Credible claims

As the countdown begins for elections, debates on the economy will become one of the key policy platforms for the different political campaigns of various parties. Therefore it becomes all the more imperative to have independent evaluation on claims, particularly on aspects such as job creation that bring tangible elements of economic growth to the people.    

As part of its campaign the United National Party (UNP) recently launched a recap of all their accomplishments since coming to power. Titled the ‘UNP Achievements Report’ it was rolled out in all three languages and its contents are likely to be repeated on political platforms. Similarly, progress, or the lack of it, will undoubtedly get much air time over the coming weeks as the Sri Lanka Freedom Party (SLFP), Janatha Vimukthi Peramuna (JVP), Joint Opposition and others begin their campaigns in earnest.  

According to data published by the Central Bank in its Annual Reports based on the data compiled by the Department of Census and Statistics. According to the Central Bank, as at the end of 2014, the number of people employed in the country had amounted to 8.424 million. As at the end of 2016, this number has declined to 7.948 million recording a decline of employment by 476,000. However, it has been claimed that 400,000 jobs have been created since January 2015.   

This is a case in point of why a credible, independent and transparent jobs report is urgently needed. The job market is the heartbeat of the economy. It’s both an indicator of economic health—since a strong economy prompts companies to hire more workers—and an engine of growth, since higher employment means more dollars available to spend on goods and services. Without job growth, overall economic growth is likely to be limited no matter what else is happening in other areas of the economy.

The employment situation is the primary monthly indicator of aggregate economic activity because it encompasses all major sectors of the economy. It’s comprehensive ideally should be available early in the month, much like the US version. Many other economic indicators could depend on the information presented in the report. The report could reveal important information about the labour market, income levels, and industrial production.

The US job market report, for example, is eagerly awaited by the whole world, as it drives stock market and influences policy decisions. It can also give important hints on the holding power of an economy and whether policies are successfully implemented. 

In the US the Employment Situation Summary Report is used to help determine the tightness of the labour market. This tightness gives an indication of inflationary pressures on wages. A tight job market is basically when the number of qualified workers is less than the number of jobs available in the market, so the labour market has more jobs than workers, leading to upward (or inflationary) pressure on the wage rate.

As Sri Lanka moves towards attracting foreign investment and increasing exports it needs to create a more dynamic labour market, particularly in high-end service sectors, which attract the best employment and help in reducing brain drain. To make fact based decisions and dispel political myths a job report would be an ideal starting point.