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| The Public Works Department received a huge turnout of jobseekers at its main headquarters. Picture: BT/Saifulizam |
Sometime in May of this year, our Public Work Department (PWD) announces job openings for daily paid. It was estimated 14,000 applications were received by PWD.
From one perspective, it was good effort on behalf PWD in assisting the locals in finding a job. Another perspective, it shows that our country have unemployment or lack of employment issue.
So what can Brunei Darussalam do to alleviate such issue?
A monetarily sovereign government such as our country, Brunei Darussalam can unconditionally offer a public sector job at a minimum wage to any person that is willing and able to work. With this it established and maintained a buffer stock of employed workers. This so called buffer stock of employed workers shall expands or declines when ever the private sector activity declines or expands respectively.
Our government is offering to purchase a resource that currently do not have market value i.e. a zero bid input. The government expands her spending not by competing with other resource users but utilising an unemployed resource. This shall be noted as a spending on a price rule rather than a quantity rule.
Normally, government tends to spend on quantity rules i.e. government plan a budget deficit of certain size and allocate program budgets to match. It is believed that this approach is flawed as it relies on the government to being able to exactly predict the spending gap that the deficit needs to fill. It is also believed that this approach cause the likelihood of under spending and thus leaving labour resources unemployed high.
From current perspective it is much better on having some leeway in the budget with the spending gap is being closed with an employment guarantee. This entails that the government shall be able in creating “loose” full employment i.e. procuring or buying labour at zero bid rather than competing in the market for it. Hence, the deficit shall be whatever it had to be i.e. exactly the right size relative to the GDP.
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| Job applicants are seen queuing up at the Public Works Department Headquarters at the Old Airport Road in Berakas. Picture: BT/Courtesy of Public Works Department |
Job Guarantee (JG) acts as an absorption function which is to minimise the real costs that is currently being associated with the flux of the private sector. In essence, a declining or stagnating private sector employment will automatically make the public sector employment react and increased its payrolls. This shall make the nation remains fully employed, with only the mix between private and public sector employment fluctuating as it responds to the spending decisions of the private sector. Please note that JG wage is open to everyone and thus it shall functionally become the national minimum wage.
To some, JG being equated as purely a public sector job creation strategy. However, it must be appreciated that JG is a macroeconomic policy framework. It is designed to give a full employment and price stability. This is based on the principle of buffer stocks where job creation and destruction is but one component.
Brunei Darussalam can fairly quickly introduce this JG as she has the fiscal capacity to run the JG. She do not have the difficulty in creating demand for her currency. She have a taxation, welfare and other administrative procedures which allows her to engage the population. Brunei Darussalam also have a robust checks and balances which do not prevent corruption but tend to make it harder to become entrenched.
A country that is not monetarily sovereign may not have the fiscal capacity to engage the JG without raising revenue first.
In implementing this JG, it inherently comes with an inflation control. There can not be an inflationary pressures arising as the Government is offering a fixed wage to any labour that is unwanted by other employers. JG is basically, the government “buying labour off the bottom” rather than competing in the market price because there is no market demand for their services. JG shall offers a minimum wage to anyone who wants it.
