Newspaper Column #1: Is unmployment the real problem – Part I


As it appeared in the Sunday Standard, Botswana on  Sunday Oct 21, 2012 edition (maiden print).

This is the 1st of a three part series of this article.  Each part will build on the earlier article to an eventual conclusion.  We invite you to participate in the column as well as do your ‘own homework’ – searching and discussing to build your own conclusions.

When unemployment persists (hard as it is to admit it is happening)

Persistent unemployment, in any country is a consequence of two factors.

The rate of increase of supply of labour (birth rates from twenty years ago) relative to the rate of increase in the demand for labour (job creation rates of today).  In jest, it is a mismatch of rates of child creation of the past vs. rates of job creation today.

Should the rate of demand for labour exceed supply year on year; we would have full employment of the locals and perhaps be able to employ foreigners as well.  However, should supply of labour persistently outgrow demand; we would now have a classic case of persistent unemployment.

When we, as citizens, learn to watch these two behaviours of change as a nation over time then we should expect to resolve the issue of unemployment.   For good.

When we don’t, and we are oblivious to the reason, all we can expect to do is to play a catching-up game but not solve the problem.  It stays on the charts as a stubborn problem, usually on the President’s table, worsening over time.  This is, despite efforts from all quarters to run ahead of the problem or get to the root of the issue.  Not to say, we hear persistent disgruntlement amongst the locals about the lack of employment opportunities for the youth or for those employed the lack of pay rises and we harbour fears of jobs being taken away by foreigners.

So,

Sustained Growth of Supply of Labour > Sustained Growth of Demand for Labour

= Sustained Unemployment

[Insert graphic here]

These two factors are not directly related to each other, but they each

 influence unemployment, separate as they may be.

But what led things to get this far?

What causes the demand for labour to decline relative to the supply of labour?  And what causes the supply of labour to increase relative to the demand for it?

First let’s explore the supply side.

Here’s a case in example.  In the ten years to 2010, Vietnam saw its population numbers grow from 80 to 89 million.  Growth of population numbers and more typically birth and migration numbers influence the supply side of this equation.  Job creation on the other hand, did not see such levels of growth.  The result is, we see runaway unemployment in the country.

Closer to home, while, population numbers in the country do not compare anywhere close to those we see in Vietnam, still when we look beyond the overall numbers, there are interesting data that we cannot ignore.

We know the overall population numbers have grown somewhat from 1.5 to 2 million levels over a decade.  Given however, the concerns of mortality rates one may conclude that our population numbers have not really changed all that much to warrant the unemployment levels we see in the country.

But realistically … has the supply of labour declined over time?

Births rates from twenty years ago, leads to the supply of labour and therefore the unemployment numbers we see today.

When we remove population and mortality figures and see our fertility rates, we may notice that these numbers have not been all that low.  In fact, typically in most populations, each generation outnumbers the previous one.  Think of population pyramid, where the numbers of young born are in numbers greater than older persons in the population.  But also see population pyramids for more recent decades assuming wider bases than those in previous ones.

Such trends are not apparent when we gloss over overall population data.  Yes, there is migration data.  But we cannot shut our eyes to these sheer levels of increase.

Do we know by how much such numbers have grown?  In the country?  In the region?

A separate question is, when should we start noticing such increases?  Would it be when the young turn 20 years old and are now looking for a job and they complain they cannot find one?

That will be too late!

We would now instead be dealing with “a fire” in our hands.  Youth unemployment rather than employment.  Yet it really is a problem that had its embers simmering for the past 20 years.  Quietly but surely.  But we were not watching it, till the embers had blown over and we now have a fire in our hands.  At this point, we say, we have a problem.  A burning platform.  But the signs were long there.  If we push this now, the system will push back.

Ok it has not.  And … has the demand for labour increased by such levels during this period?

If it has, we should not see sustained unemployment.  This is indicative that the demand for labour has not matched such levels.

How much has it increased by?  Perhaps more importantly, how much would it need to increase by?  Two-folds?  Six-folds?  What do you see are the answers?  What is making it difficult to get there?

Interestingly, should we think carefully about both sides of the equation, that is, the jobs and the children we create are influenced by the same segment of the population.  The Adults.

While perhaps we may argue that these’ activities are carried out’ by different sub-segments of the adult population, it is still the sole prerogative of this group.  The problem may not belong to any one part of this group, i.e. government or private sector or families.  That sounds like the bad news.  That it was our fault (in any generation).  But the good news is if we created the problem, then we also have the ‘power’ in our hands and in our hearts to turn it around (yes, even as a citizen) for the nation.  Together.

So is unemployment, still the real problem?  How do you see this issue?  Go forward another twenty years from now.  What would these trends look like then?

Yes, you are right given this, the reality looks painful for our children too.  But I also know, if anyone can turn this around, it is us!

The 2nd and 3rd articles in this three part series will appear in the next edition of this column.   It will seek to explore the story of the demand and supply sides of labour respectively more deeply and what causes them to either grow or decline over time.

END

#998

Countries by birth rate in 2008World map showing countries by nominal GDP per...

While this is her maiden newspaper column, Ms Sheila Damodaran is an avid writer on her blogs and website.   An international consultant in the use of systemic thinking for regional or sectoral strategy development, she welcomes feedback on her column as well as requests for types of persistent issues you wish to see discussed in her column at sheila@loatwork.com.  For more information, refer to www.loatwork.com.

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One thought on “Newspaper Column #1: Is unmployment the real problem – Part I

  1. Pingback: Newspaper Column #9: Why do some problems defy, no, NOT change? – Part I | Sheila's Blog

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