Job creation stimulates economic growth by increasing the purchasing power of individuals and creating demand for goods and services. This leads to increased production, sales, and revenue which in turn contributes to the growth and expansion of the economy.
However, the statement by the Vice President of Ghana, Dr. Mahamudu Bawumia, speaking to New Patriotic Party (NPP) supporters during a health walk in Mpreaso mentioned that NPP has created 2.2 million jobs between 2017 and 2022 is not one that has brought about economic growth. This statement by the vice president was based on his own fact without reference to the budget statement within the same period or any other reference.
The focus of the press statement by the YAFO Institute is to provide clarity on the nature of 2.2 million jobs claimed by the vice president and their impact on economic growth. We also assume that the data given by the vice president is true.
The Ghana Living Standard Survey round 7 defines employment (work) as any economic activity performed during the reference week that contributes to the economic production of goods and services for pay or profit. The claim from Dr. Bawumia on 2.2 million jobs ignored the impact on economic growth. It is trite that once you create jobs, economic growth must respond positively. However, our sad reality has an inverse relationship between job creation and economic growth in Ghana. According to World Bank, Ghana’s GDP growth rate had decreased from 8.1% in 2017 to 3.2% in 2022 with the unemployment rate increasing from 4.22% in 2017 to 4.7% in 2021. Should the creation of 2.2 million jobs within this period result in a decrease in the growth rate and unemployment rate or otherwise? Hence, the increase in employment (2.2 million according to Dr. Bawumia) does not translate into an increase in the GDP growth rate or a reduction in the unemployment rate in Ghana.
Again, the data on 2.2 million jobs from Dr. Bawumia shows an overly expanded government workforce. Most employment created is at the various Ministries (32), Office of Government Machinery, Office of Attorney-General, and Ministry of Justice and Internal Audit Agency. The nature of these jobs is politically oriented and individuals get fired once there is a change of Government. The size of the government is a major concern as the economic woes deepen which has necessitated a Domestic Debt Exchange Program with IMF. Several calls for the government to reduce its size have fallen on deaf ears. It is, therefore, not surprising that Ghanaians are experiencing huge taxes and the introduction of new taxes from the current government.
It is, therefore, illogical for the government to borrow to pay salaries of individuals in political employments that do not add value to economic growth in Ghana. Ghana is unable to raise revenue to meet its spending with a fiscal deficit of 9.9% in 2022 as the size of the government continues to increase.
With these jobs created, the operations of government are ineffective and our kind of digitalization breeds inefficiency and increased manpower. The data on 2.2 million jobs has more government jobs than private sector jobs. The private sector (formal and informal) is the engine for growth and the government needs to create a business-friendly regulatory environment so the private sector can rather boost of creating 2 million jobs.
We recommend a reduction in government expenditure including cutting down on government size as the government aims at achieving macroeconomic sustainability and debt sustainability. Also, the private sector should be the focus of job creation and not the government.
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