It is a trite knowledge that economic prosperity requires, among others, hard work, honesty (a form social capital), and sacrifice. This does not only require a strong work ethic but also the investment in human capital, delayed gratification, and setting the right priorities (e.g., investing in the living, not the dead).
For more than 25 years, China saved more than a third of its national income every year. This saving was accompanied by prodigious rates of domestic investment. Please note the emphasis on domestic savings. Foreign aid helps but self-reliance is very important. As Ga folks say “agboo, ayeee” (“no contribution, no chop”).
Nana Akufu-Addo’s election as president of Ghana has raised the hopes of many Ghanaians. For example, his “one district, one factory” campaign promise is expected to create jobs for many unemployed Ghanaians. But economic prosperity will not come without sacrifice. For example, free SHS must be financed through taxes. Without a sustained increase in the production of goods and services and investment in efficient tax administration, tax revenue will be insufficient for free SHS. There are no freebies.
In 2014, I estimated, on the basis of the 2010 population census that the number of Ghanaians in the 18-60 year cohort was about 12 million. This was the size of Ghana’s labor force in 2014, the actual number of people available for work. According to data by the government, IMF, and World Bank about 650,000 workers are in the public sector. This is only about 5.41% of the labor force.
The 650,000 workers in the public sector include “ghost names”, which means that the true figure is smaller (i.e., the proportion of the labor force in the public sector is less than 5.41%). The employment of 5.41% of the labor force in the public sector does not mean that 94.59% of the labor force is employed in the private sector. It means that 94.59% of the labor force is not in the public sector (i.e., they are either unemployed or working in the private sector).
Even if the government were to double the number of workers in the public sector, there will still be about 10.8 million (of Ghana’s approximately 12 million labor force) who do not work in the public sector.
According to the International Labor Organization (ILO), total employment in the public sector as a proportion of the labor force (the actual number of people available for work) in some OECD countries in 2008 was as follows: Japan (6.7%); South Korea (5.7%); Germany (9.6%); USA (14.6%); Canada (15.9%); UK (17.4%). The top four were the Nordic countries (Norway, Denmark, Sweden, and Finland) with the highest being Norway at 29.3% and lowest being Finland at 22.9%. The corresponding figures for the year 2000 were not different.
The figures for non-OECD countries like Brazil and Russia were 8.6% and 20.2% respectively. So no matter how you look at it, the public sector cannot absorb more than 70% of the labor force (even in welfare states like Norway, Sweden, Finland, Denmark). The Nordic countries are the exceptions, not the norm.
The private sector is the ultimate engine of job creation. The government cannot directly create many jobs. It can only incentivize private profit-maximizing businesses to move to your district. This is not meant to absolve the government of responsibility. After all, it is now a cliché in development circles to say that the government must create an enabling environment for the private sector.
In this respect, the government must reduce the private sector’s cost of doing business. In February 2014, the president of Association of Ghana Industries (AGI)