Jan 23, 2012

The unemployment myth and the Right to Employment

When Nepal Airlines Corporation announced a vacancy for 119 positions last month, it received an astounding 23,000 applications . As in the past,  the state of affairs was touted as another instance of the severity of unemployment problem in Nepal. The scenario is not unique to the case of Nepal Airlines Corporation , any government vacancies  announcement  is overwhelmed with applications and there is hue and cry about the unemployment scenario in the country. Unemployment problem gets highlighted time and again in the political discourse of Nepal and right to employment is even considered to be a fundamental right to be guaranteed in the constitution. However, the ratio of applications to vacant posts in a government agency is a poor , in fact, a very misleading way of ascertaining the unemployment status of Nepal and listing out employment as a fundamental right in the constitution is more likely to exacerbate than solve the unemployment problem.

The real scenario and the lure of government job

The exact figure of unemployment rates of Nepal is yet uncertain. The range of unemployment rates ranges from as low as single digit to as high as almost half of the population. Underemployment rather than unemployment remains the major issue plaguing Nepalese economy. The astounding number of applications has more to do with the lure of government jobs than high unemployment rates. The private sector has never held any charm as a career for majority of the populace as private sector is in its nascent stage and Nepal is just taking its first steps towards industrialization. With the declining industrial sector and anti-entrepreneurship forces in dominance everywhere, private sector and entrepreneurship has further lost its attractiveness to job seekers. Finding skillful and competent people is among the top concerns for Nepal's private sector.

Government jobs on the other hand provide anyone with an opportunity to not only get a secure job for life regardless of performance but also myriads of opportunities to get rich through less visible and less legitimate means. Besides these, a government job also shields the job seeker from the competition and the urgency to remain updated and skilled in one's own vocation to accommodate the new innovations and changes in an industry. It would be no surprise that if customs were to announce vacancy for 100 seats we would have more than a million applicants. Would that be any good measure to judge the unemployment scenario of Nepal?

So what's the harm in it ?

Writing Right to Employment in the constitution (as a fundamental right) may sound as a brilliant way of solving the unemployment problem of Nepal but it would be as effective as writing “Right to a vehicle” and expecting everyone to have an automobile. It may seem mere addition of another line in the constitution but its implications can be disastrous. Any 'right' written in the constitution entails other fundamental questions “How?” and “By whom?”. If we were to have right to employment as a fundamental right in the constitution, who is to provide the jobs and how is that to be done. If the government is to be provide the jobs, how is it supposed to do it: though increasing the number of public enterprises which are a kick in the face of any financial prudence, or over-staffing the already ailing current public enterprises or coming up with populist, self-aggrandizing schemes such as youth self-employment fund or increasing the already bloated  bureaucracy?

Making state responsible for providing jobs is nothing more than creating extra avenues for politicians to interfere more with the economy and lives of general citizens. Besides this, the harm in asking government to create jobs means attracting even more people towards bureaucracy. Nothing could be more detrimental to economic health of a country than having its best and the brightest people, , busy with the dead end , unproductive, paper-pushing jobs in the government bureaucracy and many a times, working to hinder other productive people through various regulations and controls rather than being engaged in wealth creation. It is a very depressing scenario that many Nepalese youth would want to work for a highly mismanaged, corruption infused organization like Nepal Airlines Corporation (or any other government run entity for that matter) , than aspire to work for an innovative and profitable company or dream of creating their own company. Hence, the astounding number of applications attracted by vacancies in government agencies are not an indicator of how severe the unemployment problem is but how distorted the incentives are for Nepalese youth to build a career in.

Since economic well-being of any economy depends on the level of productivity of its citizens, it is imperative that our policies and actions align towards  encouraging people to be engaged in more productive jobs. It is necessary to understand that employment is not an end in itself but rather a means to achieving the end of creating wealth. Jobs created in government sector or even jobs created by spoon-feeding schemes by the government may employ people but ultimately they fail in meeting their end objective. i . e. to engage citizens in wealth creation.

(Published in The Reporter Weekly on January 23, 2012)