Tag: Tertiary Industries

When The Economy Speaks … Reversing National Unemployment Statistics


6 Things A National Leader Does.

View at Medium.com
https://medium.com/series/when-the-economy-speaks-cdb62e49ad36

Peter looks down at his high school examination results transcript for the first time. It is not a pretty picture. He had been praying hard the results that would peer back at him would be different but he also knew deep down that it may not. He had been dreading this moment. It has arrived.

Still, he had wished for otherwise. He is a bright student. But it had not been an easy past few years. He had just lost his older sibling to a debilitating illness. They had been very close to each other. He is also dauntingly aware his parents are not close to each other and fears they may find other partners and break up the family and sanctity that he seeks. What would that mean as a family? Where can he seek counsel? Will he be intruding? It bothers him.

Turning his eyes back at the results, he knows he can do much better than what he sees. The reality is dawning at him. He is facing it squarely. These results will not help him get into his dream course at the university of his choice. It hurts him. What should he do now?

Suddenly he remembers that he has to announce these results to his family. He has been known to be the one with a sound head on his shoulders. But now. With this. What would they think of him? Maybe they would not ask. He consoles himself.

But they did. He chose to keep quiet. Perhaps they will understand. He hopes. But meanwhile, he needs to come up with a strategy. Fast. So that his peers do not leave him behind.

He thinks.

He needs to get grades. Good grades. Fast. What subjects will help him do so? French. Perhaps. Grades that would allow him to put his foot through the door of a tertiary institution. What can he do so that he can catch up with his peers in the shortest possible time? He has the coming summer months to do so.

What jobs are out there that he should prepare for? He really did like the sounds of the field of nautical engineering. He had really enjoyed seeing and fiddling in the cockpit of a cruise ship during one of his summer vacations. It had made him feel happy and come alive. And he loves his Maths and Physics. But he has been told that manufacturing here is not a big deal in terms of jobs. What should he do? How should he decide?

Are his days of plain sailing through life over? Will he face the same dilemmas when he is out there in the big wide world looking for a job? With only four jobs available for every ten working-age population, what will become of his chances with not-so-great grades? The supply of labor is now outstripping the demand for labor. Will jobs become too slim for his picking?

He will need to figure this out. He needs time. But does he have the time?

We all know a story like this.

One way or another.

And so. Here is the situation (Click on the link to the case study). You are now charged as the Head of this State. What would you do to turn around the situation?

Run, you say? Oh, you did not say that. Good! Invite more investors, locals as well as foreigners, to invest in the country?

Your predecessors have done that. Poured trillions for decades with the help of past heads of states and a cabinet of citizen representatives. Yet, widespread unemployment today, has grown to prevail at 60%! How did that happen?

You say perhaps “they” have not done enough. That you will do more than them. That is possible. For how long would you do more of the same? What went wrong? What else could we do?

Some measures are drastic and feel more like a bitter pill to swallow. But I hope it will make the tough actions we would take at a later stage become easier to bear with. So here goes.

1. “EXPORT” UNEMPLOYMENT

Don’t have solid agricultural and manufacturing bases? Finding it too difficult to build them? Well, here’s a strategy—though said tongue-in-cheek—to ease the short-term pain of unemployment: continue exporting unemployment at the same rate you’ve been importing manufactured goods and raw materials. That way, the unemployed will follow the money being spent on goods produced outside the country (or region) but consumed within. While this may momentarily relieve some pressure, it’s a reflection of the deeper economic challenge that needs addressing.

2 “MATCH” BIRTHS TODAY TO JOB CREATION TOMORROW

If we’re confident we’ll be able to create more jobs tomorrow, then by all means, go ahead and multiply. But if we’re not sure… well, you get the idea.

An unchecked population growth leads to rising unemployment, which eventually becomes difficult to manage.

The supply of labor isn’t driven by our education system alone—it’s determined by birth rates, from twenty years ago. That’s the time for a young person to mature and be ready for the job market.

Matching the decisions made by families today with boardroom decisions twenty years from now isn’t easy. But here’s the key: the same people who bring children into this world are the ones responsible for creating the jobs those kids will need in the future. And no, I’m not talking about divine intervention—it’s you and me.

We need to believe we can build businesses that will generate jobs for the next generation. Companies shouldn’t just be a means to hustle for profit today or a temporary shell to discard once we’ve met our immediate needs. They should be about creating a legacy and shaping the future for our children.

So, the question is, do you believe you can do that?

3 NATIONAL & COMMUNITY DIALOGUES AS FAMILIES Q: What allows industries to grow?

The choices we make as families and as a nation are deeply interconnected.

Decisions about acquiring skills for agriculture and manufacturing begin within families and households. However, these decisions are often shaped by perceptions of what is happening “out there,” rather than personal experience. It feels distant and unrelated to our immediate lives.

If we believe that our population lacks the skills needed for manufacturing, and as families, we feel the country isn’t doing enough to create jobs in that sector, we find ourselves in a lose-lose situation.

To move forward, we need to clarify our intentions, address the concerns, and develop a strategy to share accurate information as a nation. In today’s world, where countries can do grocery shopping online, solving this issue may not be as challenging as we believe.

Community Dialogues on household decisions and impact on national unemployment and vice-versa

4 CONSTRUCT REGIONAL MATRIX-ED GOODS VALUE CHAINS MAP

Get your foundation in order. Know your goals and pursue them with clarity.

Understand the interconnected structure of raw material supply chains driven by regional customer needs and develop strong agricultural and manufacturing sectors by following these steps:

  • Focus on what customers demand, not just the products you currently have. Build a comprehensive value chain map.
  • Identify how goods complement each other to efficiently meet end-customer needs in local, regional, and global markets.
  • Assess what resources are available and what is lacking.
  • Leave aside the question of who holds specific resources for now; this becomes relevant once the map is fully formed.
  • Pinpoint critical processes within the chains that, if absent, could halt production and disrupt the supply chains.
  • Don’t wait for other regions to develop their maps and then approach you for manufacturing. By doing so, you risk losing the influence and value needed to manage the process.
  • Co-develop this map on an ongoing basis with private sector organizations. Bring them on board. Present the reality. Ask what they want to do. Do not push their responses to another organization. Keep the conversations going. Do not let anyone think that the government will fund them. Ask what can all do to grow the nation together. How can they collaborate with each other and respond to the market demand and forces while creating employment for more?

Once the mapping is complete, you’ll have a roadmap to align your efforts and drive progress, both as a nation and as a region.

5 ALIGN AND BUILD HUMAN RESOURCES

Align and, where necessary, develop human resource skills for the agriculture and manufacturing sectors, with a focus on building both foundational and advanced competencies in English, Mathematics, and Science—particularly in Physics and Chemistry—across the nation. This will enhance resilience and inclusivity within these two critical sectors.

6 BUILD UP THE PYRAMID OF THE ECONOMY

Establish coordinated corporations within the agricultural (crop, plant, and raw material production) and manufacturing sub-sectors, ensuring alignment with the regional industry value chain matrix and scheduling.

Economies that rely heavily on extraction industries will have large pockets of unemployment that continue to persist in the nation. These industries gross high returns but they do so by employing fewer people and more machines to keep the costs of operations under control and therefore ensure the growth of the industry. This way the GDP would certainly look good (but not the food on our tables, which is the real GDP).

Machines do not create jobs for the unemployment rates.

Plant and animal-based primary production and manufacturing economic sectors when well-developed have greater potential for creating and absorbing significant employment. Extraction-based industries are typically technology-driven and have a lower capacity for the employment of human resources.

The nation is shifting its focus to production, particularly in plants. It will learn to mitigate climate effects one country at a time. This approach would allow the region to produce consistently throughout the year. It will keep the manufacturing sector humming.

Invite regional and global industry leaders. Alternatively, incentivize and groom local captains of industry with long-term overseas stints. These leaders can lead, chart, and build the sub-sectors from the ground up. This includes efforts within households and education sectors.

Newspaper Column #2: Is unemployment, the real problem? The story of Demand for Labour – Part II


As it appeared in the Sunday Standard, Botswana on  Sunday Oct 28, 2012 edition.

Supply of Labour

Industries (be they by locals or foreigners) do not exist for the sole purpose of employing citizens.  Hard as it may be to accept this point, it really is not that difficult to see the reason.

What is harder to see is an unemployed economy will affect the growth of his industry.  Not immediately.  But eventually it will.  Think most political revolutions. It is a sign of a vicious circle.

In last week’s edition of this column, we uncovered two factors that influence persistent unemployment in any country.   These were:

  1. The rates of growth of demand for labour (by employers) vs.
  2. The rates of growth of supply of labour (by employees)

As the supply of labour (rising birth and migration rates) persistently exceeds demand, unemployment grows.  This does not mean that our attempts at correcting the problem will not be successful.  They will not be successful for the long-term.

On the other hand, as the demand for labour (number of new jobs created) persistently exceeds the supply, unemployment would decline (and literally disappear by itself).

This week, we explore the demand – a side commonly used by most of us when focussing on the problem of unemployment.  In the next edition of this column, we will get around to supply.

But before we continue, what does the picture of growing demand for labour look like?  We might say, well, that is obvious.  We would see companies and industries recruit and persons as employees of their organizations.  That’s where most of us would stop.

But that would not be quite enough here.  We should see increasing numbers employed for the long-term.  Possibly even for decades.  And it happens primarily in the private sector.  They are key. If these three conditions do not happen, then real and deliberate growth in demand for labour has not quite happened.  Yet.

But what influences the demand for labour to grow consistently (rather than ad-hoc)?

It would require industries and the country to post a healthy growth of its income margins or profits.  Year-on-year.

Margins / Profits = Level of Revenue Earned – Level of Costs Incurred

This difference needs to grow sustainably.  Where revenues grow and costs decline, the industry is well positioned to create new jobs each year and pay for higher wages in other years.  The reverse is also true.  When the margins are negative, we would face sustained unemployment.

What would cause the margins to grow sustainably for any industry?

Asking this question is deliberate in helping the mind steer itself to the inevitabilities.

Does sustainable growth of margins happen because we are able to apply “do more with less” strategy, really well?  Or, is it because sales have picked up for that industry.  Well, yes, partly.

However, here’s the inevitable.

The extent to which we see sustained growth of margins depends on the extent margins or profits grow across ALL the three levels of industries in any economy, i.e. primary, secondary and tertiary industries.  These three share a very tight systemic relationship!

As we take care of the whole, not parts of the economy, the nation grows.  We all know that.  AndI know we can turn this knowledge around with our hands and feet.

So what causes sustained systemic growth of all three types of industries?

Think tomato sauce.  The cost of manufacturing and eventually retailing that sauce would depend on the cost of the transport and distribution systems (secondary industries) needed to transport the raw materials to the factory or retail sites as well as the cost of producing the raw material itself (i.e. from seed to fruit by the farming industry).

The transport industry, in this regard is secondary to manufacturing while farming of tomatoes is primary to both transport and manufacturing.

Should however, the costs of the primary and secondary industries for each unit of product produced increase over time, the  tertiary industries would not be able to reverse those costs, much less grow without incurring further costs and will have their work cut out for them to stay afloat, much less see their margins grow in sustained ways.  That is the reality.  The experience will otherwise be like juggling balls.  It will be hard to take our eyes off them because we do not know when they will fall.

When these costs are passed on to the customers or citizens, it makes it harder for them to find ways to fund continued private sector development efforts.  Here we have now come full circle.

In most cases, the primary industry refers to raw material production, in particular crop production.  As we grow our raw materials (as we have achieved with sorghum production), its secondary (farm and brew trucks) and tertiary (brew production and retail) industries will begin to grow as well.

Just as the white farmers in South Africa in the primary industries (vegetables, fruits, dairy and livestock production) have done for the Chinese and the Indians in the secondary and tertiary industries there (as well as here in major supermarket chains).   This relationship, however, did not happen overnight.  It took almost one hundred and fifty years in the making in South Africa (and not forgetting two centuries before that in India).

So for a nation to thrive (not survive), think the root of a plant.  When the root thrives, so does the plant.  When it dies, so will it and the other healthy roots around it will suffocate the plant out.  Removing the top of the plant will not cause it to go away.  The root will bring it back.

I am sure you see it!  When the profit margins do not grow for all of the three industries, the number of new jobs created does not grow.  Instead, unemployment grows.What is the implication of these to employment, you ask?

Where are we today as a nation on this graph?

Which industries are dominant for the nation?  Which ones are not?  Which industry do you see as driving the others?  Would you like to be a part of or lead from that seat?  I am sure you can!

What would cause the health of primary industry or production of raw materials to grow over time?  This will be the subject of another column.  But till then, I wish you, happy thinking and discussing.

So is unemployment the real problem or could it just be the tip of another problem? The iceberg. How do you see this issue?  Go forward another twenty years from now.  What could these trends look like then?  Could this possibly affect the sovereignty of a nation?  For any nation?

The 3rd instalment in this three part series of this article will appear in the next edition of this column.  It will explore the supply side of the equation of labour and unemployment.   Watch this space.