One million jobs program:

GDP sub sectors provide new job opportunities

by D. Amarasingha

Job creation programs are conducted in many countries for economic development and is a powerful political slogan.

Implementation of the one million jobs program by the Government focuses directly and indirectly on - i. Increasing the per capita GDP. ii. Providing qualitative and high value addition jobs. iii. Eradicating poverty and reducing income disparity. iv. Improving the economy of backward districts. v. Reducing migration from rural to urban areas especially in the Western Province. vi. Discouraging people going abroad for low-paying jobs. vii. Providing proper access for excess labour in the rural and estate sector. viii. Increasing export earnings.

2. The economy

The per capita Gross Domestic Product (GDP) was Rs. 473,261 (US$ 3,625) for 2014 and according to the classification of per capita income by the IMF, it is in the lower middle level range.

The GDP growth rate was 7.4% for 2014 while it was 7.3% the previous year. The annual average inflation rate based on the GDP implicit deflator was 9.2 in 2014.

The annual average exchange rate of the US Dollar was Rs. 130.6 in 2014 and the value of imports was 38% more than the value of exports. The GDP share from agriculture, industry and services was 10%, 34% and 56%.

The average household income per month in the urban sector was Rs. 69,880 and in the estate sector it was Rs. 30,220. The number of income earners per household was 1.8.

The Gini co-efficient of household expenditure was 40 according to the Household Income and Expenditure Survey (HIES) of the Department of Census and Statistics for 2012-13.

In 2013, labour force participation was 53.8%, while for males it was 74.9% and females 35.6%. The economically active population was 8,802,113. The employed population was 8,417,674 or 95.6% of the labour force (formal and informal).

The number of people not in the labour force was 7,557,648 in 2013. The annual average population increase was 0.8% for 2014. The annual entrants to the labour force was 347,749 in 2013.

The Gini coefficient ranges from 0 to 100. A value of zero represents equal income distribution and 100 represents the highest income disparity.

Under general education, the number of students who sat for the GCE Ordinary Level examination was 264,772 and 176,534 qualified to enter GCE Advance Level classes and the number of dropouts was 88,238. The number of students who sat the GCE Advanced Level examination was 209,906 and 122,913 qualified for university admission and the number of dropouts was 86,993.

The university intake was only 24,540 in 2013-14. The dropouts from the two main examinations, the GCE Ordinary Level and Advanced Level examinations was 186,611.

The annual average unemployment rate for males and females was 3.2% and 6.6% in 2013 and number of unemployed people was 384,439. The unemployment rate was 26.6% in the age group 15-29 and the unemployment rate was 8.6% for those who had passed the GCE Advanced Level and above.

3. Emerging economic sectors

The emerging economic sectors of the country are basically identified by looking at the sub sectors of the GDP that indicate faster economic growth in the recent past and more value addition to the economy.

Basically, these are the sectors responsible for a bigger share of the employed population and provide more new jobs.

The prioritised sub sectors of the GDP are -

i. Construction industry which includes construction of houses and commercial buildings, highways, roads and bridges and ports. This industry has shown 14% to 22% annual growth during the past four years and the industry can be ranked as the fastest growing and its GDP share which was 11.8% was higher than agriculture in 2014.

The industry has the highest direct and indirect input for production and has links with many other industries and has a direct and indirect impact on accelerating the economy. The sizable share of investment is from this industry and its fast development is needed to raise investment and create better infrastructure facilities to enable faster growth in other sectors of the economy.

The number of people employed in the construction, electricity and water sector was 587,968 or 7.0% for 2013. This industry can provide more jobs for excess labour in rural areas and the estate sector.

ii. Information and Communication Technology (ICT), Business Processing Outsource (BPO), Knowledge Processing Outsource (KPO).

This industry has shown an annual growth of around 15% during the past few years. In respect of foreign earnings and providing jobs, BPO and KPO are in a prominent position and the expansion of this sector is encouraging.

ICT is important to accelerate production and services and provide user-friendly and faster market facilities for consumers. Many of the modern electronic and automobile equipment use ICT. To provide proper services the ICT sector has to expand. By increasing the availability of advanced communication technology and a skilled workforce, there is potential to raise productivity.

In 2013, the number employed in the ICT sector was 62,640 or 0.7% of the total employed. Basically, BPO and KPO service centres have to be set up where infrastructure and ICT personnel are available for a smooth operation.

iii. Tourism industry including hotels and restaurants.

The number employed in the accommodation and food services sector was 62,640 or 2.2% of the total in 2013 and its GDP share was 0.8% in 2014. This industry has shown 12-40% annual growth rates from 2009-2014.

The sub sector performed commendably to attract over 1.27 million tourists during the year and the earnings from tourism was US $ 1.7 billion in 2013. This growth surpassed achievements in 2012 for the second consecutive year despite the unfavourable global environment.

iv. Apparel industry

The textiles and apparel industry has shown 5-12% annual growth from 2010-2014 and the industry can be ranked as fast growing and its GDP share was 3.2% in 2014. The share of export earning of this sector was 43.4% of total export earnings of US $ 10,394.3 million in 2013.

The apparel industry is the major component of this sector. The reputation of Sri Lanka as a reliable supplier of quality garments at competitive prices in international markets enabled the apparel industry to maintain high growth in traditional markets and with positive signals of regaining GST plus, the industry can expect a better future.

The industry could provide jobs in the Eastern and Northern provinces too.

v. Food processing industry

The food and beverages industry has shown 5-8% annual growth from 2004-2014 and can be ranked as a moderately growing industry. Its GDP share was 8.1% in 2014. The food processing industry expanded in 2014 growing 8.1 percent.

vi. Light engineering and automobile industry.

This is another prioritised sector having the capacity to expand to generate more jobs and higher value addition.

vii. Pharmaceutical products.

The import expenditure on medical and pharmaceutical products was 2.1% of total import expenditure of US $ 18,002.8 million in 2013. This proves that the local pharmaceutical industry could be expanded to generate more jobs and value addition.

4. Implementation

i. To create new jobs foreign investment is needed for value addition and productive sectors of the economy. This is needed for all seven segments identified above under Section 3. It is important to have foreign capital inflow and foreign investors with the latest machinery, equipment and technology to compete with modern products globally.

Therefore, investment and investors should be decided on by a committee to suit each segment indicated in section 3.

ii. New industrial zones and industrial estates and expansion of industrial zones and industrial estates can be set up. The location of industries and industrial zones should be decided by a team of experts to suit the area taking into consideration the labour market characteristics in the area.

Similarly, the infrastructure needs for industries including transport, electricity, water, waste disposal, sanitation, environment should be considered. If these are not available, the facilities should be provided before setting up industries.

iii. There should be a package of benefits (tax holidays) to promote and encourage investments and investors and it will also help to accelerate the activity and at the same time there shouldn't be any sort of red tape such as to obtain registration, licences and facilities for new investments.

Accordingly, legal coverage is needed for these investors for a smooth operation.

iv. The government has a role to play in promoting investment, finding foreign markets especially in the western world and internally, to make proper roads and highways to each province, provide uninterrupted power and water supply and implement labour rules.

v. There are Free Trade Zones, such as the Board of investment in Sri Lanka (BOI) zones, industrial estates for small and medium scale enterprises (SMEs) and identified districts and industries to be promoted. These have to be incorporated into the program after an evaluation for smooth functioning.

5. Authority to implement the program

i. There should be a high ranking authority empowered to coordinate with other relevant agencies to implement the one million jobs program.

This institute must have powers to implement its policies through other agencies such as the BOI, Samurdhi and Department of Labour (minimum wages, poverty reduction), Bureau of foreign employment (BFE), Job Bank and Treasury.

Within the institute there should be a separate division named Job Bank. The Job Bank should collect information from job seekers and job suppliers and offer employment to job seekers by cutting down time and other unnecessary expenses and by matching supply and demand.

ii. A high ranking national planning commission for the implementation of the one million jobs program should be set up to provide policy guidelines, monitor and evaluate progress of each identified activity and the relevant agencies.

6. Time frame

The most appropriate period should be three-years considering the present situation and other factors affecting this program.

The writer is a freelance consultant.