Question

Briefly discuss public works programmes as a short-term job creation strategy. Refer to the arguments against and in favour of such programmes.

Answer 1

Answer: Public work programme are kind of developmental interventions used as tools to provide temporary relief from poverty, distress in case of economic downturns and natural calamities.

Popularity of Public work programmes has been grown immensely due to two ways success as via them reduction in poverty can be achieved by direct income transfer to poors as well as they build or provide services in public sphere like infrastructure etc.

Various such programs are popular in developing countries like India it is called by name MGNREGA (100 days employment program at particular wages).

Such programs have different effects on economic activities and labour demands in market in short as well as in long term.

In short run they they ditectly infuse capital in the economy by ways of wage payment.That too such projects which are more laboure intensive inject larger cash flow in the economy. Hence is short run they generate demand hence pushing market at equilibrium according to demand supply analysis.

Such programs have their pros and cons:

Pros:

1.They introduced with the aim of poverty reduction hence provide relief to poors.

2.They increase demand in short run into market hence push for more supply of goods and services which lead to incraese in production hence employment in the economy.

3.They help to reduce gender disparities in thw society as in various countries women are more participating in such programs than men.

4.Such programs are incraesng minimum wages in the markwt hence better bargaining power with the labours.

Cons:

1.Such ad hoc programs can not take the place of comprehensive job creation strategy.

2.More the no of people employed under such programs means more the people are in distress and poverty And for their ultimate upliftment they need comprehensive job strategy which focuses on skilling, training etc hence better standards of living overall.

3.Sometimes such programs which are more capital intensive increases sudden liquidity in market as the wages provided but production doesn't incraese with the same pace leading to inflation in the economy.

4.Hight wages leading to higher cost of production in the economy hence insentive for producers to employ more workers.

Hope it helps!