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Youth unemployment is a matter of national crisis.

Sat, 20 Aug 2016 Source: Superior, Musah

Musah Superior

The Ghanaian youth today belongs to a generation who feel that the implicit contract they signed with the government —work hard, and you can have a better life than your parents—has been fundamentally breached. There is no better prospect in sight under this government for the youth. The perilous graduate unemployment particularly is the mainstay of the spectacular collapse of morality and education in Ghana lately. The youth no longer feel inspired or motivated to work hard and stay good and out of trouble. Some even argue verily that spending ages and energies climbing up the educational ladder is unnecessary. Consequently they conjure up in their minds that formal education is a waste of time and resources. Youngsters felt inspired by the achievement of the graduate nurse or accountant who is gainfully employed in a properly run government such as the last NPP government. Today, their "role-models" are "sakawa" hitmen who cruise in fashionable cars and live very luxurious lifestyles. Their "mentors" are now the corrupt politicians who flagrantly rape the public purse to live in their opulent world of conspicuous consumptions. The best predictor of future unemployment is previous unemployment, research shows. Upcoming young people tend to adopt the criminal means of acquiring wealth than furthering their education only to still be a dependant after graduation. What future are we building for our homeland? In this article, I will examine the causes and effects of youth unemployment in Ghana and suggest solutions to slaying the monster.

How did we get here?

Our elders say if you fall, look at where you stumbled not where you fell. In the same vein, a referee never justified the award of a penalty kick by pointing to where the player fell but where he was kicked or fouled. There has been youth unemployment in Ghana. But the situation at present is particularly horrendous. The figures have reached crisis level. The poor economic growth, widespread corruption scandals and the winding up of job-creating stimulus measures threaten further unemployment overall.

In these difficult confusion, young people are suffer most. They are relatively inexperienced and low-skilled, and in many industries they are easier to fire than their elders. Yet the government gives the institutions plenty of points to write the lay-off letters. Much to the chagrin of the young citizens, our government imposes lots of iniquitous taxes on the private sector. Every existing tax is increased and still rising perniciously yet more weird and obnoxious taxes are introduced at substantial rates (increased taxes on corporate profits, income tax, utility bills, import and export duties, fuel, etc and new taxes on financial services, imports of inputs, ICT gadgets, health needs, etc).

The youth is also bearing the brunt of austerity economic policies. The NDC government has collapsed the private sector, which is the engine of growth. Apart from the harsh taxes, government has been unproductive at solving the energy impasse and crowded private investors out of the domestic money market too. Businesses need credits (or loans) to expand its operations and engage more hands (likely the youth) in consequence. Sadly, government has dominated the money market with treasury bills reducing the available credits and causing interest rates to increase substantially. Businesses then either increase prices of goods and services or lay-off some workers (most likely the young) in order to operate within budget. In an attempt to reduce the unemployment, the government had renamed the inherited NYEP to GYEEDA, YES and now YEA. The NYEP, an NPP flagship policy was effeciently operated and correctly supervised and played a key role 8n addressing unemployment in our deprived communities. Today the youth employment program has been scandalised with corruption.

The skills mismatch is a youth unemployment cause that affects young people in this country. There are millions of young graduates who are seeking jobs, but businesses need skills these young people never got from schools. The skillset of our graduates do not relate with the requisite skills needed by businesses. Similarly, young people who have advanced degrees find themselves overqualified for the ready jobs. In this regard, there is both economic and personal cost: their potentials are underutilised. While the root cause of the skills mismatch is difficult to finger, it's a combination of school curriculums neglecting vocational, entrepreneurial and employability training in favour of rigid theoretical academics, poor connections between industries and schools to promote training and work experience for the job market. The skills mismatch in present Ghana is worsened by the inaccessibility of ICT gadgets for training due to its unaffordability resulting from new taxes on ICT inputs.

Young people who want to venture into entrepreneurship by starting their own businesses often struggle to have access to affordable loans, or loans in general. This in part is due to a lack of collateral. Another worrying constraint is high interest rates. The straining interest rates charged on loans hampers access to capital. And government looks on haplessly.

What are its effects?

Youth unemployment has direct costs in much the same way as all unemployment: increased benefit payments; lost income-tax revenues; wasted capacity. Government loses much in income tax revenues because young people are not working. Productivity slows down too. The effects are both economic and personal.

Some indirect costs of unemployment, though, is compounded when the jobless are young. Take emigration for one: ambitious young citizens facing bleak future in Ghana often seek opportunities elsewhere more readily than their elders with dependent families. In Ghana, where the youth unemployment rate pegs at 48%, some young professionals like graduate nurses, teachers and doctors may consider emigrating for employment reasons. Meanwhile, a constant brain-drain is one more depressing symptom of a stagnant economy. It slows the performance of the economy and stagnates it.

High crime rate is another cost. Attempts to attribute the recent rise in crimes to youth unemployment is overhasty. But to conclude there is no link between crime and youth unemployment more generally looks unduly optimistic. Young men are already more prone to break the law than most; having more idle time, more motive and less to lose hardly discourages them. Leaders cannot continue to let the youth down, living in opulence while expecting the youth to look on. At some point, they will get frustrated and try to take you out. Remember, most young men neither have properties nor direct dependent families to worry about in case of riots. Some researchers even claim that a causal link exists between increased youth unemployment and increases in crime, specifically property crime (robbery, burglary, theft and damage) and drug offences. No such link is identified however for overall unemployment. We must realize that future employment prospects fall off a cliff if the crime leads to prison. A labour economist at the London School of Economics, Jonathan Wadsworth says young people are hit especially hard by the economic and emotional effects of unemployment.

How do we resolve these challenges?

Ghanaians go to polls on December 7 and it is a day to decide who in turn decide for us. Leaders must understand that the decisions they take for and on our behalf have repercussions. And Ghanaians must appreciate that to change the decisions is to change the leaders who make them. The Mahama government has no credibility to change the current situation. That is beyond doubt! The IMF deal that will rationalize (euphemism for lay-off) the public sector labour beyond 2017 is one that may be renegotiated, but cannot be by NDC again.

The next government should priorotise reduction of corporate taxes. Reducing corporate taxes on businesses will enable them to expand and in turn employ more of the youth. Government must scrap taxes imposed on imports of inputs so as to increase productivity and consequently employment. The new taxes on financial services must be repealed too. This should increase bank savings and make credits readily available than now. It will lessen the cost of capital for businesses and cause more entrepreneurial ventures to spring up. Tax incentives must be encouraged for those businesses who employ more youth and graduates. It is not to suggest that tax revenues are completely immaterial to government. But attention is given to the benefits of foregoing tax revenues in the sense that jobs are created, productivity is increased, tax net widens and income-tax revenue increases and maybe crimes reduce drastically.

Government must engage other stakeholders to sign a Public-Private Partnership agreement with the private sector to provide practical training to vocational students especially. For example, the German's employer-based apprenticeship scheme could be considered. In Germany, a quarter of employers (in the private sector especially) provide formal apprenticeship schemes and nearly two-thirds of students undertake apprenticeships. Vocational students spend around three days a week as part-time salaried apprentices of companies for two to four years. The cost is shared by the company and the government. And we know the possibility of apprenticeships turning into full-time jobs at the end of the training.

Ghana's educational system needs revision to resolve the skills mismatch. Government must involve the private sector in planning the educational curricular so that the skills required by the sector is considered. This will inculcate in the students the needed skills to work in the private sector.

The next government must, finally, exit with urgency from the domestic money market causing interest rates to reduce and boom business operations and expansion.

In the words of Mr. Carl Wilson, a prominent member of the governing NDC: "... I know Ghanaians are not satisfied with the governance they are being [served] today, especially the unemployed youth ... You see the propaganda is too much and so it has clouded the indicators by which we can properly gauge the mood and judge how the polls will go. If you take away the propaganda and you face the real issues, they themselves [NDC] know that it will be difficult for them.". We must change the decision makers at the opportune moment in December. Nana-Bawumia ticket will truly transform the economy and create jobs for the teeming youth of Ghana.

God bless our homeland Ghana and make our nation great and strong!

Columnist: Superior, Musah