DEFINING THE RESEARCH SPACE
It is not difficult to create employment.
It is harder to keep unemployment off!
Do you wonder what came of the billions (possibly trillions) spent by countries both as governments as well as private sector (including foreign direct) investors, across the world, decade after decade (let’s say, now going five decades) with the purpose of creating employment, and then learn to find that unemployment persists relentlessly , companies shut down at the snap of a global economic meltdown and national economic growths continue to take hits, year after year?
Is this story familiar?
Why does this happen?
I am not alluding that the money is siphoned off. That is not where I am going. But, yes, there is another kind of ‘siphoning’ happening.
In the meantime, of course, governments face angry faces of unemployed constituents and so nations react by wanting to see both governments and foreigners ‘continue to invest’ in it. Why does the issue persist?
Often, when an issue persists, it is a sign we have made the choice to avoid some difficult and hard decisions. These hard choices include questions such as what is causing our innate ability to be honest with ourselves, and that includes bearing criticisms, taking a hard look at ourselves (instead of cowing others into submission or hustling as needed), being patient, persistent and being sufficiently resilient to spring back from setbacks, diminish over time. All of which are factors that are critical to the ability of a country to succeed as a nation in growing its economy.
So, which one do you think comes first?
Nurturing our capacity to be patient, to persist and be resilient and being frugal (doing more with less (not spending no more than 10% of the margins for personal spending while the business is still trying to stand up on its feet (and generate its own income) is the first rule of business)) despite the odds stacked up against us?
Needing to seek investments?
What is destroying our ability to grow these innate capacities for us? These and more questions are explored in this article.
Botswana’s new leader wants to shrink the civil service, sell state companies and cut red tape as he targets increased foreign investment.
President Mokgweetsi Masisi has identified reducing the country’s reliance on diamonds and creating jobs for the almost one in five workers who are unemployed as his top priorities since taking office six weeks ago. Private companies will have to take the lead, he said in a May 14 interview in his office in the capital, Gaborone.
“The government in and of itself does not really create jobs,” Masisi said. “It is not my desire to grow the public service any bigger; if anything, it is my desire to trim the civil service so we are more efficient, we are leaner, meaner, and we can do business and we are more attractive to the private sector for them to invest.”
Source: Agency Staff. (2018). Botswana wants to shrink civil service so privatisation can grow the economy. Bloomberg. Available at: https://www.businesslive.co.za/bd/world/africa/2018-05-16-botswana-wants-to-shrink-civil-service-so-privatisation-can-grow-the-economy/ [Retrieved on 17 May 2018].
- THE OVERARCHING SYSTEMIC STRUCTURE OF UNEMPLOYMENT
- THE STORY OF SUPPLY OF LABOUR
- THE DIGITAL USE DIVIDE: A SPECIAL MENTION
- THE STORY OF DEMAND FOR LABOUR
- WHEN GOVERNMENTS INTERVENE
- WHEN PRIVATE SECTOR INTERVENES
- THE UNEMPLOYED DIGITAL USE (ICT GRADUATES) EXPERTS – WHEN THAT HAPPENS – A SPECIAL MENTION
- BUILDING INDUSTRY SYNERGY: VALUE CHAIN MATRICES
- THE UNEMPLOYED DIGITAL EXPERT (OR ICT GRADUATES) – A SPECIAL MENTION: WHY IT HAPPENS?
- WHEN DEFINING THE TRUE NATIONAL UNEMPLOYMENT NUMBERS
- REQUIRED RESEARCH ANALYSIS
GENERAL TALKING POINTS OF INTEREST:
THE OVERARCHING STRUCTURE:
Systemically, the growing pool of unemployment today is as the result of the different rates of change that exists between the levels of annual births from as far back as twenty years ago and the capacity of annual jobs created today. Why twenty years? That is the average age before someone becomes ready to join the labour market. The changing rates of unemployment is determined by rate at which these two factors change over time relative to each other.
When the numbers of Jobs Created Today < Children ‘created’ from twenty years ago cause the number of persons that are unemployed adds on to an existing pool.
Growth Rate of Births From Twenty Years Ago (A)
IS GREATER THAN (>)
Growth Rate of Job Creation Today (B)
= GROWING RATES OF UNEMPLOYMENT Today (C)
A = SUPPLY OF LABOUR
B = DEMAND FOR LABOUR
Growing Unemployment = When Growth of A > Growth of B
Growing Employment = When Growth of A < Growth of B (it would now have the capacity to absorb increasing immigrant employment).
And of course,
Full Annual employment = When Growth of A matches the Growth of B
SUPPLY OF LABOUR
The factor that contributes to the supply of labour in any nation is the rate of births. Yes, it is dependent directly, on the number of students who graduate from the education system but how wide that pipe is, would depend on the rate at which the nation populates or replaces itself.
It would, however, not be completely accurate to say that had the overall population numbers not increased substantially over the years, that it must mean that the rate of births has not increased. It could mean instead that the rates of attrition (deaths or migration) or somewhat higher than the rates of births. Hence, the theory would have to be tested before being confirmed that it is so.
Couples within an intact marriage often would have a better chance at influencing the rates of births within their combined capacity to provide for the children. However, in an impaired marriage (and I am not referring to visual or hearing impairment) or a marriage where the couple has lost or is losing their ability to be committed to each other, as a couple they begin to produce children outside of the marriage.
As males become increasingly sexually active with several partners (or with the same partner), he then tends to produce more female progeny. A higher proportion of females within the system would mean a higher propensity of the population to increase its birth rates and therefore even further female offsprings (testament to polygamous communities typically living off on arid lands). It does so, at times, at runaway rates i.e. populate at rates faster than their capacity to provide for it.
Of course, when the males present their progeny within an open system (marriage or a polygamous community), where everyone sees the number and the gender of children he has produced, it is much more evident as a community and as a nation the impact such behaviours will have on unemployment and job creation in the future. When he is, however, unable to do so or such information is limited to immediate family members or the village, impacts of such acts become less discernible to the nation as a whole. Governments seem to be caught unawares of the extent of the issue till the election times are upon them.
THE DIGITAL USE DIVIDE: A SPECIAL MENTION
The Digital divide is a term that typically refers to the gap between demographics and regions that have physical access to modern information and communications technology, and those that don’t or have restricted access. This technology can include the telephone, television, personal computers and the Internet.
But I would like to make a special case for this divide here. The Digital Use Divide. One perhaps that was brought on by man’s own decision to avoid the hard choices when he had to make them.
Think back to the time when we were choosing to decide to whom should a topic such ICT to the population? The old ones? The young ones? Which one did we choose? We thought, it was easier to teach ICT to young minds. Teaching the old ones would be like trying to teach old dog new tricks. It will be painful and take a long time. That is harder. It takes time and resources’. Well, moulded, we sure did.
Except, what becomes the consequence of this choice? It meant that the old ones except in the case of passive use of the ICT are fearful of engaging ICT actively for purposeful and creative uses. They did not want to come across as incompetent or worse, stupid. So what will be the result of older generation trying to work with the younger ICT graduate? What would we do? Did you say, we could ‘push them away’. This way the older ones can avoid dealing with the pain of that fear of using ICT.
Adding, to this, persons who would typically venture into small businesses in the private sector or set up their own businesses would be persons (typically the parents of the millennials) who did not do as well in school particularly in the areas of mathematics and science. They have found it difficult to keep a job since they are not able to do most jobs that are common in the new knowledge economy.
On the other hand, an ICT graduate would have had a much easier time with these subjects, and appear to come across as the ‘know-all millennials who do not care for the ones who do not understand maths and science subjects’. They would then be perceived as a threat to the older ones. These experiences, can often push the wedge in the divide between the two, even further, and often generations apart, from each other.
The trick for now may lie in the young ones learning to make a very conscious, but not obvious, choice to ‘hand-hold’ the older generation along in crossing this bridge of divide that exists now between them. Very patiently and learning not to tread on tender emotions, when doing so. Should the two generations figure ways to build that trust between them, we could possibly enter a new era of interacting between the owners and enablers of the economy that would enable them to expand their market, manufacture bases and export capacity to the region, all of which requires the ICT environment to flourish.
It would also mean opening opportunities up for several other careers such as sales, accounts, finance and marketing to take off in the industry. Should we, however, not be successful in doing so, we face the risk of riding off into a bleak future of seeing the pool of ICT unemployed graduates grow or eventual dwindling of numbers willing to enter the study of the profession or a draining of their talents out of the industry or worse off, the country. That would present a loss of investments by the country in their learning and therefore a possible alternative future for the country.
What is your view?
Now, going back to the point on the supply of and demand for labour, just a bit. The trick is both, the supply of labour (bearing of children) and the demand for labour (creation of jobs), is essentially ‘managed’ by the same person, the man in his 30s to the 50s. When he figures how he would create more jobs than children, he, more than anyone else effectively wipes out unemployment for his country. Not the government.
DEMAND FOR LABOUR:
– WHEN GOVERNMENTS INTERVENE
When governments create jobs (in government) to absorb the unemployed, they do so at the expense citizens pay to the state coffers or from revenue of sales of raw materials extracted from the ground. It typically behaves as a cost to the overall system with low returns.
Additionally, these jobs do not fundamentally change the structure of the economy, in particular develop the primary sector of the economy i.e. the production of natural raw materials by its citizens. This sector not only has the greatest capacity to absorb employment that will be needed for sustained growth of the economy over time compared to manufacturing or industry and service sectors, but it serves as the fuel that will keep the economy burning to some extent, literally, and therefore growing its GDP (the ROI on government and private sector spending).
Investing without the need to sustain the investment is a sign that the country is primed for investments in the sector as a result of solid growth of the supporting industries. However, should a country after, tens of years (decades) of investment injections by corporations and nationals from both within and outside the country and in-spite so, continues to rely on such injections to sustain its growth, it then speaks to a fundamental breakdown of the supporting set of industries (primary for industries and, manufacturing for retail) needed to support sustained growth of the ones above it.
– WHEN PRIVATE SECTOR INTERVENES
Notice as in a pyramid (see figure below) the layers at the bottom of the pyramid of economic structures provide much greater capacities to absorb employment than the ones above it. The math is easy. If there are 30,000 personnel in the services sector, then we are looking at say, 100,000 persons that would be needed within the agriculture raw material production strata to grow and support the layers above it. The services and the government sectors will not be able to absorb 130,000 persons when there is little persons and materials to sustain the growth profitably from within the primary industries. Also refer to Figure 1 below for reference of a country till in recent times that has absorbed large numbers of the population within the primary economic agriculture sector.
The private sector creates new jobs when it has the capacity to generate revenue (notice I did not say funding) in a sustained manner at rates faster than the costs of production of the organization. When the change between the two grows a margin such that the growth in the margins itself is sustained, then the organization is able to create new jobs in a sustained manner for the economy. This does not, however, happen when its development is based on the principles of socialist economic systems where we strive for equality in the distribution of wealth (that poses risks of rising costs). It only happens when the rates of growth of revenues inclines and rates of growths of costs decline.
What would influence that? The current set of employees do. From management and that includes the boss to the cleaner. Companies do not create employment. Employees do. When everyone in the company helps to grow (rather than consume) the margins, they, in turn help the company create margins that help it to expand and therefore recruit more employees in the future.
When we understand that, in principle, anyone could start anything from anywhere. There right there is how new jobs become available to us today from the past. However, when a new employee joins asking what is it in there for them, or carving out their own niche, that’s a warning bell. It is the start of that company not only losing potential new employees but stand to lose their current jobs. When there is unemployment today, this suggests that this has been happening from the past.
THE UNEMPLOYED DIGITAL EXPERT – A SPECIAL MENTION – WHY IT HAPPENS?
When graduates or trained ICT personnel continue to stay unemployed within the nation, it is a sign the following are happening:
- A numbers mismatch. This is a case of where there are more graduates created (SS) than there are jobs inherently (naturally as in a free market system, as opposed to forced employment creation (those created by government in response to appease an unhappy voting public)) available for the sector.
- Skills mismatch. Where the employers are unsure or even feel threatened to hire ICT graduates. This is a case where employers do not understand what ICT graduates can do (refer to the digital divide segment above, where this elaborated further) for them or what that job would do to affect the bottom-line of the organization. This gap is particularly noted in the small, medium and micro-businesses. If these businesses make up the majority of the populace, then ICT graduates who come from that same populace (who are children of that population), will inevitably find themselves at the short-end of the stick. Their parents are unlikely to open jobs to them, except on compassionate (for socialist reasons) grounds, unless the parent sees a very experienced ICT personnel (who is at this juncture is not a graduate) who can convince they can and will change the bottom-line for the organization. The small businesses make up the major employers of any country. Each one of them may not be anywhere close to the size of your national network chain employers, but they are more important as a combined system in terms of numbers and impact. If this sector does not change its mind towards ICT employment, doing anything else to change it will not make any significant difference to the country.
- When other graduates are employed gainfully, ICT graduates are better placed to be employed as well. They usually do not make a substitute for a missing production base, unless the ICT graduate is just as skilled in non-ICT-based jobs, such as cooking food products, as an example, in which case, they would then know how to mechanize the process. When they don’t. the job for which they are trained for, ceases to stay relevant.There is a systemic breakdown of the economic sectors within the country. ICT sector employment does not create or conduct the actual jobs needed to generate revenue within the economy. They facilitate an existing process to become more efficient particularly when the volumes of trade are significant. The presumption is a process or a window exists that needs to be made more efficient between factors of production and management of production. This is caused by two interrelated factors:
- This means sales and revenues are generated particularly in a vibrant manufacturing and agriculture sectors. However, when markets are dull (as in what happens when there does not exist a strong set of primary and secondary economic sectors) and the economy is not hiring factors of production (jobs in other sub-sector, e.g. milling, cooking, producing furniture, clothes, and so on) in the first instance, and in which case, this window for the ICT sector becomes narrowed significantly.
So which one is your reason?
BUILDING SYNERGY OF INDUSTRIES: VALUE CHAINS
The easiest way for an opposing political party to bring a ruling government down is, noteworthy enough, not at the elections. It is slowdown, low productivity and tool down at the workplace, often by employees that are party to the opposition. This fundamentally does one thing. It works at gradually eroding the synergies needed in an economy to keep the economy well-oiled and running effectively. These are its value chains.
This does not change because the ruler is no longer at the helm and had to leave office to his opponent. All it does do is the see the camps trade places. But nothing changes fundamentally until, the lines between the ruling and the opposition fade away and the people of all creeds and parties decide to join their hands, hearts and minds as one. A broken industry value chain is a sign of the breaking down of its people of the nation.
WHEN DEFINING THE TRUE NATIONAL UNEMPLOYMENT NUMBERS
Governments and nations can only consider patch works of correcting unemployment as a nation when it looks at the narrowest definition of unemployment. To consider working with the real rate of unemployment, it would require understanding the state of unemployment that exists at its fullest extent within the nation. Refer to Figure 3 to determine such a figure. Remember as always, it is not the primary responsibility of governments to absorb these numbers, if they are high.
These numbers need to be understood as a nation and dealt with as a nation to turn the issue around. The ruling party or the government can bring it to the awareness of the nation but it is still the responsibility of the nation in deciding together what it will do next as a nation.
To note, unemployment in the region cannot be ruled out as part of the unemployment structure within the country. We cannot run away from this reality. A true picture of the country needs to include the true picture of unemployment in the region that needs attention.
Homelessness, crime, substance abuses, domestic violence, divorce rates, growing single-parent households and reliance on government programmes are just making up the tip of this ice-berg.
Source: Tuyen Tranh and Tinh Doan. (2010). Industralization, economic and employment structure cbanges in Vietnam during economic transition BCollege of Economics Vietnam National University, Hanoi. Available at: https://mpra.ub.uni-muenchen.de/26996/1/Vietnam_industrialization_and_employment_structure_changes.pdf [Retrieved on 17 May 2018].
REQUIRED RESEARCH ANALYSIS
FOR DETAILS OF DATA REQUIRED FOR RESEARCH ANALYSIS FOR THIS SUBJECT, CLICK HERE.
FOR STORIES RELATED TO PRODUCTIVITY, CLICK HERE.