generate only 15,000 jobs during the construction phase (of which 5,000 will be nationals). When the project is operational, it will employ less than 1,000 jobs. The spin-off activities might actually provide more employment opportunities than the project itself. The same can be said of all the other projects.

The Government’s Medium Term Development Plan (MTDP) 2011-2015 aims to create 202,835 jobs by 2015 and 2,000,000 by 2030. But at an average growth rate of 2.3% per year, the country’s population will be around 11 million by 2030. It is clear that there will always be more job-seekers than the number of jobs available.
The conclusion that can be drawn from this analysis is that a paid job will not be a dream-come-true for the majority of school leavers. This leads to the second option available to people, which is to roam the streets in search of jobs. The situation is already explosive, with thousands of young people wandering around the streets of the major centres every day, looking for opportunities to make ends meet. I have stated in previous articles, and other people have said so too, that educated but unemployed young people in Papua New Guinea can be likened to a ‘time-bomb’. You can feel the bomb ticking as you go through the towns, markets, highways etc. The rise in social problems such as crime, prostitution, drug addiction etc are symptoms of the very high unemployment level in the country.

Given that this is the situation as it is, just imagine what it will be like when we push a lot of young people through the education system as a result of the proposed free education policy! We will have hundreds of thousands of educated people who cannot get jobs in the country. I say that is a recipe for disaster.

To avoid this inevitability, our young people must be a given a third option, which is self-employment. As regular readers of this column will have gathered by now, I am a preacher as it were of the gospel of self-employment. I am convinced that the logical and most viable alternative to paid jobs is for people to start small businesses and become self-employed.

We need to realize that our unemployed young people are not good-for-nothing failures and drop-outs. They are human beings with a lot of potential just like the few of us that are well-to-do. They possess intelligent minds (which may need to be reprogrammed to think of starting their own businesses rather than looking for jobs), skills and knowledge, time, strength and energy, natural talents and abilities, dreams and aspirations. Many have land in their villages. These are assets the nation can mobilize for development.

Most if not all young people do not realize that they have all the above. They have been so indoctrinated into expecting paid jobs at the end of the education process that they lose their self-belief once they get labeled as drop-outs or become unemployed. They need help to look within themselves to appreciate the greatness that lies within them. Somebody once said that what lies is above or around us pales into insignificance when compared to what lies within us. This is so true so far as our young people are concerned. They possess so much but don’t know that they do so, so they park at the minimum of their potential.

The following are the recommendations I made at the forum to tackle the high level of unemployment but also to provide real hope to the majority of the country’s workforce:

1. The Government to provide a business-friendly environment by introducing appropriate legislation and policies. A conducive environment for business includes better transport infrastructure, readily-available and low-cost utilities, law, good order and justice. Some laws and policies have to discriminate in favour of national businesses.

2. The National Government to introduce a National Entrepreneurship Training Program aimed at equipping school leavers and unemployed people with basic business skills. Ideally the program should be conducted by people that are already in business, not classroom teachers or academics, under a public-private partnership arrangement. The program should enable participants to gain a working knowledge of all business-related subjects (economics, accounting, law, management, investing, etc) as well as personal viability, ethics, leadership, etc.

3. The National Government to establish a Business Incubator Grant which people that have undergone the entrepreneurship training can access to start their own small businesses. The Independent Fellowship Scheme operates along these lines, but what I am proposing is a bigger program which gives most of the unemployed people an opportunity to be involved and engaged.

4. Provincial Governments to build up the capacities of their Divisions of Commerce and Primary Industry in order to provide advice and technical support to small business people in the provinces. Most of the businesses envisaged under the program will be agriculture-related.

5. The program to include on-going coaching and mentoring in order to minimizing the number of failed enterprises.

Papua New Guinea desperately needs more local businesses. It is business people that generate cash flow, multiply wealth and create jobs. The country needs thousands of them who can provide employment and hope to the thousands more that are living in hopelessness and poverty.

Even if the above proposal is not acceptable, something has to be done seriously to address the very high and increasing level of unemployment in the country. Otherwise, pushing more young people through school will be counter-productive in the long-run. The country will be filled with educated people without jobs who engage in unlawful activities to put food on the table. Lawlessness will repel both foreign and local investment, leading to more unemployment and lawlessness, and the vicious circle will continue.

In concluding, free education is a good policy. However, if it is for paid jobs that people go to school for, I have argued that there will never be enough for everyone. The best alternative is to empower the majority who are not likely to get jobs to start their own small businesses. The recommended training, funding and mentoring program should be introduced immediately, starting with the large number of unemployed people we already have in the country. The only other alternative is to allow unemployed people to continue to roam the streets, which will be bad for all of us.


urgent cash offer said...

Are you in need of a loan? Do you want to pay off your bills? Do you want to be financially stable? All you have to do is to contact us for more information on how to get started and get the loan you desire. This offer is open to all that will be able to repay back in due time. Note-that repayment time frame is negotiable and at interest rate of 3% just email us

Mrs Sharon Sim said...

Hello Everybody, My name is Mrs Sharon Sim. I live in Singapore and i am a happy woman today? and i told my self that any lender that rescue my family from our poor situation, i will refer any person that is looking for loan to him, he gave me happiness to me and my family, i was in need of a loan of S$250,000.00 to start my life all over as i am a single mother with 3 kids I met this honest and GOD fearing man loan lender that help me with a loan of S$250,000.00 SG. Dollar, he is a GOD fearing man, if you are in need of loan and you will pay back the loan please contact him tell him that is Mrs Sharon, that refer you to him. contact Dr Purva Pius,via email:(

Blogger said...

eToro is the #1 forex trading platform for newbie and professional traders.