Wednesday 28 June 2017

Jobs Creation 101 - The information imperative

The problem with job creation strategies and discourses is that they start not by fundamentally analysing the principles of job creation, but by already advocating the need for removing growth barriers for existing businesses, making a case for fiscal spending, removing barriers for new business and focusing on innovation. Unfortunately, these are actions that are based on certain principles and when we start from actions and not principles, these can not only be misleading but may not provide us with the full picture, leading to critical omissions and partial perspectives. 
The fundamental pre-condition for meaningful increase in job creation or net new job creation stems from the following:

A demand – supply gap in favour of greater demand and lower supply of goods and services.

Let us deconstruct this statement to uncover all important elements that factor in here. Demand, supply, goods and services, and a gap. Have we covered it all? 

The important thing which we tend to overlook is the information basis of it. The collection and communication of this information. The information of the demand and supply gap is critical for job creation. Without this information creating mechanisms to bridge this gap, ie. create jobs, will be inefficient, perhaps ineffective and counter-productive as well. 

History stands testimonial to the fact that precise information and meaningful use of it has been not only the basis of progress, but also has served to bring respect, accolades and prosperity to societies and individuals. Kings and the erudite, prided themselves on being able to accurately measure time, sizes and distance of celestial objects, or create architecture that required precise measurements to achieve marvelous and often difficult creations. As societies evolved precision systems were being used in manufacturing, astronomy, and for other practical uses. Data systems for socio-economic use have not yet evolved to the extent required, while the technology is there it is the intent and the effort that is missing, and perhaps to some extent the competence to design effective systems, along with devising reliable compliance mechanisms. 

It is no surprise that in recent times, the evolution of data management and analytics is in great focus across the world. Countries that invest in devising systems for precise and meaningful collection, storage, analysis and use of data and information, will be at the vanguard of economically developed and well-functioning societies. In developing countries today, where key national macroeconomic-data itself is being challenged and doubted there is little hope of meaningful and planned progress. 

From a job-creation perspective, to create jobs it is important to:
  1. articulate demand and supply and the resultant gap in quantitative and qualitative terms
  2. tip the scales in favour of greater demand. For that, we can either increase demand or decrease supply. Decreasing supply will logically reduce jobs, therefore the lever we are seeking to use is 'increase demand' and thereby raise supply to meet that demand. 
Yet when we talk about job creation we tend to almost always look at setting up and growing supply institutions more than focusing on generating demand. 

Let’s now look at the demand side, on the demand side we can increase demand by creating aspiration and enabling purchasing power. 

Programs such as employment guarantees, minimum wages, social security, directly and indirectly sustain consumption by enabling purchasing power, apart from the other socio-economic benefits they provide. Another way to increase incomes (purchasing power) is to shift economic and labour activities towards higher value and productivity practices, that enable to command better prices (returns). This may be done by enhancing skills, technology employed, making better choices and working in a supportive eco-system, that is designed for better productivity. This also may result from shift in socio-cultural work practices and attitudes, and increased labour rate participation for collective units. 

An additional way of enhancing income is by reducing over-supply in the economy, something that depresses prices and therefore returns. 

On the other side to enable aspiration, requires us to educate people, enhance their awareness not only of goods and services, but generate a sense of competition and achievement motivation through addressing the issue of self-worth. This is a significantly under-focused aspect of job creation. The socio-cultural basis of this requires us to work differently at this, but much can be achieved through this, as this is a generative method that not only produces the maximum impetus, but also sustains itself. 

Some people confuse greater demand with greater consumerism and high ecological costs. There is an underlying bias that needs to be corrected here, as we are not stating the nature of goods and services that are to be consumed within societies and economy, the value ascribed to these goods and services is by society and it may not be as materialistic and damaging as the bias suggests. Effective Education for example can be a service with low ecological impact and high sustainability, it really needs to be developed in that frame. Similarly, as an example, the value of organic food today is greater in both sustainability terms and economic terms and thereby the increased consumption of organic food may well be a lever for higher future jobs and economic growth.

Now when demand is generated, or existing surplus demand is captured in data, then the supply side wakes to fulfill the demand. It is here that new investments, growth of existing institutions and setting-up of new institutions and mechanisms for meeting that demand take importance. Removing barriers for setting up new business, access to capital for new and existing businesses, laws and levies that make businesses unviable and undermine growth will need to be looked at.  More and more economies and societies are focused on these, and governments are being pressurized to develop laws and business environments where the supply can increase in response to existing demand, even where demand and supply information is not readily and accurately available. One of the reasons why this is so is because companies and businesses are looking for comparative advantages in a global context and currently such entities are able to exercise influence and power in governance mechanisms even unduly. Businesses are competing for the same pie and as long as they can inveigle an advantage that allows them to sustain and grow irrespective of any real need, they are happy. But in order to generate meaningful jobs and capacities, we need to not only work on these, but really focus on getting better information, and work on the levers on the demand side of job creation, that will be the real lever for evolution of jobs, businesses and real progress. 
Click image to enlarge

I will bring forth in this section concepts, strategies and practices pertaining to job creation, a critical theme for development in the contemporary world, especially in light of automation and technological advances that are making certain skills and jobs redundant on one hand, and on the other developing economies and conflict-afflicted contexts pose varied other challenges for creating and sustaining jobs and putting people to meaningful work. 

I hope to have a solution focused discourse that necessitates focusing on fundamentals that will bring a refreshed understanding of context, causal relationships, complexity and consequences. 

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