Job creation vs poverty alleviation

APNUs point man on economics, Mr Carl Greenidge, charged that the government in its budget was not focusing sufficiently on poverty reduction. Making this charge against a background, as outlined by the finance minister last week, of manageable public debt, declining fiscal deficits, recurrent account surpluses, low inflation, a healthy banking sector and persistent growth of the GDP for the past six years even as the sugar industry is unable to attract workers, has to be a statement based on ideology rather than reality.
Mr Greenidge is evidently still holding on to the thinking that guided the PNC in its seemingly laudable goal of making the small man, the real man. That policy failed ignominiously for the simple reason that all they were trying to do was to redistribute the wealth of the country to transform the small man. They lost sight of the even simpler fact that since the economy was not growing, all they were doing was ‘robbing Peter to pay Paul’. The entire system collapsed when ‘Peter’ balked at being impoverished and decamped for foreign grounds.
‘Paul’ was normally the citizen with the most initiative, capital and know-how, so that his departure set up a vicious cycle that we are still experiencing. For Guyana to progress, all sections have to rise up: since poverty is a relative measure, there will always be a certain percentage of citizens defined as ‘poor’. Even the number one economy in the world according to the UNDP, Norway, has “poor people” – those with less than US$ 44,000 annually.
As the example of sugar shows, the problem in Guyana when we discuss poverty is not that there are no jobs available: in the most densely populated areas on the coastland, jobs in the sugar industry go begging. For years, the opposition had been complaining that sugar workers were being pampered by the administration and that the wage scale in the industry was way too high.
That charge was obviously false or else there would have been no complaints from the management of GuySuCo that their labour attendance rarely meets 50 per cent. What happened during the PNC regime, under the guidance of finance ministers like Mr Greenidge, was that the limited job opportunities in a stagnating and static economy left workers restricted to low-productivity jobs that precluded them from raising their standard of living. Even if the small man became a ‘real man’, his income could only remain small. Mr Greenidge and the rest of the opposition must understand and accept that Guyana needs an inclusive tide of growth that will raise the ships of all.
Inevitably, however, as the experience of Norway shows, there will always be income differentials. The secret is to make the lowest stratum have enough income and opportunities that they can live with dignity. What then is the right road to inclusive growth? Within the last two decades, Asia has shown us the way. The key to the success of many high-performing Asian economies has been a dynamic structural transformation where the composition of output shifts from low-productivity goods into high-productivity ones, where labour moves from agriculture to industry, and exports become more diversified. These economies have maintained productivity gains by systematically upgrading technology and manufactured products, boosting labour productivity, raising household incomes, and fostering inclusive growth.
The PPP/C government has been laying the groundwork for the structural transformation of the economy along the lines suggested above. Our infrastructural base, which is low even by Caribbean/ Latin American standards (already lowest in the developing world), is being upgraded – even though the opposition is fighting it tooth and nail. The facility for moving into the ICT arena is being laid, and in tandem with the OLPF programme, is preparing our workers to make a quantum leap upwards. The examples abound.
Let us change our perspective from worrying about poverty to focusing on creating wealth for all.