This week President Dr Mokgweetsi Masisi admitted to job creation being one of his “greatest” struggle, saying the economy is failing to yield jobs as yet. The President further, through the local media midweek, addressed Batswana’s impatience on lack of jobs saying but the economy would not work that way.
Masisi who has been dubbed the “Jobs President” when taking over presidency in 2018 is already feeling the heat from his critics who are accusing him of being Janus-faced when addressing the unemployment issue. Masisi’s critics were up in arms after the president recently sounded to divert that which he made his top priority even when he took leadership of the ruling party in 2016, job creation.
Last month from the Masisi was accused of trying to divert his promise of creation of jobs to the private sector when coming from his World Economic Forum trip; this topic that even made a big national debate towards and after the Budget Speech of 2020. Leader of the private sector Gobusamang Keebine has said job creation should be led by government with policy and good governance.
"My duty as the president is to create environment for jobs to be created. I cannot open a brick manufacturing factory and employ people but i create conducive space for investors to do so and employ local people instead. I attend world summits to create space for jobs to be created,” this created a big uproar with some seeing the president to be speaking with a forked tongue in his jobs creation mandate.
Even though dishing out old statistics of the 2015/16 unemployment rate, finance minister during the Budget Speech admitted that “the unemployment rate has remained a cause for concern, at annual rate of 17.6 percent of the labour force in 2015/16.” Opposition legislators after the budget speech were already saying Masisi is failing in job creation while some Mps from the ruling party kept the president’s stance that jobs would come with partnership with the private sector, allowing more capacity for economic activity.
Recent statistics from Statistics Botswana shows that the unemployment rate is increasing, the three months of July to September 2019 shows idleness rate of 20.7 percent for the third quarter of 2019. According to Quarterly Multi Topic Survey Labour Force Module Report- Q3 2019, the unemployed population is 194 990, with 93 190 men unemployed who are less than women who are jobless in Q3 2019 being 101 799. The unemployed population has grown by 32.5 percent in the quarter under review when compared to the preceding quarter in the Statistics Botswana records.
The unemployed population with disability increased by 7.3 percent in Q3 2019 from Q2 2019. Youth unemployment increased by 1.6 percent while youth not in education, not in employment or training rate increased by 4.7 percent. 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.
Talking about the same sQ3 2019 results and bringing them closer to the concern of unemployment rate that seem not to be curbing according to statistics during the recent budget speech, Matsheka said the unemployment rate of 20.7 percent for the quarter cannot be directly compared with the 17.6 percent annual rate for 2015/2016. These results are for one quarter only and are subject to seasonal variations, he explained during the reading of the budget speech.
“….Successful economic diversification requires an economic growth rate that is high enough to generate sufficient jobs to address unemployment, raise household incomes and reduce poverty. This has not yet been achieved and the unemployment rate has remained a cause for concern, at annual rate of 17.6 percent of the labour force in 2015/16, according to data from Statistics Botswana. Therefore, accelerated growth, consistent with Vision 2036, will require a mix of policies that promote export diversification in goods and services to impact unemployment, especially among the youth,” said Matsheka.
The working poor and disparities
Menial jobs or piece jobs took a larger population of the country’s employment, meaning a lot of Batswana were absorbed to work for ‘small jobs.’ The report says the largest proportion of jobs is found in the elementary occupations with 114,766 persons representing 23.7 percent of the entire labour force. This jobs were followed by occupations in the service/sales workers with 112,707 persons (23.3 percent) while professionals were at 12.7 percent or had 61,652 persons employed.
When the Statistics Botswana revealed the Q3 2019 monthly average cash by occupation it shows that monthly average cash earning by occupation professionals who were not the most employed in the population were the highest earners, recording P12 455 followed by managers and Technicians & Associate Professionals with P11,122 and P10,171.
With complaints still high that Botswana’s minimum wage is low to the benchmark, the rest of the population who are the most employed earn peanuts. Unlike their counterparts at professional level, the mostly employed in the population, elementary workers average earning is the lowest recording at P1 286.
And foreigners showed to be earning more than their Batswana counterparts with average earnings for non-citizens was estimated at P5, 117, P12, 794 and P5, 404 for all employees. The national records reveals that Fourth Quarter FSES monthly average cash earnings for Citizens was 6,206, while for 2019 QMTS was 5,117, for Non-Citizens was 20,374, from QMTS was 12,794, for all Employees was 6,533, while for QMTS was 5,404.
Foreigners got most jobs at the education sector recording 19.6 percent (3,546 persons), followed by Construction and Human Health and Social Work Activities with 17.8 (3,236 persons) and 14.1 percent (2,560 persons) respectively. In a case showing gender disparity, in almost all industries males earns more than females, this is an exception in industries like Real Estate Activities, Arts, Entertainment and Recreation, Health, Extraterritorial Organisation where women get better salaries than men.
According to Statistics Botswana, males recorded P6, 729 and for females was P4, 178 in total formal sector employment monthly average cash earnings. In total the third quarter 2019 (July to September 2019) estimated average cash earning from the 2019/20 QMTS Formal Sector Employment with the Fourth quarter 2018 Formal Sector Employment Survey (FSES) shows that there was a decrease in average earnings.
The national statistics has further seen that at industry level, Accommodation and Food Service Industry have employed more females, accounted for 70.5 percent of employees working in the industry, followed by Education with 65.7 percent. However construction and Mining & Quarrying were the two industries which have employed lowest proportion of females recording 11.3 percent and 19.3 percent of female employees.
Men mostly get jobs in cities and towns while their female counterparts are seen working at rural areas according to the latest statistics. But in urban areas like Gaborone and Francistown many women recorded a higher percentage in employment than males being at 51.7 percent for females as compared to 48.3 percent for males.
The capital city Gaborone recorded the highest number of people working in Formal Sector, recording 16.5 percent, followed by Kweneng East with 13.8 percent and Central Serowe with 6.2 percent and males were dominating in formal sector employment almost in all the cities according to statistics. Females were many in formal employment were recorded in all the district except Kgatleng, Ngamiland East, Kweneng East, Central Mahalapye and Kgalagadi South.
Education, skills match issue
Statistics Botswana refer to elementary jobs as “mostly unskilled” but this is also the national cry of even formal sector and businesses complaining in a report by the central bank to be receiving unskilled employees. According to Bank of Botswana’s recent Business Expectation Survey, unavailability of skilled labour was cited as the greatest challenge facing businesses in the fourth quarter of 2019, particularly in the manufacturing, trade, hotels, restaurants, transport and communications sectors3 , arising from the reported difficulties experienced in recruiting foreign skilled labour.
But do people go to school, get higher qualification and get easily hired? That is not the case in the national statistics as employers are mostly fishing in the less qualified pound. Higher education holders, higher certificates, diploma and degree holders are suffering to get jobs and it is recorded in the national statistics. Employment by education level shows that people who completed lower education or secondary school contributed 45.5 percent of the overall employment in the population.
Those who are regarded as fairly educated, the ones at university or tertiary level were at a lower percentage of the overall employment at only 15.9 percent. Primary qualifications holders were at 13.2 percent. Also when statistics reveals the issue from a sectorial perspective, the highest percentage (41.7 percent) of people in Formal Sector Employment have secondary school education. The statistics further states that these rates were followed by those with University and Primary school education with 21.5 and 10.6 percent respectively.
According to Statistics Botswana, a small percentage (0.5 percent) of people in Formal Sector Employment have apprenticeship. Statistics Botswana has shown in the same Q3 reports that youth not in education, not in employment or training rate increased by 4.7 percent.
According to Statistics Botswana, Formal Sector Employment by Industry shows that Public Administration had the largest portion of employment at 29.0 percent (140,280 persons), followed by Wholesale, Retail & Repair of Motor Vehicles with 13.5 percent (65,084 persons) and Education with 12.0 percent (58,034 persons) of total employment.
This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.
The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.
Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.
He was speaking in Parliament on Tuesday delivering Parliament’s Finance Committee report after assessing a motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.
Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.
The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.
The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.
The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.
This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.
Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.
Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.
However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.
Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.
When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.
This as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.
Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.
The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.
Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.
In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.
Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.
Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.
Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.
Acknowledging the need to draw down from GIA no more, current Minister of Finance Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”
He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”