One of the most common complaints I get is that many Zambian graduates do not have access to jobs because the jobs are normally given to foreign expatriates. Many see the challenge of unemployment as being largely compounded by the presence of foreign experts doing jobs that can be competently executed by Zambian graduates.
There are three fundamental questions help us unpack this issue :
(1). Are Zambian graduates really not getting the jobs that they are equally competent to do, and may even be able to do at lower wages?
(2). If the answer to (1) is yes, is this a failure of the market, or is this effectively a failure of government?
(3). What is the appropriate way of addressing these market or government failures, assuming they exist?
Question 1 is essentially an empirical one, and one which Zambian economists have yet to address. There's no available robust evidence to verify whether Zambian graduates are losing out on jobs that they can actually do to foreign born experts. However, many people hold this belief - so it is probably safe to assume, in the absence of rigorous evidence, that on the balance of probabilities, the answer to Question 1 is "yes".
Question 2 is more complicated. Is the suggested lack of equal access to jobs between Zambian graduates and expatriates a failure of the market or government? I think most people would agree that if two people are equally qualified, they should have equal access to jobs. So either they are not equally qualified (a "no" under Question 1) or they are, and therefore something must be preventing the market from working effectively.
There are three potential market-related explanations why foreign experts may be displacing Zambian graduates. First, the market may place a premium on being foreign compared to being local. Secondly, the foreign employers could simply be practicing discrimination against Zambian graduates, either due to stereotyping or other things. Thirdly, the foreign investors’ preference for foreign expertise may simply reflect the incompleteness of information in the Zambian labour market, as it relates to how much foreign employers know about Zambian graduates relative to foreign expertise.
We can safely rule out the first two explanations based on premium and discrimination arguments. There are laws already that deal with discrimination - and no one is suggesting that government is not enforcing them. The other issue of there being a premium for being a foreigner, although interesting in itself does not essentially correspond to a failure of the market. If being non-Zambian means more exposure to other working practices relevant to the job at hand, it would simply imply that foreigners are more qualified and more competent than Zambians.
This just leaves us with the third explanation above based on “incomplete information”. Essentially, the argument is that foreign firms do not have all the information on Zambian graduates compared to foreign experts and therefore feel more uncertain about hiring Zambian graduates compared to foreign experts. Rather than going out and hiring a Zambian graduate with equal skills and is possibly much cheaper, employers probably feel more certain and more assured of the person from a similar background or nationality. Being a foreigner almost represents the non-identified positive characteristics that the foreign investor can't see in the average employee.
To some this explanation is the same as discrimination, but in the context of the market and the way markets operate it’s simply a feature of incomplete information between the employer and the prospective employee.
"Incomplete information" in any market is a "failure" because the incompleteness of information prevents the market from reaching an efficient solution. In our context, it is immediately obvious to see that if foreign firms had complete information about foreign and Zambian graduates they would probably make different hiring decisions. For one thing, they would almost certainly prefer cheaper labour, which would almost put Zambian graduates at an advantage over foreign expertise. This in turn would lead to cheaper firm costs and greater profits, leading to more investment and so on.
Instead what we essentially end up with is an inefficient scenario where a cheap Zambian graduate is rejected on the basis of incomplete information in preference to a more expensive foreign expert who the foreign investor feels more assured and certain about (due to common nationality and background). Information is therefore what is missing and what essentially needs to be rectified!
So what does this all mean for Government policy?
This is a tough question, but it is clear that central to any solution is the need for Government to ensure that information between foreign investors and Zambian graduates significantly improves. This could be through specific programmes addressing the issues raised in this post, but also through incentivising foreign employers to work harder at getting to know and understand Zambian graduates.
Some policies may include requiring employers to hold workshops at Universities, encourage partnerships between universities and employers, and to possibly consider imposing minimum thresholds on the number of local graduates interviewed for each position. These are more likely to be effective solutions, as they target the problem at hand which is basically incomplete information between the foreign investor and the Zambian graduate.
Chola Mukanga | Economist Copyright © Zambian Economist 2013