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The Determinants Of Unemployment In Pakistan Economics Essay

Introduction Unemployment is a common word nowadays. we may have noticed that in spite of education, there are many people that are without jobs. widespread and persistent unemployment is one of the serious macroeconomic problems, both developing and developed countries in the world. Unemployment brings a large number of socio-economic problems in many divers’ ways. The negative crash of unemployment is divers and delicate. In addition if the output of income is low its leads to the rising income inequality, ill health and mortality, loss of human capital and skills, migration, loss of human capital relation, loss of motivation for future works and social life. for that reason it is very important to be aware of the nature and effects of unemployment. We should also have to design suitable policies and programmers to contest it. In this component that will be introduced to the perception classification, and measurement of unemployment. From this a person will be able to analyze the tendency and consequence of unemployment, and evaluate effectiveness of different programs and policies that are initiate by state and central government to reduce the unemployment in economy.
Definition of unemployment We might have listen to about unemployment from our friend and relative might not have got the job even after being effectively educated.
To most, the word unemployed means remain without work. Unemployment basically is define as ” The condition of having no job or being out of work or proportion of people which are able to work actively searching jobs but they are unable to find it.”
IMF report (1998) define as:-
‘unemployment is measured annually as percentage of labor force that can’t find a job’. Unemployment also refers to the number or proportion of people in the working population that are unemployed.
Unemployment is basically a persistent challenge that is facing Pakistan since its inception and it is one of the biggest problems of Pakistan.. An unemployed person is one who is an active member of the labor force and he is able to and looks for work, but is unable to find work during a precise reference period that might be a week or a month or a year.
According to current situation in Pakistan more than 30 lack people are unemployed and unemployment ratio is more than 12%.
The unemployment issue of Pakistan is increasing more in rural areas where almost 70% of the Population is living. There livelihoods depend on rural economy. They have lack of basic necessities such as primary health care, education, job opportunities, social services and some other issues due to unemployment increasing day by day. . The biggest reason of unemployment in Pakistan is concerned with the backwardness of agriculture sector. Agriculture sector is the largest sector of Pakistan economy it contributes 20.9% to GDP and 44% people directly or indirectly get jobs opportunities from this sector. Unemployment in agriculture sector arises from two sides.
First reasons are due to the adoption of latest machinery and capital intensive technology. Due to this reasons, demand for labor has been decreased. Second is the backwardness of agriculture sector. There is less availability of quality seeds, pesticides, and fertilizers, absence of land reforms and lack of agriculture education. Due to all these factors agriculture sector is not expanding or flourishing and due to these problems there is general and disguised unemployment in the economy.
Industrial sector is the second largest sector of our economy and it contributes 19% to national income of economy. A large number of labor employed by this sectors. But due to backwardness in industrial sectors a small number of people are employing. Due to electricity breakdown it already established industry is deteriorating, resulting is the prevailing unemployment ratio. In Pakistan education system is very defective. There is no proper educational planning. There is lack of technical and vocational institutions. Public attitude towards education is no serious, they want to get their degrees in general and arts subjects. Nobody is ready to set up his own business without technical education. In Pakistan majority of the businessmen are less educated and unskilled. They don’t have proper knowledge and they don’t know how to run their businesses properly and effectively. So they become bankrupt in a country. This factor and reasons generates unemployment on a massive level.
Increase in unemployment can be stated the change in demographic structure, women participation in labor force, immigration from rural areas to town, economic crises in a society and technological unemployment. On the other hand unemployment is not only an economic problem but it is also a social problem and that may cause crimes and deform social fabric. The struggle against unemployment is not limited the unemployment rate in the economy but also to take a consideration into the relationship with macro economic variables such as we can take the example of economic growth, exchange rate and inflation natural unemployment In the economy can be summarized as change in demographic structure, oil crises, increase in Capitan intensive production, labor unions, loss of power, increase in productivity, productive growth, decrease in wages rise, firm structure and structure of policies that regulating in labor market are imbalances in rural as well as in urban areas. Inflation is another factor that may affect unemployment. In the past 20year the rapid and wide spread diffusion of computer information technology at a work place is one of the most important and notable trend. This development has prompted both a great concern that its effects the employment and enhance the job skill requirement that increase the economic inequality and great deal of excitement that information technology serve as engine of economic growth.
Types of unemployment Comprise studied the meaning of unemployment, now let us talk about the different types of unemployment. Generally, unemployment can be separated into two types: voluntary, and involuntary, unemployment.
Voluntary and involuntary unemployment Voluntary unemployment occur due to motive that are explicit to an individual, whereas involuntary unemployment is foundation by a large number of socio-economic factors for example level and composition of aggregate demand, structure of the market, government intervention, and so on.
Therefore, the Unemployment has different kinds depending on the nature, origin, and period of unemployment. Let us now talk about various types of unemployment. Unemployment is broadly classified in following group.
There are different types of unemployment we can define them in five categories such as frictional unemployment, structural unemployment, cyclical unemployment, classical unemployment and demand deficit etc.
Frictional unemployment Frictional unemployment includes those people that are unable to do work plus the stock of people moving between jobs. it occurs because of a discrepancy in the timing due to this people leave one job and starts another job. Frictional unemployment pass on to a conversion period of looking for a new job, for different reason, such as looking for a better job, being passionate from a current job, or having voluntarily quit a current job. The period of time between the current to a new job is referred to known as frictional unemployment.
Seasonal unemployment The other type of unemployment is Seasonal unemployment that is a type of frictional unemployment, it occurs in a definite activities or profession which is characterized by seasonal work. An example of seasonal unemployment is the joblessness through non-cultivation in rural areas.
Structural unemployment Structural unemployment occurs when there is the long-term changes happened in the patterns of production and demand within an economy This kind of unemployment takes place when there is several transform in consumer demand and technology in the economy. For example, when computers were initiate many workers were displacing because of a divergence between the accessible skills of the workers and the obligation of the job. Though jobs were accessible, there was a demand for a new category of skill and qualification. So, persons with old skills did not get employment in the changed economic domination and stay unemployed. This is known a structural unemployment.
Cyclical unemployment In cyclical unemployment includes those workers who lay off when the overall economy suffers a downturn. When there is an economy is broad decline in aggregate demand for goods and services, employment declines and unemployment in the same way increases. as a result it is sometime referred to as ‘demand lacking unemployment’. For example during the current global slowdown, in late 2008, many workers in the region of the globe vanished their jobs.
Natural rate of unemployment Natural rate of unemployment is the sum total of frictional and structural unemployment that is referred as the natural rate of unemployment of economy .Open unemployment happen when a person is voluntarily or Involuntarily and keeps himself out of deliberation for definite jobs. For example In1980s there was a rapid decline in the steel and coal industries in the UK. That’s caused a large number increased in structural unemployment in those areas such as South Wales sun-set industries etc.
All the developing countries, including India endure from structural unemployment, which survive both in open and disguised structure. The problem in developing countries can better be review as underemployment a fractional lack of work, low employment income, and under utilization of skills, underutilization of natural resources or low productivity, slightly issue of unemployment as argue above. Thus, underemployment explain the condition of those person who are able to do work at part time because full time jobs is unavailable or employed one full time foundation but the services they turn into may actually be much less than full time as known as disguised underemployment and those who are employed in profession have need of lower levels of skills than they are qualified for , that a name is hidden underemployment. A related concept is that of working poor those who are actually work for long hours but they earn only at low income beneath the poverty line. In other words, working poor is definite as situation when the individuals or households, in spite of being employed, stay put in comparative poverty due to low levels of wages and earnings.
It is essential to note that the kinds and nature of unemployment fluctuate extensively in developing and developed countries. Unemployment in developed countries occurs due to the lack of required effective demand or economic slowdown, such as recession, or depression. In developing countries, unemployment happens largely because of a lower demand for labor or inadequate employment opportunity in the economy. Such a situation occurs due to the survival nature of agriculture, a low industrial base and the small size of the tertiary sector of economy. Let us now discuss the different concepts of unemployment that are related to developing countries, including India. A low income below the poverty line. In other words, working poor is defined as a Situation when individuals or households, in spite of being employed, remain in relative poverty due to low levels of wages and earnings.
Classical unemployment Classical unemployment is the view of unemployment that put forward by classical economists. It occurs when the real wage is too high. Real variables take account of the price level, nominal variables do not do so. According to classical framework, wages and prices are perfectly flexible so as to keep the economy at full-employment.
Demand-Deficient Unemployment Demand-Deficient Unemployment refers to unemployment within the framework of Keynesian, where the aggregate demand level is below that necessary to achieve full-employment.
In Pakistan unemployment is of structural and cyclical nature. Unemployment is a central problem because when unemployment is high, resources are wasted and people’s incomes are depressed; during such periods, economic distress also spills over to affect people’s emotions and family lives. There are a number of causes of unemployment occures in Pakistan. There are deferent causes of unemployment. Some of the causes of unemployment that are usually aware, the main problem is that there are over population and lack of work. Some of the important causes of unemployment are: the high rate of population growth and the subsequent increase in labor force; low velocity of economic growth, need of sufficient employment opportunities in non-agricultural activities and creation of seasonal employment, or need of full time employment in agriculture; low labor incorporation capacities in industrialized and tertiary activities; shifting from labor-intensive to capital, Skill-intensive production technique and expansion in education system, and so on.
Let us now we will briefly elaborate these causes. Low and unpredictable levels of economic growth do not generate sufficient employment opportunities, as desired. in addition, rates the sectoral composition of growth is also an most important determinant of unemployment. extreme dependence on agriculture sector and slow growth of non-farm activities is the cause of limit employment generation. utilization of capital-intensive technique and production practice not only dislocate presently employed persons, but also measured down the generation of new employment opportunities. There is the need of a clear and glowing developed human resource policy and manpower policy, may show the way to a disparity between the need and accessibility of appropriate skills and training, which outcome is unemployment, mainly of youth and educated ,speedy growth in population, deficiency of employability due to poor health and nourishment that also show the way to unemployment. deficiency of investment and infrastructure development are factors that do not produce sufficient levels of employment in the economy, and as a result unemployment rises in economy.
Insufficient accessibility of unemployment insurance and public employment programmers also source a rise in unemployment. Large scale smuggling which has flooded the market with cheaper goods poses a serious threat to the development of local industry. Tight bureaucratic control on the economy, inadequate credit facilities and complex tax system are also some important factors that are creating hurdles in the way of private sector investment in industrial projects.
Now we will discuss the problem of under employment and working poor.
Underemployment problem might acquire different forms, such as partial lack of work, low employment income, and underutilization of skills or low productivity. In other words, the underemployed are those persons who look for and are accessible for alternative work, moreover because the quantum of current work is not sufficient, or not remunerative sufficient In this section, we will talk about two important component of underemployment, that is. first, the incidence of working poor by type of employment and extensive sector, and second, insufficient accessibility of work.
The working poor might be depict like individuals and families who preserve regular Employment but residued in relative poverty because of low levels of wage and earning Approximately one fourth of the total workforce functions at income level, which is below the predetermine levels of MPCE that are used to define the poverty line in India. It is significant to note that the frequency of working poor is highest among the workers who work informal The occurrence of working poor is too high for the self employed workers. The extent of working poor is more in urban areas as contrast to rural areas for all category of employment. There are momentous variations in the proportion of working poor in broad sectors .A larger proportion of primary sector that is agriculture workers are poor contrast to workers in secondary and tertiary sectors. yet again, in urban areas the occurrence of working poor is larger than that of rural areas in all three wide sectors.
Youth unemployment Youth unemployment is also a very serious problem with much socio-economic implication. Unemployment surrounded by the youth is not only a social cost in stipulations of potential loss of skill and training, but also it is protracted, it will generate unrest Among the youth and capacity that go ahead to family argument, alcohol, drug, suicide and abuse, For expediency, in this unit, we have distinct ‘youth’ as persons old 15 to29 years. In stipulations of all the four measures of unemployment, the unemployment rates are maximum for persons old 20 to 24 years. The unemployment rates are higher for urban persons at unreliable age groups. The unemployment rates have amplified for persons of different age groups during 1993-9412004-05. Thus, the occurrence of youth unemployment has an increasing tendency and it is more delicate in urban areas. Special employment policies and programmers need to be prepare
to address the problem of youth unemployment.
The level of education is an significant correlate of unemployment. There is a universal belief that levels of education and unemployment rates are inversely related with each other. The level of education is an imperative associate to unemployment. There is a common certainty that levels of education and unemployment rates are inversely related with each other , the illiteracy rate in 1993-94 rural male and female was 1.8 and 2.2 respectively, in 1999-00 was 3.0 and 2.7 and in 2004-05 was 2.7 and 2.5 respectively. And in urban areas illetracy rate in 1993-94 of 2.2 of male as well as female, in 199-00 was 3.1 of male and 2.0 of female and fanly in 2004-05 2.8 of males and 2.5 women were illiterate. But, Unemployment rates are higher for the educated workers. This is true for both male and female workers, with in rural and urban areas. Illiterate person or workers through low level of education that do not has sufficient employment options. Consequently, they cannot meet the expense of to wait for a better employment opportunity. On the divergent educated and trained workers in the favor to keep on unemployed till they obtain appropriate employment of their choice. Therefore, at higher levels of education, the rates of unemployment are also higher. In addition the potential of changing jobs are also advanced for educated workers. The conversion period between the present job and new job is also a magic charm of unemployment, that might be referred to as frictional unemployment. Consequently now the question is that what is the main reason of the rise in educated unemployment? Earliest, in excess of the years, there has been considerable expansion of the education sector. as a result when educated workers entered into the market labor force has increased, but the economy has unsuccessful to create equivalent employment opportunities on behalf of these workers.
In other words, there is a inequality between the supply of and demand for educated Workers in the economy. It may also be discuss that the existing education system is has unsuccessful to provide the right kind of skills, opportunities and technical propensity. The skills and capability of these educated workers that are do not match the necessities of various of kinds of work and activities That are available. For example, in India in educational system, most of the workers having ten years of schooling and they do not attain any vocational training, and therefore they are not appropriate for any skilled jobs.
Unemployment and poverty are two imperative problems of all developing countries and they are interconnected with each other .Unemployment and poverty coexist at a time, but it is not always positively connected with each other.. But unemployment and remain in underemployment are most important causes of poverty and, as a result, the provisioning of profitable employment will be fundamental for poverty reduction in economy. in view of the fact that in the Indian statistical system, poverty is considered on the foundation of Monthly Per Capita Expenditure (MPCE), accede to us now investigate the behavior of unemployment rates on varying levels of MPCE in rural and urban areas of India. Many African countries also facing the problem of unemployment in african countries the Growth is essential not only for growing the levels of income but also for put down the groundwork for sustainable poverty reduction policies, improving human welfare and enhancing the overall development in economy. Growth facilitates countries to enhance the accessibility and allotment of basic life supporting goods and services for example food, shelter, health, shield and protection. It also permits countries to produce more jobs and better education slandered, in that way growing the assortment of economic and social choices obtainable to individuals. For the considerate how to attain growth and how we can maintain it at high levels is the solution to understanding that how we can increase the living standard of individuals and recover poverty on the continent so that people can live happily.
From the time when the occurrence of the global crises in Africa, the GDP growth has trended downwards, even though showing some flexibility as evaluate to preceding episodes of economic recession. with the intention of growth rate was 4.9 per cent in 2008 and 1.6 per cent in 2009 outstanding mainly the demand of commodity was low and prices and a spiky fall in domestic demand specially private investment, exterior capital inflows and tourism receipts. Projected growth improvement in Africa is about 4.3 per cent in 2010 will another time rely mostly on the health of the global economy and its craving for Africa’s commodity that are exported, which will increase export prices and revenue generation.
The economic crash of the global economic recession on African countries is because of that its depended more on their economic structures. The Africans Countries that are seriously dependent on mineral resources and undiversified export intention that were affected the most because of lower prices of commodity and their demand. The disaster also has an impact on social conditions of the countries, as a result there is declining in living standards of the people, particularly in that place where social protection is not well-developed. The prolonged decelerate in the world of economy that reason to transmittal, job creation, tourism and ODA start decline and as a result the unemployment to increase.
In economic theory the linear positive relationship between economic growth and employment can be supposed. There is not a common thinking related to this issue between the economist. Some suggested that there is a positive relationship between employment and economic growth and this economist are not agree with the jobless growth. But in few recent years it is observed that unemployment problem cant be solved by economic growth economic theory the relationship between unemployment and the economic growth is explained by using Okun’s Law.
Okun’s Law Okun’s Law described an enduring empirical observation that firstly made by Arthur Okun in 1962 he observed that in the postwar periods the unemployment rate was on the average, each extra percentage is above than four percent and that can be associated with about a three percent in real GNP. Because Okun’s empirical finding is well heldup during the ensuing decade, the ratio was 3:1 in trade off between the real GNP growth and unemployment rate that becomes to known as Okun’s Law.
Now we will explain the relationship of unemployment and inflation.In economic journalism there are many different accounts of labor market theory. All labor market effect have been clarify by theoretical point of view with the help of three major forces that are the market forces of demand and supply ,sociological factors such as cultures, customs, class, and family background and institutional forces in the form of government union etc.With this framework there are different schools of thought exist in which includes the classical, the neoclassical, and the institutional schools that are come into view in labor economics journalism. That is foundation on relative importance and the working of these forces to express about specific labor market effect.
The neoclassical school of thought paying attention on the primarily operation of market forces in influencing the wages and distribution of labor, and measured other institutional and social factors as mention. On the divergent, the institutional school highlights the role of institutional forces, for instance internal labor markets and unions, and sociological factors, such as class and intolerance segmentation, in addition to stratification Unemployment in the labor market. The institutional school consequently, situates emphasis on the exclusive features of the labor market, and explains that how these forces fade away the role of market forces hence, known about the different theories and school of thoughts in labor economics journalism how would one explain the problem of unemployment?
Unconventional theoretical explanations on the problem of unemployment have been locate ahead by different schools of thought. Of economic .Keynesian economic thoughts center of attention on lack of effective demand for goods and services which foundation is unemployment in an economy, and discuss those government policies, mutually monetary and fiscal, might be used to increase aggregate demand, therefore, increasing economic activity and sinking the unemployment and deflation. On the divergent, the Classical and Neoclassica1 Schools of thought have paying attention on labor market inflexibility, for instance minimum wage and additional regulations as clarification for unemployment in economy. But this clarification may not be sufficient enough to explain the problem of unemployment known the heterogeneity of this problem in expressions of nature, pattern magnitude, reason of unemployment, and their impact in the economy. on the other hand in this perspective it is attractive to understand an important theoretical description of the relationship between unemployment and inflation revealed by A. W. Phillips. He predicts an inverse relationship between unemployment and inflation, presenting a downward sloped curve, popularly known as the Phillips curve (see the diagram). He clarify the tradeoff between unemployment and inflation, and show that how any attempt by governments is helpful to reduce unemployment was liable to source increased inflation.
There are different theories related to unemployment. Different economists distinguish between various types of and theories of unemployment, including structural unemployment, cyclical or Keynesian unemployment frictional unemployment, and classical unemployment.
Cyclical or Keynesian unemployment is also known as deficient-demand unemployment, it occurs when those who wants to do work but jobs are not provided by them due to the lack of aggregate demand in the economy. Demand for most good and services fall down, less production is needed and consequently a fewer work are needed for these goods and wages are sticky that do not fall to the meet the equilibrium level in the economy, and result is the mass unemployment . this type of unemployment occurs during the great depression of the 1930s. in cyclical unemployment the number of unemployed workers the number of existing job vacancies , so that even in full employment were attained and mostly open jobs were fille due to this some workers still remained unemployed. cyclical unemployment is associated with frictional unemployment at some extent because the factor that cause to create frictional unemployment are partially caused by cyclical variables. For example , a decrease in the supply of money surprisely may shock rational economic factors in the economy and suddenly inhabit the aggregate demand.
Classical economist reject the conception of cyclical unemployment and gives the alternatively suggestion that is invisible hand of free market would response quickly to unemployment and underutilization of resources by a fall in wages result is rise in employment.
Keynesian economist on the other hand result is the lack of demand for jobs are potentially resolved by the govt intervention. Keynesian other suggested interventions involves deficit spending to boost employment and demand. Another intervention involves expansionary monetary policy that increases the demands of money that reduced the interest rates that leads the increase in non government spending.
Next theory is Marxist theory of unemployment this theory is presented by Karl Marx, unemployment is inherent within the unstable capitalist system and periodic crises of mass unemployment are to expected. Proletariat function within capitalist system provides “reseve army of labour” that create a downward pressure in wages. That accomplished by dividing the proletariat into surplus of labor and under employment. Reserve army of labor basically fights among themselves for the purpose of scaring jobs at lower and lower wages. At first point, unemployment seems to be inefficient since the profit of unemployed worker do not increase. However, unemployment is considered profitable within the global capitalist system because unemployment at lower wages which is the cost from the perspective of the owners and from this perspectives low wages provide the benefit of the system of reducing economic rents. Yet it does not provide benefits for workers. The capitalist system manipulates the market for labour unfairly by perpetuating unemployment which lowers laborers and demand for fair wages.
According to Marx, to eliminate the unemployment permanently there is only one way that would be to abolish the capitalism system in the economy and the system of forced competition for wages and then it shift to a socialist economic system. Acording to Marxists, existence of persistent unemployment is proof of the inability of capitalism that ensur the full employment in the economy.
Now we will discuss about involuntary unemployment. in the general theory , keynsian argued about neo-classic economic theory he said that nea-classic theory did not apply during recessions because of excessive savings and weak , poor investment in the economy. As a result people could be thrown out of work involuntarily baises and did not able to find the acceptable and reliable employment.
This conflict between the Neo-classical and keynsian theories had a very strong influence on govt policy that works. The tendency for government is to eliminate and to curtail the unemployment in the economy through increasing the benefits and govt jobs opportunities and to enhance the ability of job seekers to the both considered new careers and relocation to different city. In voluntary unemployment basically does not exist in agrarian societies and its not formally and easily recognized to existence of underdeveloped countries but it can be find in urban societies. We can take the example of mega-cities of Africa, Pakistan and india. In these societies, a suddenly unemployed person is able to meet their survival needs either by getting a new job at any wage which is being offered. Involuntary unemployment is basically discussed in novels of social suffering and from the narrative standpoint in stories.
The concept of full employment can be discussed in Demand -based theory. We can abolish the cyclical unemployment in th

The Rate Of Unemployment In Nigeria Economics Essay

According to streetdirectory online unemployment refers to when they is joblessness in an economy .Furthermore it describe unemployment as a state of not having a paying job. The rate of measuring unemployment is called unemployment rate which is the sum of unemployed workers divided by the sum of civilians in a country. Despite the fact that unemployment found in the rural area is an example of disguised unemployment, it is not considered as big problem.
According to politics(2012)[online]defined unemployment as one of the factors used an economy to determine the number of individuals that has offer themselves for work but are where not able to a paying job.It went further to say that individuals that has not offer themselves for unemployment are not counted among the unemployment economic figure in an economy. Furthermore it says high level of unemployment is been caused by a struggling economy.
According to investorswords (2012) [online] defined unemployment a situation in the economy of a nation, in which individuals looking for job remain unrmployed. According to word IQ(2010)[online] defined unemployment according to economics definition as an individual that is capable to work and has offered himself for employment but not able to find a job. Furthermore it defined unemployment as the number of individuals employed divided by the total labor force.
According to about(2012)[online] unemployment is defined as individuals without jobs. It further says that unemployment is determined by unemployment rate. Which is the sum of unemployed individuals divided by the total civilian labor force. It went further to say that unemployment is not is not taking into consideration as a serious problem in spite of the disguised unemployment present in the rural area.
The history of unemployment can be traced in different countries like in Britain. The rate of unemployment which is the total number of individual divided by the total labor force of a country was at a very minimum level because of the stable econmy the britian enjoyed in 1900-1914. After some period of low level of unemployment the britian began to experience an increase in unemployment in 1920s because formally the unemployment level was between 10% and 12%. The level of unemployment fell to a great level in In 1920s where the unemployment level was increased which was as a result of the closing down of some industries due to the fact that they were not able to compete with other foreign countries, britian experienced a larger decline in their economy in 1930 However in 1920s the unemployment level began to rise.In 1933,1934 and 1935 and it became constant at January 1936 , which was about 13.90%. In 1938 the level of unemployment was recorded to be 10%. After the second world, new industries began to open and this resulted to a decrease in unemployment level, this decrease in the level of unemployment was experienced in 1940s to 1960s. But in the mid 1970s the unemployment level began to increase. (2012)[online]
In 1980-1982, the unemployment level in Britain grew reach its maximum in 1986 and fell in 1990.Unfortunately there was another increase in unemployment in 1990 which later fell in 1993 and it continue to fall till the end of century. But in 2009 the unemployment level rose again in which the unemployment rate in the United Kingdom in September 2012 was recorded to be 7.9%. from local history(2012)[online]
In USA, during the period of 1930s in USA, they experience a high level of unemployment the level of unemployment was very high during 1930s and a fall in the price of goods which started in From mid-September. On 24th October 1929 they was a teribble fall in price of goods which resulted into deterioration of commercial operation and the rate at which their industries produces goods fell completely because of the fall in the price of the goods that was produced which resulted in the reduction of their exportation to other. This made aabout 25% of the work force not to be able to get a job and therefore they remained unemployed. From local history (2012) [online]
Due to the high level of unemployment it has lead in fall in the economy of USA which was very serious than any economic fall they went through before. It was recognize as the depression.
At that time the president there had was President Hoover who tried to convince employers to maintain wages at their present level and tried to help by increasing government spending on the construction of bridges, roads and public buildings. But president Hoover rejected the introduction of federal unemployment relief inother to prevent people from over independence on the state.From local history (2012)[online]
For the unemployed life during the depression was very harsh. Many were reduced to attending soup kitchens run by charities. (The soup was sometimes called ‘Hoover stew’. Destitute people lived in shantytowns they called Hoovervilles. Hoover became deeply unpopular and in 1932 Franklin Delano Roosevelt was elected President. From Local history (2012)[online]
Roosevelt assured the American people that the only thing they had to fear was fear itself. He promised the American people ‘A New Deal’. However between 1933 and 1939 he had only limited success. Unemployment fell to between 14% and 15% by 1937. However in that year the economy dipped again. (It was called the recession) and unemployment rose to 17%. However industrial production rose to its 1929 level again by 1939. From local history(2012)[online]
On 12 May 1933 the Federal Emergency Relief Act was passed to help the unemployed. The states were given grants to provide work like repairing roads and improving parks and schools. From local history(2012)[online]
Also in 1933 Roosevelt founded the civilian Conservation Corps, which employed young men on conservation projects. A Public Works Administration was created which built public buildings, bridges and dams. Also the Tennessee Valley Authority was created to build dams and hydroelectric plants. From local history(2012)[online]
In 1935 the Social Security Act created old age pensions and an unemployment insurance scheme. In 1938 a Fair Labor Standards Act created a minimum wage.
Despite all of Roosevelt’s efforts the depression only ended with the coming of war. The USA mobilized all its resources for war. Industrial output doubled during World War II and by 1943 there was full employment. From local history(2012)[online]
Meanwhile Canada suffered from a huge drop in exports of timber, grain and fish. By 1933 unemployment had soared to 23%. The government introduced relief works but economic hardship continued throughout the 1930s. The depression only ended when the Second World War began in 1939. Gotten from Local histories (2012)[online].
In Nigeria, in 1985 the national unemployment rate estimated by the office of statistics was 4.3 percent of the labor force. The unemployment rate increased to 5.3 percent in 1986and 7.0 percent in 1987, before falling to 5.1 percent in 1988. This was as a result of measures taken under the SAP. Most of the unemployed were city dwellers as indicated by the urban jobless rates of 8.7 percent in 1985, 9.1 percent in 1986, and 9.8 percent in 1987and 7.3 percent in 1988. But the rural unemployment figure were less accurate than those of the urban unemployment figure because of the disguised unemployment found in the rural areas were most of them were underemployed.
Secondary school graduate has the highest proportion of unemployed which was about 30 to 50 percent. There were also about 40 percent unemployment rate among urban youth aged 20 to 24 and 31 percent rate among those aged 15 to 19. Gotten from photius(2004)[online].
According to ehow(2012)[online] The are four main types of unemployment. Which are structural unemployment, frictional unemployment, cyclical unemployment and seasonal unemployment? Cyclical unemployment is the type of unemployment that causes widespread unemployment within a population. Seasonal and frictional unemployment are forms of unemployment that are voluntary which change depending on what type of year it is. Structural unemployment has to do with the supply and the demand of the number of individuals trained to perform a particular job.
There are four types of unemployment which are cyclical unemployment; this is the type of unemployment that causes widespread unemployment within a population, seasonal unemployment, frictional unemployment, and structural unemployment. Furthermore frictional unemployment is the type of unemployment that occurs, when an individual finding a job takes time or when an individual is waiting to find a job that works for him or taking time to choose between a multiple jobs offers. Frictional unemployment is an involuntary unemployment because an individual has to decide for example when an individual voluntary quit a job which may be due to as a result inability of salary increment, the time it takes for the individual to find a new job is called frictional unemployment, because when the individual is looking for another job the individual is partially unemployed. The second type of unemployment is called structural unemployment is the structural unemployment which is caused as a result of a change in the technique of can also be caused when the needs of the employers does not match the skills that a workforce in a country has. Structural unemployment can also be caused by geographical problems. The third type of unemployment is called the seasonal unemployment which occurs when an individual is unemployed because certain types of job are only available at a certain times or season of the year. For example a gardener will remain unemployed until the flowers in a garden grow. Lastly the fourth types of unemployment are called the cyclical unemployment which is caused as a result of decline in the economy of a nation. It is the type of unemployment talked frequently in news. It is caused as a result of when the economic growth in a country is poor in which there is not enough demand to supply goods. Gotten from ehow(2012)[online]
According to buzzle (2012)[online]a series of events in the United States had sparked a vicious recessionary cycle which is commonly referred to as the economic recession of 2007 or financial crisis of 2007. The Bureau of Labor Statics, United States, churns out numbers according to the current population census with the rate of unemployment at about 9% in the June of 2010. Economists have predicted this exorbitant rate of unemployment to rise from the beginning of 2011. Though the causes of unemployment have been closely associated with the financial crisis and recession, there are several other factors that have contributed to the same.
some of the causes of unemployment in united states of America are
Financial Crisis of 2007 to 2009 United States President once commented in very harsh words that unemployment and economic crisis was as a result of ‘culture of irresponsibility’. What President Obama implied was the current status of the United States economy. Let us go down to the basics of Alfred Marshall and Adam Smith. An economy with a good GDP is a result of legitimate demand and supply curves, meaning that producers produce and consumers pay for the goods. The total goods that are purchased in the economy is the GDP. However, in the United States, an enormous volume of goods are purchased by credit cards (i.e. money which will be paid at a later date). In May 2010, G.19 report on consumer credit, the Federal Reserve indicated that as of March, $2.45 trillion worth of consumer debt had accumulated, with a circulation of 576.4 million credit cards. This enormous number of ‘credit’ has generated a GDP that is partially ‘artificial’. This unhealthy purchase rate has led to an enormous volume of bad debt and bankruptcy with lenders, credit card companies and consumers suffering losses. This loss bearing spread to all economic entities in the US economy with an enormous number of companies either filing for bankruptcy, or initiating layoffs and job cuts. From buzzle (2012)[online]
Real Estate Bubble a sector that is closely related to the financial crisis and unemployment, is the real estate sector. From the 1990s to 2000s the real estate rates in the United States had risen by 124%. Concepts such as refinancing, second mortgages, reckless lending and unnecessary price appraisals caused banking companies to fall into severe crisis of loss. Apart from that, foreclosed properties and short sale procedures started fetching lesser and lesser returns. People, either refused to buy or had defaulted mortgage loans. The blow was dire and a considerable number of banks and financial institutions started filing for bankruptcy. The first prominent example being bankruptcy of Lehman Brothers which was worth $600 billion in assets. The blow was so substantial that people associated with the bank also lost a mammoth amount of their liquidity had to bear financial troubles. Many companies who were associated with the bank filed for bankruptcy, initiated layoffs. Lehman itself lay off 1,200 of its personnel, while still in the initial phases of its decline. This crisis is also sometimes referred to as the sub-prime mortgage crisis of United States. From buzzle (2012)[online]
Automotive Industry Crisis one of the biggest industry that was affected after the banking industry was the automotive industry. With a decline of banks and lending institutions, a large volume of lending facilities that provided car loans and auto loans, disappeared. Apart from loans, sectors such as international trade, foreign exchange and oil trade had been affected. The 2003 to 2008 lapse of enthusiasm in fuel trade had also drastically affected all fuel supply facilities, causing inflation in the costs of fuel. The automotive industry thus suffered from significant burdens such as loss of sales and markets, credit crunch for raw material and labor procurement, unwanted products, etc. The concluding effect was a terrible number of people being laid off. From buzzle (2012)[online]
Outsourcing the first three causes of unemployment in the United States are principally financial crisis. There are however other unemployment causes and consequences that have originated as a result of business practices. Outsourcing is one such practice where work is allocated to companies which are based in less developed economies, to benefit cheaper manpower hours. This practice has led to loss of job opportunities. From buzzle (2012)[online]
Iraq and Afghanistan Wars The indirectly related causes are the two wars by the Bush administration. The United States Armed Forces which were involved in the Afghanistan invasion roughly amounted to 78,430. A permanent military installation of Kandahar Air Field amounted to $780-million and as of 2009; $1.6 billion has being spent on military installations in Afghanistan. In 2003 invasion of Iraq 248,000 troops were deployed in Iraq. The conclusion, United States government spends a $533.8 billion defense budget (as of 2010) and the foreign operation brings it to $663.8 billion. This amount is almost sufficient to revive many sectors in the economy.
The Obama administration has made it a point to make changes and revive the economy and also the United States unemployment.
In the United Kingdom some of the causes of unemployment are:
Lack of demand
Lack of supply
LACK OF DEMAND: When there isn’t enough demand employers will not need as many workers, and so it will result to demand-deficient unemployment.
Unemployment caused by supply-side factors results from imperfections in the labor market. A perfect labor market will always clear and all those looking for work will be working – supply will equal demand. However, if the market doesn’t clear properly there may be unemployment. This may happen because wages don’t fall properly to clear the market.
Wages are initially too high and so unemployment of ab results (supply is greater than demand). To get rid of this unemployment and clear the market wages should fall. However, if they are ‘sticky-downwards’ this may not happen and the unemployment may persist.
Supply-side unemployment may also happen because there is occupational or geographical immobility. It may happen because there is poor information about job opportunities. This will lead to people taking a long time looking for jobs, increasing the level of frictional or search unemployment.
One final cause of unemployment which tends to be discussed less but is no less important is changes in the workforce. The workforce is made up of people who are of working age and not currently in full-time education. Their number will change with the demographic (age) structure of the population. If there is a baby-boom (a rapid increase in the birth rate) then these people will become of working age between 16 and 21 years later. They then join the work-force. If there are the same numbers of people retiring from the work-force at the other end, then unemployment will stay the same. However, following a baby boom there are often more joining the work-force than leaving? This may increase unemployment, unless there are enough extra jobs created to employ the extra people in the work-force. This was one of the causes of unemployment in the early 1980s when people born in the baby-boom of the 1960s joined the work-force.
Some of the causes of unemployment in Nigeria are:
EXPANSION OF EDUCATIONAL INSTITUTION IN NIGERIA: due to the rapid expansion of educational institution in Nigeria, has increased unemployment in Nigeria, because many students, graduate each year or individuals that has gone through any type of formal or informal training which has made it impossible to find a job due to the high number of individuals applying for a job.
RISING POPULATION IN NIGERIA: the rising population in Nigeria is one of the factors that have led to increase in unemployment. As a result of this increase in population it has increased the labor force rate and this has led to unemployment, because job opportunity is not increasing as population is increasing.
RURAL URBAN MIGRATION: individuals migrates from the rural area to the urban area in other to find a greener pasture where they swell the rank of the unemployed.
Rural —urban wage differential: due to the difference in wages between the rural area and the urban area, this has lead individuals to leave the rural areas to the urban area. This has increased the number of individuals unemployed in the urban areas.
Inadequate Educational Opportunities and Resources:
Quality education has a direct bearing on national prestige, greatness and cohesion. The knowledge and skill that young people acquire help determine their degree of patriotism and contribution to national integration and progress.
Between 2000 and 2004, about 30 per cent of Nigerian youth between 10 and 24 were not enrolled in secondary school (Population Reference Bureau, 2006). Perhaps the prohibitive cost of acquiring education is responsible.
The after effect of this situation is that thousands of young people roam the streets in cities in Nigeria. Those who manage to complete secondary school have no opportunities for tertiary education. Having been denied the chance to reach their potential, they are disorientated and readily available for anti-social actions.
Worse still, some who struggle to enroll in various educational institutions drop out due to lack of basic learning facilities. This situation is attributable to the dwindling resources of government at both federal and state levels as a result of economic meltdown.
Lack of Basic Infrastructure:
Most rural communities and urban slums in Nigeria have no access to potable water, health facilities, electricity, communication facilities, industries and commercial facilities, etc. Behind social unrest and youth restiveness in the country is the agitation for equitable distribution of resources.
Inadequate Communication and Information flow:
Communication creates room for sharing information. It helps people express their thoughts and feelings, clarify problems, and consider alternative ways of coping or adapting to their situation. Such sharing promotes social cohesion.
People must have access to communication facilities, to communicate with the people making the decisions that affect them. Sadly, rarely do people in Nigeria participate in decision-making processes on issues that affect their lives.
Effects of unemployment in Nigeria: Every year, over 300,000 graduates are churned out from the tertiary institutions nationwide. This number grows yearly and translates into more and more unemployed people littering the streets of Nigerian cities.
Mental health: Mental health problems like: Low self-confidence, feeling unworthy, depression and hopelessness. With the lost income and the frustration involved in it, the recently unemployed may develop negative attitudes toward common things in life and may feel that all sense of purpose is lost. Frequent emotions could be — low self-esteem, inadequateness and feeling dejected and hopeless.
Health diseases: The unemployment overall tension can increase dramatically general health issues of individuals. Tension at home: Quarrels and arguments at home front which may lead to tension and increased numbers of divorces etc.
Political issues: Loss of trust in administration and the government which may lead to political instability.
Tension over taxes rise: Unemployment also brings up discontent and frustration amongst the tax-paying citizens. In order to meet the demands of the unemployment fund, the government may have to increase the taxes thus giving way to restlessness amongst the tax-paying citizens. Gotten from vanguard(n.d)[online].
According to the research done Nigeria has a higher percentage of unemployment than United Kingdom and United States of America.