Inequality, Poverty, And Unemployment: Challenges In Developing Countries

Nature of Unemployment in Developing Countries

Question:

Describe about the Unemployment?

Inequality, poverty and unemployment are three topics which are interrelated with each other. These three are common problems faced by developing countries mostly. A person is said to be unemployed when he or she is not having a job to do, so unemployment is wastage of human resources. Unemployment is one of the familiar problems of the society which takes place either when there is a population pressure in the country, or if the country is suffering from slow rate of industrialization.

Unemployment causes poverty; hence to remedy that, the unemployment crisis is to be checked. The nature of this varies from an underdeveloped country to a developed country. In case of a developed country, unemployment problem is associated with cyclical variations in the level of income, whereas in a under developed country unemployment is perennial in nature. Cyclical variation in the level of income refers to a situation when the level of income varies due to economic depression and unemployment is created. When there is no economic depression, the level of income rises and the unemployment problem is curbed. But in an under developed country the main reason can be inadequacy of capital. (EconomyWatch, 2010)

In an underdeveloped country there can be several types of unemployment like, seasonal unemployment, disguised unemployment, industrial unemployment, educated unemployment.. Educated unemployment takes place due to unavailability of practical knowledge, vocational education and having only general education. (Kaur, 2013)But in a developed country problems like lesser numbers of opportunities, no actual growth in industry, layoffs, taxation problems cause unemployment. (Krulick, 2012)

Unemployment takes place when the person is not getting a job, or is thrown out of a job. A person is also said to be unemployed if he or she is not gainfully employed in any productive activities. Voluntary unemployment is on the choice of the employee, if someone does not want to work for its non suitability of job profile or if someone is not getting adequate wage or remuneration from a particular job, they remain unemployed. Frictional unemployment however is not permanent in nature. Suspending an employee, imperfect mobility of labour are some of the cases when frictional unemployment takes place. If unemployment is subsisting in a country for a long period of time and it is one of the biggest economic problems of the country, it is said that the country is suffering from a chronic unemployment problem.

The nature of unemployment has not remained the same over the years in any country or state. We would consider several illustrations of under developed as well as developed countries to enumerate the unemployment scenario across the globe. If we consider the reasons for unemployment of a developing country, we can take the example of India. India is a country where unemployment problem has been considered to be one of the crucial issues. From the year 2009 to 2012, unemployment in India has been increased, and they are all young people. The sample survey which was conducted by the government authority resulted that such unemployment of young people are more in urban areas than in rural areas. (Chauhan, 2014) The various reasons for unemployment in India are explained below.

• In India, there have been situations, when economic growth has been sluggish and that is why job opportunities could not be created. Low level of economic growth in three decades from 1950s to 80s could not fetch employment opportunities in the market. The growth in the gross domestic product rose to 11.80 per cent in the year 2003 (in December), and that helped in creation of new job opportunities in the country. In that way economic growth has played an important role in unemployment issues. (NINAN, 2011)
• Due to population pressure in countries like India, Nigeria the unemployment rate fails to keep pace with that. Employment rate does not grow proportionately with population rise.
• Technological failure also hinders the progress of job creation. Countries which have surplus labour but lesser capital, lesser source of finance, industries which are labour intensive should be given more importance. In the case when capital intensive projects are undertaken it suffers from wastages of human resources.
• The education system in the country is not practical, and the general education is not relevant for getting jobs. Proper vocational trainings are to be introduced to impart education which is relevant for the job.

Types of Unemployment in Underdeveloped Countries

The International Labour Organization has reported that the unemployment has risen globally from the earlier years. In the year 2013, it moved up to more than 200 million around the world. There has been increase in the number of young jobless people. One of the reasons in such case is that during the crash of financial markets around the world there were employees who lacked in facing such uncertain situation, they lacked in handling such pressure. The company in turn continued buying back its own shares, depending on cash and did not bother for employment creation. (Head, 2014) Countries like Spain suffer from fiscal crunch; the unemployment rate has been increased from the year 2013, as there has been a 1% growth in GDP over the year. There were shops which are famous brands, outlets of which were closed and to reduce costs companies still do not take more employees which negatively effects the generation of employment in the country. From year 1997 to 2005, Spain has reduced their unemployment rate from 25 per cent to 8 per cent. (Mallén, 2014)

The problem of unemployment in Australia existed in the cities of New South Wales as well as Tasmania as a major problem and which was resolved to a certain extent in the next few years. While talking on the figures the unemployment rates fell down for Tasmania from 10% to 8% in 15 years. Although it took time but with the increase in population this great achievement although the unemployment in overall Australia felt by 3% during this period of time Source-(https://www.liberal.org.au/boosting-employment-tasmania)

 The rates of unemployment had been always been compared between Tasmania and Australia as its ended up at 6.4% in the recent survey in 2015. It has proved that this city has done good to maintain the proper consistent ratio with Australia in which it is located. In a recent survey by Labour Force it was notice that the female rates are higher than the male unemployment rates. The recent performance had been highlighted by the survey as the workers market of Tasmania has been improving since late 2013, with strong growth in employment and participation and a decline in unemployment. Initially, growth in employment was driven primarily by the male class of people  but female employment has increased more strongly in recent months  Through the year to January 2015, total male employment increased by 3.9 per cent (4 900 persons), with an increase in male full-time employment of 4.0 per cent (3 900 persons) and an increase in male part-time employment of 3.8 per cent (900 persons) over the same period. Total female employment increased by 4.0 per cent (4 400 persons), with growth of 2.0 per cent (1 000 persons) in female full-time employment and growth of 5.8 per cent (3 400 persons) in female part-time employment. (Mulligan, 2014)

Then talking about New South Wales which is also a major part of the country like Australia. The rates of unemployment lie between 5 to 6 % as on average and this quite consistent with the unemployment in Australia. The other cities such as Sydney serves as the most employed part of the country with the unemployment level of only 3 to 4 % in the recent pasts which is a good sign in the country with an average level of 6.4% in total.

Unemployment Issues in Developed Countries

 Talking about trend of unemployment in Australia the same had fallen in the year 2008 after which a constant increase to 6.4% had been established.   (Unit, 2015)   

There is a considerable fall in employment rate in the United Kingdom. However, from the last quarter of year 2011 to year 2012 the rate has risen. Economic as well as social and political scenarios have been the reason for it. The people who were doing jobs already, the fear of being thrown out from that job has also taken place. Some companies only want to work with professionals and that lead the fresher to get no jobs in that company. Poor vocational training and the difference between actual education and the proper education which will make an individual most fitted for the job is also a constraint. The economic and social expenditures have also increased over there, due to this problem. The rate of joblessness was 6.0% in United Kingdom in the year 2014 and it is the lowest level of unemployment observed in the last six years where as it was 11.9% in the year 1984. The measure is obtained from Office of National Statistics (ONS). (Elliott, 2014)

There have also been seen seasonal, structural and cyclical unemployment in the UK. Plant closure, failures in the business, outsourcing to reduce expenses is some of the examples of cyclical unemployment in the country. In America, unemployment has been considered as a most crucial problem. In the list of several socio economic problems in the US, unemployment problems top in the list. The private sector is the main concern which can fix the unemployment problems in US. The rate of unemployment is 5.8% in the USA as per October, 2014 and it is 7.3% in California. Several new jobs were introduced and the nation has concentrated on making its projects labour intensive more. However, there are differences in the rate of unemployment if it is considered in the ethnic groups. The rate of black people unemployed is 10.9 % whereas the unemployment rate of white people is 4.8%.

In past years, the unemployment rate in Australia has also shown a rise of a certain percentage. Mainly economic issues are the main reasons for this problem. Most unemployed persons in Australia age between 15 to 24. A solution to take initiative regarding the youth unemployment programs are to be given more importance. A country’s standard of living is dependent on the unemployment rates and how quickly the problems relating to this could be solved. The standard of living is measured with the help of gross domestic product. Educational problems, lack of knowledge of jobs of the fresher joining a company has been reasons for lower level of unemployment. This is also a reason for not being involved in a long term jobs, retrenchment pressures have taken place due to this. The rate of unemployment decreased to 6.10 % in the year 2014. An average unemployment rate of 6.91 % has been subsisting since the year 1978. The statistics provided by the Australia Bureau Statistic shows that the number of unemployed people decreased by 1 lac only. In the past, in many times it has been considered to be improper that a woman would be taken as an employee. The unemployment problem in India is not a new phenomenon; due to the economic depression during 1980s the nation has suffered poverty, in equality and unemployment problems.  Natural causes like drought, floods would harm the natural resources and may destroy them. It is also the government intervention about how the frameworks are undertaken in various countries, whether the government is paying welfare compensation to its employees or not. However, the government intervention should be reduced if there exist a greater marginal cost of labor than the marginal return.

Impact of Unemployment on Poverty

Experts like Ben Brnanke, Paul Krugman (a noble prize winner) enumerated a thought regarding political and socio economic issues which explain, welfare should be introduced to insure that there is no diminishing rate in the consumer spending. There should be more job opportunities for the people who are the nationals of that country and restrictions of foreign nationals to do job in another country have been imposed so that employment in own country is generated.

Unemployment has different consequences in different nations. In case of Australian research and analysis it was reported that unemployment increases the chances of divorce. Unemployment of a person who is the earning member of the family deteriorates the economic condition of the family. Their standard of living decreases. Mental frustration from not getting a job is also a severe consequence which may lead to many risks. Poor health, generation of crimes, poor economic condition is probable consequences in the society. New Zealand has analyzed the problem and suggested such consequences in their socio economic investment model.

The measures from this unemployment problem by various countries have been undertaken by introduction of several employment generating programs. In India, Marginal Farmers Agricultural Labourers scheme, Jawahar Raj Yojana (JRY), National Rural Employment Program (NREP), Integrated Rural Development Program (IRDP) are some notable example. In Chile, there is Chilean Unemployment Insurance to restore employment. Several inter personal development programs have been introduced in many a countries which would influence the individuals to work more. Such programs are very relevant in those industries where continuous labour is required with the rate of return or rate of earning. Vocational periodic training and employment consultancy services play a phenomenal role in such circumstances where in certain industries employees are de-motivated to work. Government as well private agencies play a pivotal role in executing the same. There are several strategies introduced to curb the joblessness problems in Nigeria. One of the notable schemes introduced in Nigeria is the Graduate Internship Scheme. This scheme offers the graduates of the country a fresher program like short term employment opportunity to have proper skill and expertise for a specific job. The fresher gets trained to manage a team, work and lead in a team, skills which are needed for execution of a particular task in a job. Federal Ministry of Finance has introduced the skill and a positive response has been observed. The graduates are helped to get internship in several countries to get good training under professional advice.

Entrepreneurs have also played an important role for remedying the unemployment crisis. Entrepreneurs are those persons who take an initiative to set up a new organization. When an entrepreneur hires a labour or employee, all risks relating to such employee is to be borne by the entrepreneur or employer. By creating self employment an entrepreneur also creates employment opportunities for others too. Special programs and employee’s incentive schemes should be introduced to inspire the employees to work more. (India, 2014) Perks and incentives make the workers contended and more committed to the company. Entrepreneurs who are willing to set up new industries, organizations are likely to generate employment opportunities. Some big employers give assistance to employee’s family members, help them to build their houses, provide financial assistance in zero percent interest makes the employee accountable towards their job and company. Capital intensive methods of production do not help to grow employment in an industry. Projects undertaken should be more labour intensive. Another scheme named the Help to Work Scheme also helps to get job seekers allowance, takes care of job placements of employees. Other than this, Community Jobs Scotland by the Scottish Council Voluntary Organizations help the youth aged between 16 to 24 years to get paid employment. (Ball, 2012)

Unemployment Examples in India

Interactive classrooms and efficient learning is being introduced in the United States. A table for the young unemployment can be exhibited to show the percentage of youth unemployment in several countries.

Region	Young Unemployed
	Millions	Percentage
World	74.5	12.6
Developed Economies and EU	10.8	18.0
Central and South Eastern Europe	4.4	17.6
East Asia	12.9	9.0
South East Asia and the Pacific	7.8	13.5
South Asia	13.0	9.8
Latin American and the Caribbean	8.9	14.3
Middle East	3.4	26.5
North Africa	3.9	27.9
Sub-Saharan Africa	10.3	11.5

(The figures are being taken from the source: (Network, 2013)

Australian Federal Government has introduced a program called Work for the Dole, which was firstly executed in the year 1998. It helps the job seekers to keep on doing the their part of obligations along with the job, obligations like any part time or volunteering work, study program. It suffered its major drawback when pursuing such other obligations was considered by the companies to be not proper. In UK, Workfare is another system which provides social welfare. (Gareth Hutchens, 2014) Later on workfare was also considered by business critics improper as well as forced volunteering. It was also reported by the groups or companies that government intervention is needed to stop such schemes and program. (Scriptonite Daily, 2013)

Unemployment benefits all over the world in different countries have been undertaken to support and generate employment, but some of them were not considered to be in favour of the companies and the companies continued to argue in those matters. By providing insurance and compensation, social welfare to employees can be done. In Australia as well as United Kingdom, the services relating to human resource or employment opportunities are termed as “the dole”. There has been rise in the level of employment in Australia as well as UK by implementing or introducing such social welfare programs. The Employment and Social Insurance Act passed in Canada in the year of 1935 during the time of economic and financial affliction has been an eye opener. In France and Germany too, several acts have been implemented to provide assurance to employees. Ireland also concentrates on jobseeker’s well being and benefits, the Department of Social Protection plays a phenomenal role.

Conclusion

A person who is not employed in a productive process is said to be unemployed. In least developed countries, problems of unemployment are associated with financial and economic expansion of the country. In big companies, disguised unemployment is found. When there are excess workers in the company than required, the excess workers are not delegated proper tasks or jobs relating to their jobs or sometimes they are provided no job at all. In this way they are not getting any positive exposure from the job they are doing. This is a problem in disguised unemployment found in many big companies. There are several problems relating to different unemployment nature and types found in different corners of the world. Government in different countries and its departments have introduced many schemes and programs to eradicate unemployment program. Enthusiasms among the workers are spread with the help of introduction of several orientation and induction programs (Eröcal, 1990)

References

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