Tuesday, September 20, 2011
It's a jobless world!
WASHINGTON DC, 20TH SEPTEMBER
Unemployment and how to counter a problem that's been described as an economic time bomb is a key area of discussion at the IMF and World Bank Spring meetings in Washinton DC.
Let me put this into perspective first.
We've seen Obama's recent shaky moments as he battles with empowering Americans after an economic crisis that stripped the worlds number one state to its bare minimum. And now US unemployment figures remains at about 9%. That is a crisis.
In Kenya, that figure (unemployment) is at 36%. Inflation is at 16.67%, and today, the shilling is at an 17 year low of 96 shillings to the greenback. That is a proper definition of the word disaster.
But we walk and talk as if its business as usual as politics and blinders (in the name of price controls and price caps) balm mass appeal.
We need to wake up to the realities of what this means for our economy.
Where are all the jobs? what is really happening?
Reduced capital flows. The developed world is in trouble. Idealy, they're usually quite intersted in investing in African economies, but when thigns are thick back home, you consolidate your investments to what you can clearly see. Things have changed, and Sub-Saharan Africa has been caught in the middle of an economic fireball. No one's got extra disposable income to throw at risky markets. So there's no dollars in the economy and the little that's available is being chased to the 96 shillings level.
Inflation: Sometimes, we don't really comprehend the extent to which these figures trickle down to a regular citizen. Look at it this way. If you have 100 shillings today, 16 shillings out of it is sucked in by Inflation. It does not exist in real terms, what you actually have in your pocket is about 84 shillings.
So imagine how this impacts your employer? Soon, we will see some companies lay off some employees to cover for loses caused by Inflation. In essence, economists agree that Inflation is the number one cause to unemployment.
There's more challenges; like international forces such as high fuel prices. But there's also a large priority issue, as well as a civil society is simply not playing it's role. It is in times like these that the Civil society must tell us what price control will actually do to this economy. In a situation like ours where there's no opposition, we need a strong civil service, and clearly this doesn't exist.
So what will these discussions at the Spring meetings entail?
How will governments be challenged to create jobs?
Are there policies in place that will help encourage growth and create jobs?
The International trade Union says that the IMF gave completely wrong advice to countries to start on fiscal cuts ( meaning budget cuts: that is, more thrifty spending by governments). ITU believes that these cuts saved the jobs of the millionaires- but the big call now is to create jobs for teachers, nurses and construction workers who are the the beating heart of the real economy.
In Kenya, there were no budget cuts, if anything it was an inflated budget. But even more government spending did not create any new jobs. But no one seems to want to address these issues, or is it that no one wants to ask the right questions?