meek-investor

One of the largest job creators in the world is, well, you. You don’t need to necessarily work for somebody else – you can work for yourself. Millions do. Entrepreneurship is truly a magic bullet to overcome unemployment. Entrepreneurship is a long and complicated word. It hints at some grandiose big startup ; it doesn’t need to be. The largest number of entrepreneurs run an organization of 1 – themselves. It’s the corner shopkeeper, the street trader, the plumber, the carpenter, the doctor, the taxi driver, who are truly the greatest of entrepreneurs. They don’t moan about unemployment. They don’t demand 6 weeks of holidays a year. They don’t demand travel privileges in first class. They just work hard and earn their own living. Entrepreneurship need not necessarily need huge capital. It doesn’t need breakthrough ideas. It doesn’t need a MBA. It however needs commitment, guts, hard work, luck and some breaks. I’ll tell you the story of an entrepreneur I know. He comes from Bihar, o...

Build and they’ll come. Economists hate this phrase. They won’t come; they say. Maybe not to the land of the politician who said "Drill baby, drill" and to whom the title of this post owes apologies to. But in most parts of the world, they will indeed come. Infrastructure development is surely the policy area where most countries have performed poorly in. In developing countries it is because of lack of prioritisation (wasteful subsidies are considered more important) and rampant corruption. In developed countries – it is the NIMBY problem – do it anywhere, but not in my backyard. Everywhere infrastructure has been allowed to dramatically deteriorate (witness America’s airports, Britain’s M25, California’s power cuts, …..) Two stellar exceptions – Britain in the colonies in the early twentieth century and China of today. That a robust infrastructure is fundamental for economic growth is well known. But I argue here for infrastructure building as a great way of creating jobs....

Education is key to development – it would be hard to dispute this simplistic truism. But what education ? Primary ? Secondary ? Institutions of high learning ? What ? This post argues for vocational training being the single biggest priority. There is no doubt that universal primary education has to be a basic human right, and a basic human responsibility. But I would place vocational training a shade above even that. For vocational training ensures people have jobs. Ensures that they have a little more wealth. And when they have that they would themselves ensure that their children receive the best primary education they can find, and afford. Both China and India do a lot in the field of vocational training. Training people to be machine operators, welders, plumbers, carpenters, nurses, technicians – there are scores and scores of professions where , with a little training, people, who are otherwise unemployable, can find a job. These don’t need a very high basic education for it to ...

Every government in the world says one of its biggest priorities is to create jobs. And yet, very often, they do precisely the opposite. Governments, and policy makers, do not normally get it as to how to create jobs. A shining exception is China – no government in the world comes even remotely close to China when it comes to job creation. How should governments stimulate job creation. By helping in all of the areas covered in this series – by favouring the manufacturing industry, by not adding burdens on to labour cost, by not putting insurmountable barriers to labour flexibility, by creating the right skilled work force, by investing in infrastructure, etc etc. But governments can directly aid employment too. Here’s (again of doubtful practicality) some prescriptions. Firstly reduce incentives based on investment and increase incentives based on employment. Remove capital subsidies, investment subsidies, and shift to employment subsidies. Base tax holidays on employment, not investm...

In China, when you are employed, you get a fixed term contract. Usually 2 years or 3 years. Even if you are a manager. Even if you are a very senior manager. There is no “endless” employment agreement. And this is ostensibly a communist state. It is not a complete coincidence that in the last 20 years, China has created jobs in the manufacturing sector for some 200 million people. This blogger might prattle on like an Ayn Rand and is unapolegetically a capitalist. Yet, in his heart, he is a bleeding socialist. Witness the almost pathological aversion to layoffs, as posted here , here and here . BUT …… One of the biggest myths behind unions and governments “protecting” jobs is that they protect jobs. They don’t. What they actually do is cosset the privileged few and make vulnerable the underprivileged many. The employer simply does not take on “permanent” workers and instead takes on temps, or contractors or part timers or whatever. These get no security of employment, they are often...

One of the most amazing consequences of the recession over the last two years is that, for the first time, employees are willing to accept pay cuts, or even zero pay for periods of time, in order to retain their jobs. Labour has realised (the unpleasant truth) that just like any other factor of production, there is an equilibrium price. Go above it and business will be killed. Its much better to have low pay than no pay. High pay and constant increases are not an automatic entitlement. This post is primarily for the developed economies where cost of labour is high. Because this has been accepted as a given, manufacturing has inexorably moved to the east, notably China. So the developed world has accepted, without challenge, that their costs will be high and therefore they can do nothing about jobs going away. Such a defeatist attitude is unbecoming of the great innovative cultures they are. Any cost, even labour cost, can , and should, be controlled to keep manufacturing jobs from goin...

Manufacturing sector is the key to creating jobs. Not agriculture. Not services. Agriculture employs a lot of people , especially in developing countries, but cannot create more jobs. Land is finite. Agricultural development will be primarily in improving productivity and output ; not in expansion of jobs. In this sector, policy must focus on efficiency; not on job creation. The services sector is sexy, but not a massive creator of jobs. For all the growth of the Indian IT industry, the number of direct jobs it has created is probably 1 million. Add the indirect employment and you probably can get 5 million. That is a drop in the ocean of the employment challenge in India. So from a policy perspective, this sector needs to be left free, facilitated to grow, and encouraged, but with limited policy intervention. The sector that can really boost jobs on scale is manufacturing. This is where policy initiatives must be most active. What sort of policy initiatives ? Some thoughts, equally ap...

Every nation is battling with this problem – how to create jobs for its people. Growth is all fine, but without jobs, there cannot be real progress. The problem with much of capitalism and economic development in the last decade has been that job creation has lagged behind growth. By definition, this leads to inequality, resentment and ultimately a backlash. The recession last year exacerbated the problem through significant job losses, especially in the developed world. The single most important economic challenge for nations is job creation. Being unemployed is one of the most demeaning of situations for any human being. A lot of the world’s ills can be attributed to joblessness. Create full employment and hunger will largely go away, terrorism will subside, lifespans will increase, the quality of life will transform and the world will be an altogether nicer place. But how ? A problem everybody has grappled with for a long time. Some thought socialism was the answer – only to be prov...