In view of slow of economic growth, widespread poverty, high levels of unemployment and income inequality, Namibia requires inclusive growth in which the unemployed or the majority of the labour force (poor) will engage in productive employment.
As a result, the labour force will produce goods and services that the majority of the poor demands and consumes.
Simply, economic growth is nothing more than increasing value additions or payments to the four factors of production – rent (land), wages/salaries (labour), interest (capital), and entrepreneurship (profit) which in turn represent the wealth of Namibia. Gross Domestic Product (GDP) is the sum of these value additions.
It should be noted that proportionately, the payment (remuneration) for labour is particularly high relative to payments for the other three factors of production mentioned above. As a result, when unemployment is rising, per capita growth slows down because the unemployed do not contribute to GDP or per capita economic growth, which can be seen in Namibia.
Furthermore, the demand for labour is dependent on the demand for goods and services produced. Currently, most of the demand in Namibia is met by imports, but there is a strong potential to meet the demand by local production or import substitution. This is the foundation of the issues related to employment creation and growth, and in turn, is related to structural transformation, promotion and expansion of new industries, and exports diversification, (Export-Led Industrialization) in the long run.
Unlike people in developed countries, the majority of Namibians consume goods and services produced by employing unskilled or semi-skills labour. This means that the current level of unemployment is partially a result of Namibia’s failure to produce goods and services that the majority of the people demand and consume.
On the other hand, due to various factors, tertiary industries have failed to create employment for increasing job seekers in the country. It is also unfortunate that a skills deficit has been cited as an excuse for employment creation, because private sector business magnates prefer to earn quick and easy profit by importing and exploiting the local markets than producing locally and selling locally.
This is the basis of the issues related to economic growth, employment creation and eradication of poverty. In the light of the above, in Namibia, economic growth and employment growth should take place simultaneously, if Namibia wishes to address and resolve widespread poverty. This is of course possible through inclusive growth.
With concerns for utilization of unskilled labour in particular, and eradication of poverty and income inequality in general, we should adopt and implement inclusive growth strategies in which the poor or unemployed contribute to per capita growth or GDP and benefit from such growth in a sustainable manner. As stated above, the pace and pattern of economic growth is anchored in Inclusive Growth. This means that the poor or the unemployed become the source and drivers of growth. Through this process, the poor or unemployed contribute to and participate in growth in an effective and efficient manner because labour is the main source of income of the poor. Inclusive growth ensures income security for the poor or unemployed in a sustainable manner because they can sell their labour continuously and in a stable manner, so that economic growth takes place in a stable and sustainable manner leading to poverty eradication.
It should be mentioned that about 60 per cent of the households in Namibia receive their income through regular wages and salaries. As a result, employment contributes to growth (GDP) in a sustainable manner. In other words, inclusive growth focuses on ways to raise the pace of growth by utilizing a substantial part of the labour force, trapped in low-productivity activities or completely excluded from the growth process which affects the levels of poverty or its eradication.
In Namibia, about 30 per cent unemployment provides evidence for this exclusion of labour from the economic growth process and from development. Namibia’s current level of output is less than the full employment level of output by about 30 per cent. Furthermore, it is difficult to enhance economic growth when about 30 per cent of the labour force is unemployed or poor. When people are employed through inclusive growth, they can purchase goods and services produced by the economy, and it helps the promotion and expansion of economic growth. Therefore, Namibia needs to follow a growth path as far as possible based on inclusive growth by employing a majority of the unemployed or unskilled labour. Indeed, Namibia should be strategic to utilize unskilled labour for economic growth through inclusive growth. Productive employment is the transition channel among growth and reduction and eradication of poverty and reduction of income inequality.
The reduction and eradication of poverty, reduction of income inequality and employment creation, based on Sustainable Development Goals (SDGs) should be the focus in development efforts in Namibia. In light of the above, eradication of poverty, reduction of income inequality, employment creation, stable and sustainable economic growth are included in inclusive growth as they focus on (a) the pace of economic growth, (b) pattern of economic growth, and (c) enlarging the size of the economy, which should be addressed and resolved under one umbrella-Inclusive Growth.
Dr. Asoka.Seneviratne is the Director: Programmes and Institutional Development with the International University of Management (IUM), Windhoek. He was the Special Advisor, Office of the President, National Planning Commission (2006-2011) appointed by the President of Namibia. Asoka.seneviratne@gmail.com