What is Ghana's unemployment rate?
I would like to commend the editorial team of the Daily Graphic for its interest in the subject of labour market information. Your editorial of Wednesday, March 5, 2014 sought to draw readers' attention to Ghana's inability to compute unemployment rate from the data gathered from successive population census exercises executed by the Ghana Statistical Service and its predecessors.
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The editorial content point to the absence of the unemployment rate despite the availability of the population counts. You also drew attention to the fact that the failure to compute the unemployment rate may have been due to the sensitivity to throwing up scary figures.
The theory of not scaring the population with ridiculous unemployment figures is real but that should not motivate a whole nation to neglect the compilation of a vital macroeconomic indicator. I have always maintained that the unemployment rate is a missing macroeconomic indicator in Ghana.
Managers of the economy have failed over the years to produce this statistics despite its importance. There is a known relationship between growth, inflation and unemployment. Thus, a focus on growth and inflation to the neglect of unemployment is to conveniently elect to skip the unintended consequences of policies targeted at growth and inflation on employment.
This situation has compelled the Ghana Trades Union Congress to call for more attention to employment generation as a key macroeconomic target.
Back to the subject of estimated unemployment rates, it is important to observe that computing unemployment rate from stock population census figures as your editorial seems to suggest is not necessarily helpful for planning purposes.
This is because the concepts of employment and unemployment in official statistics are very fluid. The number of economically active population in employment is measured as comprising all persons above a specified age who during a brief period, either one week or a day were in (a) paid employment and/or (b) self employment. On the other hand, the number of the unemployed is measured as covering people who are: out of work, want a job, have actively sought work in the previous four weeks and are available to start work within the next fortnight; or out of work and have accepted a job that they are waiting to start in the next fortnight. What these mean is that a typical economically active labour market participant can be classified as employed or unemployed within days or weeks or months. The pendulum can swing between these two categories in quick succession.
To obtain useful employment statistics requires continuous survey to produce the relevant estimates. The point is this: that employment and unemployment figures are almost always modelled estimates.
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The investment needed to capture these statistics may be enormous but their planning value as detailed in your exposé on the value of Labour Market Information System can be equally gargantuan.
To conclude, it is important for stakeholders, including influential ones like the Daily Graphic and the Ghana Trades Union Congress to support the government of Ghana to make and sustain the necessary investment in the collection of labour market data.
A functional labour market is a means to sustained output growth, low inflation, macroeconomic stability and the desired quantum leap to the middle income status.
Dr Anthony K. Tsekpo
tonytsekpo@gmail.com
(Economist)