Wednesday, August 21, 2013

Paying unemployed graduates the worst policy idea of the year

In Summary

• I award the worst policy idea to the expressed intention to pass a motion in the National Assembly to ensure that unemployed graduates below 35 years of age are granted a monthly stipend of Sh15, 000 until they find employment.
• Proponents of this preposterous idea are obviously unaware of what the unintended effects of this policy would be.
• Consider that the average annual income in Kenya is a much less than the Sh15, 000 monthly, its maintenance would need a very large number of wage workers for this idea to be possible.

UNEMPLOYMENT

By Kwame OwinoMore by this Author

With nearly nine months into 2013, it is possible to pass judgment on what the worst policy idea that has gained media coverage.

During an election year in a country in which public fact checking and calling out of candidates hardly ever happens, there are almost a dozen ideas that the Institute of Economic Affairs identified as not only wrong-headed but also based on the most scanty thinking.

Perhaps Kenyan voters may make peace with the idea that during the intense campaign period, some wacky ideas will inevitably be expressed to get public attention and highlight the policy boldness of political parties. The elections were settled and the thinking caps transferred from the political operatives to the citizens with the claim to solve one policy problem or another.

I award the worst policy idea to the expressed intention to pass a motion in the National Assembly to ensure that unemployed graduates below 35 years of age are granted a monthly stipend of Sh15, 000 until they find employment. No doubt, the National Unemployment Scheme for Graduates is an unbelievably bad policy idea.

Granted, it is based on a simple truth that unemployment in Kenya is an indisputable policy problem. It seems that the proponents of the idea thereafter think that by placing a self-evident truth about unemployment then excuses flawed thinking about its implications effects. In this instance, the mere statement of the obvious should not be allowed to cushion a bad idea from featuring in policy discourse.

For instance, unemployment and inadequate opportunity for work affects many more Kenyans than those who have university education. So what makes the latter more entitled to public subvention than the rest?

Added to the partial truth argument above are the twin beliefs in government ability to solve all problems on the one hand, and the expenditure of public money as the panacea. This can be referred to as the throw money at every policy problem fallacy.

Not only should it be evident to any person in possession of a college education that the government of Kenya will have very tight finances for the foreseeable future, but Kenya would have few policy problems if money were the solution to all policy challenges.

Thirdly, the proponents of this preposterous idea are obviously unaware of what the unintended effects of this policy would be. A study carried out by the Institute of Economic Affairs revealed that 80% of the students attending public universities in Kenya are from the richest 20% of Kenya’s households. In essence, public university education is still a preserve of the wealthiest Kenyans.

Yet the proponents of this idea are brave enough to demand that having educated this privileged group from public funds, they should still be supported through taxes by the provision of stipends for no work for up to 12 years after graduation. Thus university education policy will be about creating greater inequality among households in Kenya.

Income subsidy for mere completion of a university education would be a perfect signal for all secondary school graduates to find university places. Universities too would expand admissions knowing that students would merely have to pay for four years, worth of tuition, and then begin to collect monthly stipends at the taxpayers’ expense.

The fact that the expenditure would easily overwhelm the national government seems to have escaped the fertile imagination of the originators of this policy. Consider that the average annual income in Kenya is a much less than the Sh15, 000 monthly, its maintenance would need a very large number of wage workers for this idea to be possible.

Anybody who takes time to examine the number of the employed in the modern wage sector would know that that slice of the working population is really this.

In the pantheon of bad policy ideas, the National Graduate Unemployment Scheme for certifiably atrocious. And yet it represents the absence of policy innovation and the belief that all policy problems are about inserting government into an area to spend public money making privileged people even more so.

Recycling incomes from poorer and working Kenyans towards others just because the latter have spent four years in college makes no sense and shows surrender from tackling the real bottlenecks to employment growth.

This idea should not go any further than a discussion in the National Assembly primarily because it is both bad and expensive. Bad and dangerous.