Facts about unemployment

These days as you read newspapers or listen to the radio stations you get the impression that inflation is the only bugbear. Middle class employees of government and parastatals are pressing for upward revision of salaries to match the rate in the general rise in prices. It has been announced that Consumers Association of Malawi (Cama) backed this time by the Public Affairs Committee (PAC) is contemplating fresh demonstrations.

But in this country is inflation a more pressing problem than unemployment? Possibly not. Those who complain the most about inflation are already employed and are better organised. The unemployed are not found in one place they do not have leaders or champions. Because of this, those of us who take interest in public affairs may tend to forget the sword of Damocles that is dangling above the nation. We may forget the seriousness of unemployment in this country.

How many people out of the population are unemployed? To arrive at the approximate answer we must identify the labour force participation rate. By labour force, we mean all people of the working age about 16 years and above who are in employment and those who are actively looking for work.

In this definition, we obviously exclude children retired people, homemakers who have no desire to work outside their homes, full-time students who do not want to work while they are pursuing their studies plus the unemployable, such as the insane and habitual criminals.

The concept of labour force is important because it tells us the quantity of our labour resource available for productive work and how much of this is involuntarily idle. The idle ones constitute the unemployment.

To be available for work does not mean to be actually participating in the economy. So we must talk of the labour force participation rate.

This is the share of the population aged 16 and above that is actually working. In other words ,it is the percentage of all working age people who are actively interested in working. The work done by women in homes is never considered as part of the labour force.

The unemployment rate is defined as the percentage of the labour force that is unemployed. In a country like Malawi it is very difficult to arrive at a precise rate of unemployment because of the existence of disguised unemployment. Think of a vendor sitting by the roadside selling a few bananas or second hand clothes. Most of the time, he is really idle. If he were employed he would be more productive.

Thousands if not millions of people these days are tilling only two or three hectares of land when they could easily manage 10 or more. To that extent they are suffering disguised unemployment.

Accurate measurement of the unemployment rate is the basis of sound macroeconomics. If you talk of creating jobs for the unemployed, you must first know how many people are unemployed.

The effects of unemployment

There are micro (personal) and macro effects of unemployment to consider. When an individual is unemployed he or she does not have the money to pay for their needs. When a person who has a job loses it, his income falls and his standards of living fall as well. The surest way to alleviate people’s poverty is to give them jobs.

When a person loses a job and for months or year remains idle, he loses the experience that he gained while he was working.

Whenever we meet someone for the first time we want to find out what job he does or his source of livelihood. It is the source of livelihood that gives weight to a person’s dignity. Once you know that A earns his living as a labourer and B as a lawyer, you have an idea who earns more than the other. To be unemployed deprives a person of his sense of self-respect, therefore joblessness is not just an economic but also a psychological problem.

When a breadwinner loses a job, domestic violence becomes greater problem. The breadwinner loses the respect of his dependent wife and children. Domestic violence, alcoholism, wife beating and child abuse are on the increase.

Macro-economic effects

When thousands or millions of people are unemployed there is a reduction in the nation’s output of goods and services. Its gross domestic product (GDP) falls and the country is becoming poorer and militarily weaker.

What are the causes of unemployment? In a developing country like Malawi, the main cause of unemployment is inadequate investment in natural resources. When major investment takes place such as mining, new jobs are created. So long as the mine has got the deposits and they are being worked there will be jobs for some people when the mine is exhausted workers are laid off for good.

Recessions and depressions in the economy cause business failure bankruptcies which lead to cyclical unemployment.