An economist, Dr Adu Owusu Sarkodie, has called for strategic investments in the agricultural and manufacturing sectors to provide job opportunities for the people.
He said the unemployment challenge had some roots in the country’s inability to make strategic investments in the two sectors over the years.
Dr Sarkodie, who said this at the Graphic Business/Stanbic Bank Breakfast Meeting yesterday, emphasised that the lack of investment had deprived the two areas, which he described as labour intensive, of the needed fuel to spur growth and create jobs.
The result, he said, was an unemployment rate that was now at an all-time high of 13.4 per cent, in spite of the stable growth that the economy had enjoyed in recent times.
Consequently, Dr Sarkodie, who is a lecturer in the Economics Department of the University of Ghana, Legon, called for targeted investments in businesses in the agricultural and manufacturing sectors to help expand their operations and stimulate job creation.
Yesterday’s event was the second edition of the quarterly thought leadership programme organised by the country’s foremost business and financial newspaper, the Graphic Business, and the leading financial institution in the country, Stanbic Bank Limited.
Held on the theme: “Tackling unemployment to create wealth: Opportunities for Ghana”, the event brought together entrepreneurs, academics and corporate executives to deliberate on the unemployment situation and proffer solutions.
It featured a panel discussion with Dr Sarkodie, who spoke on ‘The causes of and solutions to unemployment’; the Managing Consultant of Purple Almond Consulting Services, Florence Hope-Wudu, who spoke on ‘Insights on existing and new opportunities’, and the President of the Private Enterprises Federation (PEF), Nana Osei Bonsu, whose topic was ‘Avenues for jobs and wealth creation’.
The Managing Director of Unilever, Mr George Owusu-Ansah, chaired the event.
Dr Sarkodie said the unemployment situation was alarming and required urgent measures to address.
He said data showed that while the gross domestic product (GDP) had been growing at 5.5 per cent in recent times, employment was growing at only 3.3 per cent.
“It means that unemployment is growing at 2.2 per cent,” he stated.
He mentioned “elasticity of employment”, which connotes how much employment would be created if employment grew at one per cent.
“It is estimated that the employment elasticity of GDP in Ghana is between 0.4 and 0.6 per cent. It means that every one percentage growth in GDP can only create between 0.4 and 0.6 per cent of employment,” he explained.
On factors causing low employment creation, in spite of the strong economic growth, Dr Sarkodie said the growth exhaustive sectors, such as agriculture and manufacturing, were not expanding so much.
He bemoaned the heavy reliance on the mining, oil and gas subsectors for growth, noting that those sectors were not properly integrated into the wider economy, thereby making it difficult for activities there to result in increased job creation.
Dr Sarkodie said between 2017 and 2018, the extractive sector accounted for 46 per cent of GDP.
“When we rebased in 2018, we were told that the oil and gas subsectors alone accounted for 80 per cent of the rebasing. So the extractive sector, which only creates 0.8 per cent of employment, is the leading contributor to the GDP growth rate.
“The agricultural and the manufacturing sectors that can create more jobs are not growing to keep pace with the extractive sector,” he stated.
The development economist also called for fiscal discipline to create and sustain a stable macroeconomic environment where inflation, deficit, debt and interest rates were low and stable to help spur growth that created jobs.
He said studies by the Institute for Fiscal Studies (IFS) showed that macroeconomic instability contributed to joblessness.
Consequently, he called for an entrenched stable macroeconomic environment to make it conducive for investors and businesses to expand and create jobs.