Quota issue from an economic perspective

Quota issue from an economic perspective

Truth shall prevail against lies and falsehood. And economic truths are often ruthless. They don’t care for human sentiments or short-term political gains. The issue of quota in public service recruitment is basically an economic one and, despite the lull in student protests that we now see, it may emerge again since there will be no overnight fix of the soaring unemployment in Bangladesh. Actually, the number of unemployed people in the country has touched one crore (ten million). Forget what the Bangladesh Bureau of Statistics says about unemployment. It basically follows the defective definition of the ILO which shows our unemployment rate as low as 4.4 percent—which is equivalent to America’s! In truth, the rate would be no less than 20 percent had we followed the US BLS standard.

For now, the quota agitation has been quelled through some palliative manoeuvrings by the government, but the operation was all but faulty and incomplete. It’s like the surgeon has stitched the cut but left the knife in the lower abdomen; the pain will be back and the patient will scream for his life. The quota-related turbulence is fundamentally an economic disequilibrium. Efforts to give it a political colour by the detractors have just added some fun to an otherwise dull life in the summer.

One need not be an economist to understand that quotas, price ceilings or price floors are distortive for the market. For instance, the minimum wage rule is an example of price floor. The US government keeps it close to the market outcome. As a result, the US enjoys a much lower unemployment rate than Europe, where minimum wages plus the benefits for the jobless are high. The recent decisions of President Trump to raise the wall of tariffs are equivalent to having some quotas that will hamper better allocation of resources and may create trade war with China. We are quite comfortable when it comes to criticising Trump, but we fail to recognise the barrier that we have raised and protected over time in Bangladesh’s domestic market of employment. It’s an irony.

Quotas exist in many countries including the developed ones. But they try to keep it as minimum as possible, fulfilling the needs of groups in need of special (read humanitarian) consideration. Preserving a reasonably minimum number of quotas for the physically challenged people and minority communities is a universal practice. But Bangladesh has taken this practice to a whole new level.

The latest round of quota protests ensued from frustrations over a high unemployment rate. There is no doubt about that. Students observed the ever-increasing quotas (now 56 percent) with alarm, depriving them of their right to merit-based recruitments and ruining their future prospects in the process. And that’s quite natural in a society where jobs are scarce.

One interesting development was the formation of a high-level committee for quota review. Our past experiences with such high-level committees show that their findings are most likely to remain secret or be dumped (e.g. probe on BB’s fund heist). This quota committee, after an initial failure to submit recommendations on time, asked for an unusual time extension of 90 days. Again, metaphorically, it was like starting to read a book on “how to extinguish fire” when your neighbour’s house is already on fire. One wonders though about the 90-day extension. Isn’t it too long? Is the committee inventing a new complicated formula of astrophysics? If the basic logic is understood, wouldn’t only nine days be more than enough? Haven’t we already got the report of the parliamentary committee? We forget that a delay of 90 days may haunt 90 thousand young people for the rest of their lives if their valid age for applying for a government job expires by the end of that period.

The PM was right when she acted out of her political wisdom and scraped the quota system entirely. She saved the nation from a volcano that was about to erupt. She didn’t ignore the employment issue for the ethnic minorities and physically challenged people. Nor did she forget the special arrangements for the children of freedom fighters.

The fact is, quota is bad for the quality of human capital which would be the most important force in leading us to the threshold of a developed nation. Since the early 1990s, market liberalisation led South Asian nations to prosper. This requires a competitive labour market in a free, fair environment where jobseekers are employed based on their merit, not because of some quota privilege. Candidates who now enjoy the privileges of the quota system and are trying to protect it would be automatically employed if they are competent. And that is more dignified than getting a job with the aid of quotas, thus depriving the nation from the services of more eligible candidates.

The PM’s initial thoughts in this line were a great synthesis of economic benefits and long-term political vision. Unfortunately, all these perceptions are now part of history and we have mummified the peaceful quota movement by hammering the forerunners. And those students who turned against their own kind as a political move, insulting and assaulting quota reformists in various universities, should realise that they are digging graves for their own future prospects. In all likelihood, the soaring unemployment in the country will trigger agitations against this unjust and growth-disruptive system again. Economic truths may be bitter, but they are unavoidable.


Biru Paksha Paul is an associate professor of economics at the State University of New York at Cortland. 

Source: The Daily Star.


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