There is slight indication that the stimulus packages aimed at reviving the global economy are yielding results. In Zambia, commentators, who include the Bank of Zambia, have concluded that the rise in the price of copper will soon have a positive bearing on the economy.

However, economic recovery in Zambia will hardly lead to recovery in employment levels in the short and medium term. Zambia is currently experiencing high levels of unemployment. We should first understand that the value of the employment rates may actually have decreased in the past few years despite marginal increases in economic growth. As things stand, the ongoing economic reforms have not had a direct positive impact on the labour market. Government will need to establish the reasons why employment rates appear to stagnate or even contract when GDP is growing at 6.1 percent on average. Agriculture which has the capacity to employ a large number of people has remained very unstable and unable to have any meaningful impact on poverty reduction.

The current economic recession will worsen the crisis on unemployment in Zambia. Even if the economy recovers by next year, the creation of new jobs in industry will experience a time lag. As at now, industry is already positioning itself to scale down on manpower. The following activities will have a negative impact on employment in the post-recession period:

1. Companies will be reluctant to higher additional workers until they are fully convinced the economy has recovered. This will take more than two fiscal years before confidence is restored.

2. Even if recovery takes place, it will be uneven. The mining sector may recover faster owing to its linkage to the global market but other sectors will experience continued recession for a prolonged period. This is why it is important not to place optimism of recovery on one sector as this may be misleading.

3. Many companies will prefer utilizing existing labour rather than increasing the number of jobs.

4. Many companies are already responding to the crisis by investing in technologies and other less labour-intensive machinery. In addition, companies will move towards highly skilled human capital and this has the potential of widening the gap between the rich and the poor. If this happens, it will pose serious social problems particularly in peri-urban areas with the highest concentration of semi-skilled residents.

In order to create jobs during and after the recession; the government will need to strongly signal to the market that growth in the gross domestic product (GDP) will be sustained. As at now, it appears less likely the projected growth rate of 5 percent and inflation rate of 10 percent for 2009 fiscal year will be achieved.

Second and much more importantly, government policy will need to focus on high growth but less vulnerable sectors such as services, manufacturing and construction. These have the capacity to increase levels of employment within the economic recovery period.