The Unemployment Problem
Social integration is the inclusion of minority/disadvantaged groups into the mainstream of societies. Unemployment is one of the challenges of social integration. Unemployment effects on individuals include failure to meet financial obligations. It can lead to homelessness through eviction or foreclosure. It increases vulnerability to mental stress, illness, malnutrition and low self-esteem. Studies have shown that unemployment causes small increases in rates of mortality, suicides, assaults and arrests. It can cause people to take up jobs that they do not like.
At the social, political and economic level, unemployment can cause loss of skills (human capital) and reduced efficiency. It causes social problems such as increased crime rates. It can cause protectionism. For example, more strict immigration laws may be put in place to prevent foreigners from competing with locals in the job market. Politically, it has lead to electoral defeat of governments that perpetuate it. It can lead to reduced government revenues and growth (Ukpere & Slabbert, 2009).
According to the World Bank, unemployment is the share of labor force that does not have work but which is available for unemployment and seeks it. Unemployment rates in specific countries have either increased or decreased in each year in the last decade. For example, in Algeria, it was 11.3, 10.2 and 11.4 in 2008, 2009 and 2010 respectively. In Australia, it was 4.2, 5.6 and 5.2 in the same periods respectively (Unemployment, total (% of total labor force) ).
In developing countries, the unemployment rate tends to be high. For example in 2008, it was 15, 13.6 in Yemen and Serbia respectively. In developed countries, the unemployment rate is relatively lower. For example, In Australia and United States, it was 4.2, and 5.8 in the same periods respectively. Some countries such as Cuba and Vietnam surprisingly had low rates of unemployment considering the strength of their economies. In 2008, their unemployment rates were 1.6 and 2.4 respectively. Some developed economies sometimes have high unemployment rates. For example, Spain had a rate of 20.1 in 2010.
International Labor Organization statistics indicate the current recession increased unemployment from 179 million to 213 million in 2009 (Unemployment Rates in Countries Around the World). However, the most developed countries have better coping mechanisms. For example, unemployment rate in United States fell from 8.9% in 2011 to 8.1% as of April 2012. Recovery efforts in some developed countries are however frustrated by a debt crisis. For example, unemployment in Greece and Ireland rose from 7.7% and 6.3% in 2008 to 17.7% and 14.4% in 2011. Recently, the unemployment rate for women has been lower than that of men, offsetting a historical trend where men were less affected by unemployment than women.
Young people (15-24 year olds) have in the recent times been affected more by unemployment compared to adults. Unemployment rate among youth increased to 12.7%, in 2012. Apparently, there are no sufficient employment programs for the youth.
World Leaders’ Attempts to Reduce Unemployment
World leaders try to reduce employment by lowering standards of living. For example, local, state and federal/national governments reduce taxes on products and services. They also offer services at a reduced cost. For example, the recent United States Healthcare Bill reduces medical costs for all classes in society. Low class sections of the society become somehow contented and are not likely to demand increase in wages. Employers are then likely to keep them employed. In addition, governments such as United States and France governments spend more to boost demand and increase growth (Harris, 2005).
World leaders have attempted to analyze job market factors and the demand for particular courses. In co-operation with administration teams of various universities and colleges, they expand or contract the number of students taking particular courses. This has happened in Uganda, India and Mexico and has helped avoid irrelevant courses and place more emphasis on courses that are marketable locally and internationally. These initiatives are aimed at reducing mismatch of skills, and therefore helps reduce structural unemployment. It is a kind of unemployment that is mainly caused by institutional set-up.
Many governments, such as United States and Chinese governments have been able to fight cyclical unemployment through use of buffer mechanisms. Cyclical unemployment occurs when business cycles cause aggregate demand to fall or rise. When aggregated demand is low, unemployment rate will tend to rise. Buffer mechanisms are those that help stabilize or increase aggregated demand, for example, lowering of interest rates. Cyclical unemployment disheartens many employed people who frequently fall out of employment.
In the United States, successive governments have used federal work projects, social security programs and general relief programs to fight the problem of unemployment. These programs covered 65%, 71% and 93% of the unemployed in 1936, 1939 and 1941 respectively. General relief programs include unemployment compensation and employment insurance (Lebergott, 1964). In the United States, unemployment insurance is provided to state residents who have worked and resided in their respective states for at least one year. A freshly unemployed person is given one third of his or her previous income. Other methods of fighting the unemployment problem include offering a job guarantee, like the case of Britain until 1948, and establishment of public works programs such as road construction. Such programs are common in African countries such as Nigeria, Mali and Zambia.
Opinion on Above Strategies
Some of these strategies succeed in reducing employment. For example, cutting taxes businesses creates jobs, thereby reducing unemployment. Other strategies do not reduce unemployment. For example, a minimum wage does not always keep incomes from falling since some people are always willing to sell their labor for less than the ongoing labor price (Bell, 1940). In addition, most programmes, such as federal work projects have short-term focus. As a result, the unemployment problem persists and increasingly worsens.
Proposed Global Interventions
All world countries need to focus their energies on reforming emigration policies in order to increase location mobility of labor. World political and business leaders should also strategize on helping poor countries access the necessary technology. This will motivate potential entrepreneurs in these countries turn their focus to manufacturing and service industries.
Countries should enforce Millennium Development Goals. Some of these goals relate to capacity development and empowerment. An international monitoring body/commission should be established to help coordinate efforts in individual countries.
Proposed Local Approaches to the Unemployment Problem
State and federal governments should improve employability of labor supply. This will ensure that employees have the right skills for the available job opportunities. Courses in higher educational institutions should be restructured in order to increase occupational mobility of labor. For example, students should be prepared for corporate opportunities as well as entrepreneurial opportunities. This will also make employees stand a better chance of utilizing opportunities in high growth areas of the economy. In the long-run, incomes will be distributed in a fair manner, creating a wide pool of capital (Penalosa & Turnoysky, 2006).
Business subsidies offered by local and state governments should be established. For example, exemption from export taxes and import duty on raw materials for businesses that are in their first year of operation may greatly attract entrepreneurship and industrialization. During cyclical unemployment phases, employees’ skills, including job searching skills, become obsolete. Institutional leaders should put more emphasis training students to market themselves in the labor market. Governments should meet part of the cost of retraining employees. There needs to be more education to help workers market themselves well.
Unemployment is one of the challenges of social integration. It can lead to disastrous effects both at the individual and societal level. Unemployment rates are increasingly high. The situation worsens during economic recessions. Men and youth are increasingly being affected by unemployment. World leaders have attempted to fight unemployment through protectionist measures such as social security programs, economic stimulation measures and increased spending. Some of these initiatives have succeeded in reducing the unemployment rate, both in the short-run and in the long-run. The best approaches to reducing unemployment are those that are long-term. They include those that facilitate location and occupational mobility of labor.
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