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Why govts can’t create jobs

By Dele Sobowale
“It is true that many countries do not have the money to pay for the policies to promote employment and growth”.
New York Times September 2011.

The New York Times was only half right when it cited money as the only impediment towards job creation, both in advanced economies and the developing world.

Money to create jobs is a problem virtually everywhere and those Nigerian Ministers and Commissioners of governments, at federal and state levels, promising thousands and even millions (as one state government has done), as if it is a costless initiative, are just deceiving themselves first and their people afterwards.

One governor (name withheld because he is not alone in making these politicians’ promises) urged the Federal

Government to sign a cross-border trade agreement which will result in creating five million jobs in a semi-rural part of Nigeria.

Our amiable governor probably overlooked the fact that the average Nigerian worker has four dependents – at least two living with him. Five million workers added to the population of any place will mean adding 15 million people and their demands for social services on a scale unimaginable.

With job creation, as with everything else economic, “there is no such thing as a free lunch.” Somebody has to pay for the jobs to be created and governments must not only calculate the costs involved; they must be honest with themselves and the people on the budget for this.

That is why President Obama’s job bill was accompanied with a stiff budget. Unlike our local dreamers, at federal and state levels, the President of the United States knows that employing millions of people calls for outlays running into billions.

Remarkably, none of our own leaders, at federal or state level, has even mentioned the cost of the exercise in order for us to decide whether it is affordable or not. Certainly, if job creation, by governments, is a costless exercise, all the nations of the world suffering from unprecedented high unemployment would have by now exercised that option and averted the social and political tensions they now face – especially in Europe.

While money remains a universal constraint to governments’ ability to generate employment, technology, automation and innovation have emerged for several decades as equally important barriers to job creation.

In fact, technology and automation have been destroying jobs faster than human beings can create them worldwide; not only in the advanced countries, but even in developing countries – including Nigeria. As usual, the point made here can be illustrated with domestic case studies with which many of us are familiar and some which a few know about.

The first example should come from the print media sector for two basic reasons. First, it is a sector with which I have had real personal experience. Three aspects of media operations will serve as proxy for the technological advancements that have erased jobs in that sector.

The first concerns how reports were, and are processed. Second is related to the handling of photographs. The third involves simultaneous printing. Every single one of these print media processes had experienced technological advancements and innovations resulting in retrenchment of staff.

Before the widespread use of desktop computers, and now laptops, media houses were among the heaviest consumers of typewriters and their human appendages – the typists/secretaries. Fifteen years ago, the typical national newspaper deployed nothing less than two hundred typewriters and their human appendages.

Today, no single typewriter can be found in a newspaper house. The human appendages disappeared with the machines. In some media establishments, those human appendages to typewriters constituted about five to ten per cent of the work force.

Those jobs have been lost permanently. The loss of those jobs has caused collateral damage in other aspects of our economy; because with them have vanished all those training establishments teaching people typing and shorthand!

That is, if the reader was old enough to know what the subjects were all about. In those, seemingly ancient days, the reporter submitted his script in his handwriting; it is then passed to the typist. Today, the reporter has a laptop with internet connection, plans his own page – often without visiting the office!!

Lithographers were a law unto themselves. They handled pictures and artwork whether as part of editorial material or adverts. The skills, or lack of them, of a lithographer could make or mar a news report or advert – especially adverts for which clients pay.

They mixed the colours; dictate sharpness and even the visual impact of entries. Dozens of them were employed by newspapers.

Only God knows how many trillions of naira print media houses have lost on account of the incompetence or caprices of lithographers. Technology took care of that as well. With modern technology, the lithographer had become largely redundant – computer-to-plate technology makes it possible for the photograph to be sent, in correct colours, straight to the plate. More jobs have disappeared directly, and others indirectly for ever.

Simultaneous printing wiped out one shift in print media houses and those jobs are never coming back. For some media houses, that means approximately one quarter of the workforce. Multiply that by the number of print media houses in operation nationwide and you can imagine the number of jobs lost to technology affecting three aspects of the work process in that sector.

Breweries supply the materials for the second case study. On March 1, 1980, North Brewery Limited, Kano, had one bottling line and produced 250,000 cartons of beer on three shifts. It also employed nearly 1,000 people directly – mostly in production department.

The largest groups were unskilled labourers packing and unpacking cartons and bottles; loading finished beer onto trailers and trucks and lifting malt from silos to the brewing hall. In virtually every brewery, my experience included working in three breweries, the unskilled labourers in those categories constituted close to 75% of the staff.

By 1985, the brewery had expanded to three bottling lines producing up to one million cartons a month; yet the staff strength had gone down by about 35%; 650 people were required, in 1985, to produce four times what 1,000 people did in 1980. Yet, the process of job losses on account of technology was only just beginning.

The Nigerian Brewery Plc invited the media to the opening of its Ada, Enugu State plant about five or six years ago. It was my privilege to be among those invited and to see the transformation which had taken place in the sector since I left it in 1988.

The Ada brewery had several times the capacity of the Kano plant. It was marvel combining the economy of scale with the economy of scope. Only one question was of interest to me, when it came to the time to ask questions. Having noticed the very few staff around, I wanted to know what the staff strength was.

The former Managing Director, Mr Odimegwu, mentioned something like 175. It was, to me not totally surprising. So, today, our breweries are producing almost twenty times what they produced in 1980 using only about 15% of the workers.

The Ada plant is totally automated; all the functions which were performed by labourers in the 1980s are now performed by machines. Indeed, nobody, starting a brewery or bottling plant today will employ up to ten per cent of the number they did 20 years ago.

The first job eliminators were probably items whose impact nobody could have foreseen — wooden pallets. Pallets were destined to result in job losses, not only in breweries but in virtually every industrial sector. How they negatively influenced employment in breweries serves to illustrate how a simple device can lead to dire consequences for workers.

Pallets were first called into service when beer was packed in paper cartons to prevent those at the bottom from getting wet and causing stacks of cartons to collapse resulting in bottles (the life blood of a brewery) being lost. Introduction of fork lifts led to the first wave of retrenchments among unskilled labourers.

With fork lifts and pallets, it was possible for four men to move more cartons than 25 people in a day. The arrival of plastic crates completed the rout of the labourers because they combined with mechanical devices which vastly reduced the staff strength in the bottling hall.

Conveyour belts added to the woes of labourers everywhere by making it possible to move massive amounts of materials long distances without manpower being involved.

Breweries, of course, were not left out of the computer age. Whereas, managers from middle management to top had secretaries in the 1980s, today, nobody would be employed if he is not computer literate and capable of preparing his own reports. Secretaries are few and far between.

When recently President Jonathan held a briefing session with Alhaji Aliko Dangote and other industrial leaders hoping to enlist their assistance in job creation, it was clear that he failed to realise that neither Dangote, nor any other businessman will establish a business today which is labour-intensive – if the production process is subject to automation. Automation of course means few workers producing more than is possible under the manual mode.

The only entrepreneurs who can still engage more labourers are the small and medium scale enterprises to which government pays lip service but for which it does nothing.

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