In this weekly column on The Sunday Morning Business titled “The Coordination Problem”, the scholars and fellows associated with Advocata attempt to explore issues around economics, public policy, the institutions that govern them and their impact on our lives and society.
Originally appeared on The Morning
By Dilshani N. Ranawaka
“We want jobs!” is the latest addition to the long list of to-dos that Sri Lankans think the Government is responsible for. The Government positively responded to the protesters and appointed 16,800 graduates as trainee development officers and positioned them across the country. What is so preposterous about this incident? Is it graduates demanding jobs or the Government handing out jobs on a silver platter?
To put this into context, these fresh graduates demanding jobs are the smallest proportion of the student population who were privileged enough to get free education for nearly 20 years while the others were limited to just 13 years. The Government bears the cost of their education in addition to the scholarships offered as financial assistance for undergraduates in need. After 23-24 years of education, they are groomed to be graduates equipped with knowledge and the knowhow to enter the world or work. But, why are they demanding jobs?
This particular problem needs to be explored through the larger lens of unemployment in the country. At the end of the first quarter in 2019, the unemployment rate rose up to 4.7%, an increase of 0.3% from last year. Unfortunately, the contribution by the unemployed graduates to the national unemployment rate is nearly 10%. Reasons for such unemployment rates can be explained through two dimensions; from the perspectives of labour supply and demand.
Labour demand theories indicate that unemployment rates persist for two reasons; demand deficiencies and structural mismatches. Demand deficiencies occur when the economy does not produce sufficient employment opportunities and structural mismatches occur when the skills of the labour force do not meet the requirements of labour demand. In Sri Lanka, studies indicate that structural mismatches are the main contribution to unemployment. But how does it explain today’s prevailing conditions of the labour market?
Entering the world of work is challenging for any graduate. The problem arises when your hard-earned bachelor’s knowledge is impractical and is rarely helpful in the related work you are hoping to do. This is the problem of mismatches of skills in the labour market. In cases where technical knowledge is not important, employees would actually prefer interns for two reasons. Graduates demand more money because of their educational qualifications and interns could be trained to suit the institution’s needs at a lower cost.
In some cases, labour without a degree could have more experience in the field even though they might not have academics. In most cases, experience in a particular field is attractive to any employer.
Now, this takes us back to the main problem. Do these graduates have the right to demand for jobs from the Government?
As a fresh graduate myself, I believe we “do” have the right to work, but the State is not necessarily bound to provide graduates with jobs. These protestors who were provided free education for nearly 20 years should be the drivers of the economy. Unfortunately, such expectations are reversed in the context of Sri Lanka. What should the State’s stance be on such occasions to prevent this from happening in the future?
The present Government responded by offering positions of development officers and teachers funded by the State. This particular stance of the Government is problematic for two reasons.
This sets a bad precedent for younger generations, giving the impression that it is the Government’s responsibility to provide jobs for them. This removes any incentive for future unemployed state graduates to be creative, think outside the box, and achieve the potential they are capable of. Instead, they would be forever dependent on the State, demanding more of everything.
Increasing job opportunities expands the public sector. Larger states would result in higher expenditures and these expenditures are financed mainly through taxes and loans. When these protesters are given jobs, the Government needs to finance these expenses through the imposition of taxes; increasing the cost of living for everyone.
Given these positions, what should the State’s role be in addressing the problem? And what should the graduates expect from the State?
Handing out jobs has so far been the strategy of governments. However, one could question if such quick fixes are effective even in the short term. A more productive approach would be to identify and implement strategies which address the question of “why” unemployment among graduates is common.
The European Union (EU) had identified two approaches to address structural mismatches within a labour market.
Addressing skills mismatch among unemployed
“Springboard” is an instrument implemented by Ireland which focuses on empowering the unemployed with skills. After offering the unemployed graduates six months of training, direct links with the labour market increases their chances of employment. A few of the key features of this instrument is that this mechanism is monitored by an “expert group on future skills needs”, a board that comprises employers, and focuses on training skills which are customised to suit the skills required for Ireland labour market dynamics and sectors such as ICT, finance, trade, and manufacturing.
Addressing skills mismatch to prevent unemployment
The “curriculum teams” initiated in Luxembourg acts as the bridge between labour market requirements and education institutions. Their role is to shape the national education curriculum in a manner to suit future labour market trends. The key takeaway from these policy instruments is the focus on addressing the core of the unemployment problem – “skills mismatch”.
This particular incident is one demonstration of a deep-rooted issue within the country; the free-rider mindset within each and every one of us. Moving from “it’s the government’s responsibility to do so” to “it’s up to the individual” is going to be extremely difficult as expectations of welfare from the government have been deep-rooted within our system. Which option would really empower an individual? Providing jobs or providing skills to strengthen and expand their capabilities?