Unemployment has always been an issue that attracted attention in this country. So when economic data start showing an increase in unemployment, many are bound to jump on the bandwagon seeking to give their own opinion on how best to tackle this issue.

Today, we are experiencing such a situation. Unemployment has been on the increase (even if in recent weeks it has seen a downward movement); it has become a key issue for the government to tackle at par with the issue of the fiscal deficit; and the solution according to many is for the government to wave the magic wand (in other words spend loads of money) to provide jobs for the unemployed.

Fortunately or unfortunately, those days when such a policy was resorted to are over. The government does not have the funds to provide employment directly. There is the recognition that the public service is over-manned in a number of occupations, in particular the less skilled ones (and those that form the core of the unemployed are unskilled persons) and as such public service employment should not be resorted to.

Moreover, state-controlled organisations are increasingly facing the need to become more efficient and consequently cannot be viewed anymore as an employment agency.

In this scenario one is required to look at employment and unemployment from a different perspective. This has become even more necessary as several economic data are pointing to an increased level of efficiency within the private sector and, therefore, any increased activity is not necessarily being accompanied by an increase in employment. This is expected to happen in public sector organisations as well. This would result in increased competitiveness and eventually in a more stable situation with regard to employment.

Broad data on employment show that the employment rate for persons aged 15 to 64 years stood at 53.5 per cent in 2003 compared to 54.2 per cent in 2000. The share of the private sector has edged upwards in March of this year to 66.8 per cent from 66 per cent in March 2003. Employment with the public service represented 22.2 per cent in February of this year compared to 22.7 per cent in 1997.

These broad indicators do show that is a lower reliance on the public sector as a direct provider of employment. It is a trend that should be consolidating in future, thereby strengthening the view that the traditional approach of viewing employment and unemployment in this country is no longer valid.

However, something more interesting is emerging. Indices on short-term trends in the wholesale and retail sector show that turnover net of VAT is increasing, at a rate that is significantly higher than the rate of increase of the consumer price index.

On the other hand, employment is decreasing, even though wages and salaries have increased. So operators in the wholesale and retail sector are selling more in real terms, are employing less people (year-on-year the decrease has been quite dramatic) but are paying their employees more. The increase in efficiency in the wholesale sector on its own is around 15 per cent in one year.

We have a similar situation in the manufacturing sector where turnover and investment are increasing but the number of jobs is not. This has meant an increase in turnover per person employed in manufacturing of around eight per cent. That trend has continued in the first quarter of this year and there are many who claim that at present the manufacturing sector is one of the most significant sectors that is leading to increased economic growth.

Information about other segments of the economy is not readily available. However, the indications are that the same thing is happening, namely growth in activity and turnover without a corresponding increase in employment. This has obviously created an anomaly that may be prevalent in other economies but is probably being experienced only for the first time in this country.

What this implies is that we can only increase employment if we manage to diversify further our activities and if we manage to increase them significantly. The need to maintain competitiveness has meant that companies are seeking to meet any increase in activity with increased efficiency.

This, in turn, means that we need to become even more aggressive and pro-active in seeking ways of generating employment.