Some interesting observations from Murray Sanderson on what is needed to solve the problem of youth unemployment. The approach can perhaps be summarised as one focused on removing "regulatory constraints" e.g minimum wage, pension contribution requirements. Not in a blanket way but specifically for those employing young people to "enable youngsters to get a foot in the employer’s door, and then to receive on-the-job training and experience". The big question of course is the extent to which such constraints are currently the "binding" ones - its an empirical question, something not addressed in the article - but one certainly hopes someone in the Ministry of Labour knows the answer.
There is general agreement that Zambia suffers from a crisis of unemployment, and that to create enough jobs we need massive economic development.But that is a long and difficult journey, and jobs are needed now. Zambia has countless thousands of unemployed people looking for jobs.
In particular, youngsters leaving school or college face a hopeless situation. Must they wait patiently for economic development? Is there no other way forward?I believe there is, and that it stares us in the face, if only we open our eyes.In Zambia today there are no ‘EMPLOYEES WANTED’ signs.However, there are, all around us, great numbers of employment opportunities.But we actually prevent people from taking advantage of them.Let me explain. Economists point out that supply and demand depend upon price.This applies to all commodities and services. Zambians whose memories go back to the 1980s will recall that price controls on consumer goods, then called ‘essential commodities’, boosted demand, but greatly reduced supply. Shops became surrounded by long queues.Ordinary people often had to wait for hours, and even then failed to obtain their needs.Instead of making supplies more readily available, price controls had the opposite effect.Well-intended controls caused much hardship.A similar situation now applies to jobs. Laws which raise wages through setting minimum levels increase the demand for jobs, while reducing their supply.This frustrates the wishes of would-be buyers and would-be-sellers, and it causes unnecessary unemployment.To appreciate this, one has only to think of what would happen if the currently low wages of most domestic servants were greatly increased by law.Many would lose their jobs, and few new jobs would be created.That example suggests that the removal of legal minimum wage legislation would make many more jobs available.But its removal would look heartless, and it would spark strong opposition.This would come especially from the labour movement; for it is the task – indeed the duty – of trade unions to demand better wages and conditions for their members. But trade unions naturally have no interest in non-members, who include the unemployed and recent graduates from school or college.Young people especially face great difficulty in finding jobs.They are ‘unknowns’. They have little or no training in skills required by employers, and of course no track record, let alone testimonials from past employers. Their ability, industry and reliability are all unknown.So potential employers are reluctant to take them on, especially at a starting wage set by law.If, however, such young people were exempted – at least for a period – from minimum wage requirements, that would enable them to get a foot in the door.How could this be arranged? Simply by permitting youngsters to enter employment, perhaps on an officially registered two year contract, at whatever wage was agreed between them and a potential employer.This would enable youngsters to get a foot in the employer’s door, and then to receive on-the-job training and experience.It would give them a chance to demonstrate aptitude, industry and reliability, and so to establish a track-record. Then, at the end of the contract period, it could well be attractive to the employer to take them on permanently at, or even above, the minimum wage.Another possibility which deserves serious consideration is to reintroduce the apprenticeship system.This was abolished in the Kaunda era as ‘colonial’. However, on-the-job training can be of great value, and it is appropriate to pay low rates to trainees.It will, of course, be objected that any waiving of minimum wage requirements would open the door to the denial of decent wages, and even to outright exploitation.Such objections are natural, but they are not realistic in a situation of mass unemployment.Desperate job seekers regard persistent unemployment as less ‘decent’ than even the lowest wages.Similarly with exploitation: most unemployed people would regard it as better to be exploited than to remain unexploited! We should leave the choice to them.The minimum wage is, of course, not the only law which discourages employment.A serious discouragement to recruiting permanent employees is the legal requirement for the employer to pay retiring employees 3 months pay for every year of service.This entitlement can become disastrous to businesses which are not financially robust, and it remains a serious discouragement to recruiting permanent staff.This provision was in fact made unnecessary by the establishment of NAPSA.It should now be removed, while making appropriate provision for currently entitled employees, together perhaps with a general increase in the level of NAPSA contributions.Another major factor which reduces job availability is the strict legal requirements of the Zambia Revenue Authority, NAPSA and the Workers Compensation Fund, which can result in heavy penalties .Complex regulations may be appropriate for large and medium scale businesses; but they present an unsupportable burden to small enterprises which lack the supervisory staff to implement them.This is important, because the establishment and the subsequent growth of small enterprises have tremendous potential for employment creation.Provision should therefore be made to exempt business enterprises below a certain size from these onerous requirements.I conclude by returning to the plight of our young people, especially school leavers, and to the need to exempt them from minimum wage requirements, at least for an initial period.This would provide them with the opportunity to get a foot in the employment door, and it would, I believe, ‘create’ hundreds of thousands of jobs.