Labour | Systems Thinking & Leadership Development Institute (STLDi)

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

This is the 1^st 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 2^nd and 3^rd 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

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.

UNEMPLOYMENT = SUPPLY OF LABOUR > DEMAND FOR LABOUR

In a country, where levels of unemployment stay persistent over time, then it is a sign that the rates of growth of the supply of labour (population numbers -” child creation”) each year is growing at rates faster than the rate of growth of the demand for labor (job creation). And we as a nation are not noticing these two trends. Period.

When the supply consistently outstrips demand over time, we have persistent unemployment. It is an unhealthy situation (as we would have with when supply of manufactured goods exceeds their demand we would have a drop in prices, when supply of rainfall exceeds demand for water, we have rising water levels, when supply of migrant influx exceeds rate of city planning we have slums, and so on). Unemployment is a function of how these two variables are behaving relative to each other. Period.

And should the problem be led by the supply of labour, we need to be realistic to expect that the demand for labour (be they by job vacancies by the private (employment) or the government sectors (education, employment) will grow fast enough to overtake and get rid of the state unemployment in the country. Seeing scenes of citizens walking the streets looking for jobs is here to stay. Period. Again.

What influences the supply of labor?

The rate of supply of labour is influenced by the rate of the population’s growth (i.e. procreation). The only issue is the supply we see today of twenty and thirty-year olds in the labour market, was set into motion twenty or thirty years ago. By the population. The children born then have today become the youth and labour of today …. and therefore today’s unemployment.

In most cases, the populace do not see the relationship of the birth-rates of yesteryears (well pretty much like what happens between the sheets and the timing of births) and much less so their impacts on the labor supply for tomorrow. It is and is likely to stay “unrelated” in our minds for as long as these inter-relationships are not raised and discussed by all. Instead, our mind replaces that (“vacuüm in our) thought by fears of our survival or security for our future should “if “the one, two or three” dies or moves away tomorrow?” (this is the voice of the grandmother in the lesser developed countries). So, we multiply … mindlessly.

But there is a misconception and it is unfortunate!

Supply does not drive the demand for labour. This means, that ‘should there be excess labour’, it is not to say that the demand for labour should go up. It could go up for compassionate reasons but not on economic grounds. We forget that in reality, it is the demand for labour that drives its supply. Period.

What influences the demand for labour?

I sometimes joke, it is often easier to “create children” than it is to “create jobs”. But in both cases, the “jobs” are done by the “same person” – Adults. So well, how is it then that we do not see how we are attempting to solve a problem we have created by our own volition?

Also the mind that ‘looks for a job’ for oneself to feed my children, is not the mind that learns to ‘create jobs’ for others, including for our children.

So it is the fault of the ‘bosses’ for not creating jobs, or the ‘fault of the rest of us’ for not thinking about creating jobs for others (while we are busy trying to find one for ourselves)?

What influences our ability to create jobs?

It is dependent on the propensity by the same adults of the country to grow the economy, i.e. the private sector. It includes us defining the ability of the country (and sector / industries) to see :

Capital, flow into the economy (and not the family only)
Increase of the economy’s revenue and
Reduction in the costs of running the economy
Diversification of the economy (systemic growth)

As the margin between the two widens, so to does the country’s / industry’s capacity to see:

Creation of further posts for existing employees to progress into
With progression of existing employees in moving to higher level jobs, it leaves the posts vacant for younger entrants (youths) to more easily enter the labour market
More likelihood of higher wages increase across the board for all

This is dependent on the systemic development (what diversification could look like) of the economy, e.g. the story of the dairy milk production.

So, is this just a case of “not enough jobs”? Yes? Given what? We would need to complete the sentence … for everyone!

What should we be doing today to solve the problem of unemployment? Who is the ‘we’? The government? The private sector? The public sector? The citizens? The male or the man (the demand for labour?)? The female or the woman (the supply of labour?)?
What, in your view, would citizens need to understand about these realities before they begin ‘discussions about unemployment’ in the country and to figure their own ways to turn the situation around?
When should we be thinking about the solution to the problem? When we create the problem or when the problem leads us to another problem?

What are the roles of the wife, mother and the man in turning these situations around?

Which role as a woman does she have an impact on the growing the demand for labour?

Which role does she have an impact on growing the supply of labour? What is motivating her?

What roles are the men play in each of their relationships with these women? As the son or the man?

Which role of the man helps grow the demand for labour (job creation) in the economy?

As the son or the man?

But this reasoning almost also begs the question, what were we doing when ‘the spark’ sparked the problem?

Sleeping, you say?

Ahh ….. SURE!