Tuesday, July 7, 2020

Matsheka joins employment target denialists

Botswana’s new finance minister, Dr. Thapelo Matsheka, might have played loose with facts in his attempt to absolve the government from job creation, which has become an occurring theme in the new administration.

The former economics lecturer at University of Botswana who was appointed minister last year November has become the latest member of president Mokgweetsi Masisi’s administration to defend the government’s lack of employment target. On Thursday, the minister faced a serious backlash after he said employment targeting is not necessary for a private led economy, and that he does not know of countries that set and achieve employment targets.

The remarks by Matsheka contrast with his political party’s central campaign message to create jobs and an inclusive economy – a message which helped the party to reclaim victory and continue its over five-decade rule. But the administration’s tone post elections seem to have changed.

Though Matsheka says job growth is the preserve of a private sector led economy, the minister appeared to be contradicting his maiden budget speech which is supposed to herald a new transformation agenda. At the heart of the transformation, the first priority has been selected as “export led growth model” premised on diversification, away from diamonds which have anchored the economy since independence.

Since the economy is far off from being private sector led, Matsheka knows that for the time being, government remains the biggest player in the economy. The minister was also lax with his facts that he does not know of countries that have successfully embarked on employment targeting.

While Botswana government appears to be moving away from its responsibility to quell the rising unemployment, other countries have set employment targets as their key performance metric. In 2010, the European Council adopted the Europe 2020 strategy, which among other things, the aim was to increase the employment rate of the population aged 20 to 64 years to at least 75 percent by 2020. In addition, the EU Member States set national targets for the employment rate in 2020.

In 2018 the EU’s 28 member states had the highest employment rate since 2005 and is progressing towards its 75 percent EU target. Moreover, almost half of the EU Member States (13 countries) have already reached their national target. The gender employment gap has also significantly decreased since and there has been a notable rise in employment for the female population as well as for the senior population.

When President Donal Trump takes to the campaign trail this year, his message has been centred around his achievements: a strong economy, characterised by low unemployment rate and rising wages. In fact, job creation has become a defining feature of American politics, despite the economy being private sector led.

Matsheka’s employment targeting denialism forms aft of a chorus, which is led by the president, who has on several occasions said the government does not create jobs but plays a facilitative role. Furthermore, the government does not have proper employment monitoring mechanisms and has been exposed for its dubious records. Recently, Minister of Employment, Labour Productivity and Skills Development, Mpho Balopi, gave parliament a diputed figure of jobs lost from 2014 to 2018, of which some of the numbers were below what the government had officially stated.

Faced with a troubling rise in unemployment, the government has often fumbled and has become sly in how it presents its official figures, which are for the most time confusing, and at worst misleading. The finance ministry officials have at time tried to obscure the troubling figures.

“Statistics Botswana recently released its first ever quarterly labour force survey results for the three months of July to September 2019, which show an unemployment rate of 20.7 percent for that quarter. These results are for one quarter only and are subject to seasonal variations. It is therefore important to note that the unemployment rate of 20.7 percent for the quarter cannot be directly compared with the 17.6 percent annual rate for 2015/2016,” said Matsheka during the budget speech.

The government’s unemployment data has been a subject of criticism over the years, blamed for its lack of quality caused by lags and inconsistencies. According to the Quarterly Multi-Topic Survey (QMTS): Labour Force Module Report for the third quarter of 2019, total number of people employed in Botswana was 745,556, representing nearly 80 percent of the economically active force. The number was also a 12.4 percent increase from the 2016 Multi-Topic Household Study which had estimated the labour force at 689,528.

Though these figures look huge, a close look at the figures reveal that the labour force might be inflated when you look at formal employment, which are jobs from registered companies that pay tax, employ a minimum of five people and keep formal accounts. The QMTS reports formal sector employment at 483,814, which is 65 percent of the total labour force (745,556), and this means that 35 percent of the supposedly employed people are in the informal sector.

If you take the formal sector employment figures against the number of economically active people (940,546), the formal sector employment only accounts for 50.1 percent of the workforce, leaving many working in unregulated environments or unemployed. Though the QMTS estimates unemployment at 20.7 percent, the rate has been sneered at by many observers, estimating the unemployment rate to be over 30 percent when you start factoring in discouraged job seekers that are usually excluded when computing the unemployment rate.

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