Private Sector and Economic Growth

 

If I were the administrator of this locality, I would enjoy my career. This is a statement made by a corporate chief, an engineer by profession. Is it a desire or lamentation? It is not sure. A student in business school is found reading job-guides for employment in public sector. When asked about the reason of looking for public job, the reply comes with questions of authorities which are not available in private corporate sector. Such is found in professional students like engineering and medical services; all are looking for public jobs. It bears paradoxical situations for students pursuing professional educations like business administration, engineering education, medicare studies, and many more.

Searching for public services becomes a craze. The run for such jobs is in high competition. The competitors are highly qualified and they are found in chairs of administrators in different public sectors. There comes a question if their talents are properly utilized. There is a talk, ‘do not go for bureaucratic approval for introducing a medicine.’ The proposition holds true in the context of work flows of public sector which contain a lot of analyses.

 What is the utility of such analyses in real life? The system does not bring fruits in reality; rather people behind the system try to keep themselves in safe zones.  It is said private sector is a growth engine of the economy. How private sector works is a question. It is an initiative by the hands of private people. They are known as entrepreneurs. They employ different factors to materialize the initiatives. But artificial intelligence cannot work behind the screen. Human capital is needed for the game. There are different levels in which human is a necessity to be engaged. These are known as division of works. In each division, work is done under specific skills. These are contained in labor forces. Skilled labor forces are factors for productivity. But what is to happen if work forces are in lack of adequate competency. This is a question for which answer is expected to be ‘productivity to fall’.

It is said the economy is in possession of demographic dividend. This is nothing but the contribution of young manpower in national income. Educational institutions bring out educated human resources into job market. Despite, private sector is said to be in lack of skilled manpower in our economy. From garment industries to engineering sector, expatriate employees are found working. On the other hand, educated resident nationals are engaged in reading job-guide books and waiting for calls for jobs from public sector. Is it possible for public sector to accommodate all educated youth coming out from educational institutions with higher academic qualifications? It is a question which deserves attention so as to unearth the underlying reasons for public jobs.

Jobs in public sector are in possession of salient and unique features. Job retrenchment is rare found in public services. It brings social status to job holders. The benefit packages include different facilities in addition to regular salary. There is capitalization of future income in the form of loans for purchases of durable items like homes, vehicles, etc. The rate of interest against the loan is very low compared to market rate. Loans for vehicle purchases are said to be amortized by way of depreciation. It means that the loans are not repayable in full. Title of the vehicle goes to its user with a lump sum payment remaining, if any, on amortization-end within the time frame. Public jobs are treated as moon in hands if it is availed. As quoted earlier with a point of medicine launching in the market, decision by public sector requires time. On the other hand, ‘license raj’ is still in existence. In present days, private sector and individuals need to be dependent on public services for numerous purposes. Whether such dependency is necessary or not is a question. An example can be cited. International trade needs to have a registration certificate from the relevant authority. Otherwise, they cannot execute trade transactions. Export is to sell goods abroad. It brings foreign money which is used for making outward payments without limiting to imports. Inside information indicates export trade is still paper-based in this digital age. In addition to registration certificate, export trade needs to cross different points which are controlled by public sector. Private entrepreneurs term these as hassles. Where prevails approval process, ‘license raj’, there creates informal transactions to cross the points. What is the utility of different points is another question. Maybe once these were necessary. But they cannot be effective for the current situation. Despite, the system is in place. This is good for nothing; rather these create bottlenecks for economic activities like international trade. Trade facilitation is well cited words. But these are in theory, bottlenecks are everywhere. No answer needs to know who works behind the points through which trade transactions are crossed. We all know they are service providers at public sector.

No negative sounds should go against public job seekers. What is to happen in case of non-availability of public jobs? Automatically educated inflows move to private sector. But reality is different. There are many laws in the system remaining in force since long. Many of them are in active stages for which implementation agencies are in place. But utilities of such services including underlying regulation remain unvisited. The laws are reported to empower their implementing agencies for which permission procedures are required. As public sector is run by budgetary allocations, the points are said to be under staffed like other Government services. This results in service delivery delayed. As these are services, they contribute to national economy. In calculation of gross domestic product under expenditure methods, government expenditure is a part. Since the said points are cost centers to the Government, they become a part of national income account. There needs to be a cost-benefit position. In absence of points as said earlier, productivity in private sector would increase leading to enhanced contribution from the sector.

The work flows under public sector are said to be flaws. They are defective themselves without regular reforms. Different multilateral agencies tout for reforms in tax, withdrawal of subsidies, good governance in public sector, etc. But they talk nothing on the work system in public sector. The system needs to be flawless for which reengineering is required in public sector. Who is to bell the cat? Highly competent manpower goes to public sector. On induction, they become accustomed to the system. They look for their own benefits available in the list including hidden ones. 

 
Seeking public jobs by talented job seekers deprive private sector. Let us think that public jobs are not available. Let us consider another proposition that public sector formulates policy without extending approvals. No lucrative facility available in the sector is another proposition. People with talents are rarely found reading job-guide books for availing public services. Situation would be different. In high income economy, private sector plays development role. Public sector does not work to accord approval. People are so eager to find jobs in public sector. Our economy is in high progress since long, particularly in 2000s. What would happen if public sector jobs were squeezed? It might lead the economy to be graduated in 2010s from LDC status. Is it an imagination? We should think of it and revisit the necessity of different public points which are required to be faced by private sector including individuals. The outcome may drive the economy to upper level unexpectedly.


Mehdi Rahman works in the development sector
and writes on business and monetary issues.