Question

How does the government generate employment indirectly?

Options

• By promoting informal employment with limited social security

• By increasing output in public enterprises, which stimulates output growth in private sector enterprises and leads to additional job creation

• By reducing output in public enterprises

• By implementing poverty alleviation programmes exclusively

Answer 1

Indirect employment generation occurs when government actions stimulate the private sector. By increasing output in public enterprises, the government stimulates output growth in private sector enterprises as well, which leads to additional job creation in the private sector without the government directly hiring workers.