Friday, March 1, 2013

Does it make sense to give jobs to the unemployed grads en-masse?

The Govt. recently employed 50,000 graduates who were temporarily languishing in DS divisions at Rs10Kpm and have decided they will obtain permanent status at Rs23Kpm in addition to the various other benefits accruing to state sector employees. Is this a good example to Society?

Of course if I was a graduate who was unemployed (more likely to be unable to find a job, in this labor market of high vacancies, as those with skills would already have been employed) I would be grateful to the Govt. for giving me a Rs23Kmp wage and the benefits accruing to state sector workers. I may even vote for them, as I know I will probably never be able to command that income in any other way!

What does this all tell you? I refer to the link:

I refer to the following statement in this article above and I do not know if it refers to the writer or Minister Wimal Weerawansa saying that:

Ten of thousands of Sri Lanka's graduates, educated at tax-payer expense, agitate to become tax spending state workers after passing out.”

If ever there was an indictment as to the mentality of our graduates, this is it! It is important that this mindset is extinguished from people’s memory. That is why we cannot hope to have a competitive economy if this is a desire of graduates over other employment, and notably of better paying jobs, as our graduates come out of University with a huge conservative culture of the need for job security over everything else. This does not create risk takers, and therefore slows the growth of the economy and in this sense, actually stunts its growth, with many of these hired graduates contributing to the breaks put on by bureaucracy to slow the growth.

Personally I believe adding to an already bloated bureaucracy was a grave mistake, and will only harm this economy when the Govt. does not have the funds to pay its daily dues. It is best to look at this additional Rs14B per annum expense as a further burden to the economy. It is time to cut the fat in the public service, reduce its annual cost, and thereby permit the Govt. to pay the bills, and pay down the loans instead of increasing their payroll commitments.

The thinking of the nation’s leaders is short term and related to electoral gains, and not towards improving the productivity and efficiency of the economy.


Anonymous said...

Frankly, this is the best allocation of resources the government has done.

If you tabulate the other wastage in the SL economy like:

1. Mihin
2. Hambantota Harbor
3. Paying double the market value for Norochili
4. Commissions on all rubbish deals

With this expenditure you could employ 100,000 unemployed graduates on these terms for 10 years.

This will have a MUCH bigger multiplier effect than all the expenses mentioned above.

Anyway, this is all irrelevant when you can have everything taken from you including your life by a tyrannical government.

Anonymous said...

Weerawansa is getting credit for this and will get a huge amount of preference votes for it.

My question to you is???

Why on earth didn't the UNP take this position???

If people are employed, there should be a minimum wage. The UNP missed a chance to pick up 200,000 votes here on this issue.

It is not too late. Your position should be for a minimum wage of 40k/month. Put some fiscal pressure on the government and uplift the poor.

No brainer issue for an Opposition IMO

Aruni Shapiro said...

It does not make economic sense. This is another example of the Broken Window Fallacy explained by French Economist Frederic Bastiat. You see a sector that is not doing well, i. e. unemployed graduates. But you don't see all other sectors that are doing well, i. e. those who found employment, some even without a campus degree. You only take into account the Aggregate Demand you see and make a policy. Long term inevitable result is loss, not profit, and to all parties concerned. Next these graduates will strike asking for pay increases while not knowing that they were very ones who increased the government debt and mades consumer prices higher. If UNP comes to power one day they should not do it either to just get votes because it brings economic disaster and is unfair to all citizens.

Since FUTA is against actual job related technical training in campuses I don't see any remedy for future generations either. For FUTA, liberal arts education is something to be proud of while those who have liberal arts degrees are the ones without jobs.

Minimum wage is also another Broken Window Fallacy. It deprives many who would have otherwise gotten an entry level job.

What does not make economic sense does not make political sense either, if you want to govern long-term.

That Which is Seen, and That Which is Not Seen:

Anonymous said...

the job of the government is to try to provide solutions to social problems. The problem is that we have a large number of young people coming out of school and unable to find employment (not that the employment does not exist as any employer in Colombo can tell you). If these people go for long periods as unemployed youth, they will get frustrated and possibly turn to anti-social activity that hurts themselves and/or society such as drug use and crime. We have already seen in the past youth insurrections so it is not a theoretical issue as in so many other countries with similar problems. Therefore a solution must be provided, and the government employment seems to be the only thing that does not ruffle the feathers of vested interests and that gives these people something to do. It is correct that the bureaucracy is expanding to meet the needs of the expanding bureaucracy and there should be a better solution such as vocational training, internship programs, mentoring, entrepreneurship training, etc. to go along with economic growth to get out of the problem