PNG’s job crisis and Covid-19

There is no doubt the Covid-19 is causing great economic damage all round the world and Papua New Guinea is no exception.
There is no official data yet, but, if we accept the 10,000 figure, how big a blow is it?
The sad reality is that PNG was haemorrhaging jobs since 2013, the year in which PNG LNG construction was completed.
The Bank of PNG (BPNG) tracked formal sector employment every quarter.
June 2013 was actually the highest that index had ever reached since independence.
For the purposes of this analysis, we set that quarter equal to 100.
Employment had fallen most quarters since.
There was a brief recovery around the time of Apec (Asia Pacific Economic Cooperation) at the end of 2018, but the index had fallen by March to 87.6, its lowest since June 2013.
This was a level not seen since 2009 – that is, more than a decade ago.
In the meantime, the population would have grown by some 30 per cent.
Of course, it’s not surprising that there was some job loss when the PNG LNG construction was completed.
The project was itself a major employer, as well as a stimulus to the broader economy.
What was more disturbing was that the downturn lasted for so long.
This reflected the persistent foreign exchange rationing, which was a major drag on economic activity and the loss of Government revenue following the ending of the resources boom.
It should be mentioned that these numbers referred to private, formal sector employment, which was only available to a small minority of the workforce, less than 10 per cent.
It’s not the most important part of the economy, but it was the only part we have recent data on, so we focused on it here as an indicator of the economy’s broader economic health.
And what it told us, in summary, was that PNG went into the Covid-19 facing a jobs crisis.
How does the Covid-19 job loss compare with this pre-Covid-19 jobs crisis?
BPNG only produced an employment index, but it could be used to provide actual numbers, and we could link those older numbers with the more recent index to estimate how many have a job in the formal sector.
Our estimate using this method was that private formal sector employment reached 305,000 in 2013, but fell to 270,000 last December and 267,000 by March.
That’s a job loss of some 29,000.
(Note that this number excluded civil servants, but included employees of State-owned enterprises.)
Some of the Covid-19 job losses might have been in the March quarter, but employment for this quarter was only 3,000 less than employment for the December quarter, so probably not very much).
In summary, if the loss of jobs due to the Covid-19 was 10,000, that was one-third of the loss of jobs post-2013, but pre-Covid-19.
This was not to minimise the loss of jobs due to the Covid-19.
For one thing, more jobs would be lost with the second lockdown and greater number of cases.
But it suggested that even when we came out the other end of this pandemic, there would be a lot of work to do in the area of job creation.
Recreating those jobs lost to the Covid-19 would be hard enough, but that could only be the start.
What can be done in the meantime to provide support to the unemployed?
In PNG, those who lost their jobs are entitled to draw down their superannuation benefits starting three months after they lost their job.
Announcing the Government’s economic response to the Covid-19, PNG’s Treasurer Ian Ling-Stuckey stated in April that those who lost their job as a result of the Covid-19, would be entitled to their accumulated super funds without any wait.
Both the Treasurer and the superannuation funds estimated that this would bring forward some K500 million in benefits.
It was surprising, therefore, to hear in June, from the Prime Minister James Marape, that this measure was being deferred to August.
It wouldn’t be fair to blame Marape and his treasurer for the employment predicament in which PNG found itself.
The period 2013 to 2019, was part of then prime minister Peter O’Neill’s reign, and the Covid-19 was a global shock.
That said, if the Marape Government can’t deliver on simple promises – such as allowing early access to superannuation – it would lose its credibility in relation to the tougher challenges it faced such as managing the pandemic and then restoring employment growth.
Implementation needed to be the Government’s first priority, and for that, ministers and the civil service need to work in close unison.
The public needs to keep the pressure on the Government.
There was no protest at all when the Government announced that it hadn’t after all provided early access to superannuation for the newly unemployed.
Are expectations of Government performance now so low that failure is expected rather than protested?
Unless the public demanded more of their politicians, and until the politicians work more effectively with their public servants, PNG would be unable to deal with either of its twin crises: dealing effectively with the current pandemic and providing more employment opportunities to a rapidly growing population.

This post is part of the Covid-19 and the Pacific series on DevPolicy.

 Stephen Howes is the director of the development policy centre and a professor of economics at the Crawford School.

Jotam Sinopane is an independent consultant with specialties in research, investments and strategy. He was formerly employed with Bank South Pacific.