Tag / Population

by sheilasingapore

Newspaper Column #3: Is unemployment, the real problem? The Story of Supply of Labour – Part III

As it appeared in the Sunday Standard, Botswana on  Sunday Nov 4, 2012 edition.

Labour is a cost

It can assist to generate revenue but it is firstly, a cost.  When we add them up, it can rack up into billions of dollars.  Easily.

Hence a situation of ‘that we have labour’, will not be enough reason why ‘jobs will be created’.  The jobs need to be paid.  When the money dries up, including borrowings, so does the job.  This will happen in the same way for any country.

The supply of labour however remains unchanged.  They are either more who are employed or more who are unemployed.

Next, think bottleneck.

When the supply of labour exceeds the demand for it, the demand becomes the ‘neck’ of the bottle.  It narrows the uptake of the supply. Competition and waiting for jobs are the inevitable consequences of the bottleneck.  As we release the bottleneck competition disappears.  And so would unemployment.

We would therefore require solutions on both sides of the ‘neck’ to solve the problem of persistent unemployment.

In the past two week’s editions of this column, we introduced two factors that influence persistent unemployment.  Should we create new jobs (i.e. there is demand for labour), unemployment goes down.  Should however, the numbers of births and immigration (i.e. the supply of labour) go up over time, so does unemployment.

We also discussed that the ability of sectors to create jobs is influenced by the health of profit margins of three interrelated industries, i.e. the primary, secondary and tertiary industries.   We discussed when the primary industry grows; they help to grow the secondary industries which in in turn help to grow the tertiary industries.

At this point, unemployment becomes resolved.  Hard as it may sound, it is a solution we cannot ignore.  The easy way out, would lead us back in, one way.  Back to the problem.

In today’s edition of the column, we explore the story of the supply side of unemployment and its solution.

This becomes important to help us see solutions that are digging us in deeper into the problem.  It will be ironical that what we had hoped will help the situation could actually be making them worse.  Things become better before they become worse.  At that point, we would have a situation spiralling out of hand.

A case in point is, if there are more of us than there are jobs available, skilling people without creating jobs will not make unemployment go away.  I know we do not like to hear this.  And neither do I.

Jobs do not stay vacant.  They are going to others.  And yes, while the best man may win, there is another man (or woman) out there.  That is the point.

If the problem does not budge despite resources, then it is a sign that all what we have done was to apply a solution to the consequence of the problem but not to its cause.  To deal with the cause, we would need to pull ourselves away from the fire to notice where the gas pipe is coming from.  A fireman cannot help us at this stage.

Supply of Labour

What causes the increase in the supply of labour?

One might say, well that’s easy.  It is caused by migration.  Well, that is certainly true.   For the short term.  Migration is just that.  Sometimes they are in.  And sometime they are out.

Sustained long-term increase in the supply of labour is caused by the rates at which locals add births to the population numbers within the country.   This impact is pre-determined.  It cannot be changed,  its effects are not felt immediately but they were set into motion twenty years ago.  They are felt twenty years later when the babies have grown into young adults and are about to join the employment pool of the country.

We therefore do not connect the problem to the cause since they are both distant in time and space from each other.  And when we do not see this relation, we disregard the cause and take the easier way out.  We look at immigration.  This happens for any country.

And so, if unemployment is persistent today, then this is an indication that numbers of those born twenty to thirty years ago and have now joined the labour pool, had been pushing up slowly but steadily.   Yesterday, we rejoiced each birth in our families.  Of course, we were not watching their total consequences on the nation for tomorrow.  Well, not yet.

As a nation, how many persons have we added to the pool of supply in the past forty years?  Yes, it may feel late to ask such a question.  It is meant as a way to face reality.

Let us say, should we produce 5,000 children per month, and that makes it 60,000 babies born in a year, then we can reasonably expect that twenty years from now (and 1.2 million people later), when they grow up, we would need to be preparing for an additional 60,000 jobs (given gender equality) for that cohort.

This is in addition to those already employed prior to them.  If we are seeing 30,000 retirees, we are still looking at creating an additional 30,000 or more new jobs for the cohort.  And do not forget these 60,000 do not stay at producing another 60,000.  Yes?  How many will they produce in ten to fifteen years from now?  That will become tomorrow’s reality.

How much would an additional 30,000 jobs (for that year) cost us?  Don’t forget the other years and other employees.

Who created the children?  You are right.  We did!

Who will create the jobs for them?

Creating Jobs

In a recent project on unemployment in a country, we saw the population of 35 year olds and younger, ballooned six folds in a thirty-year period.  On the other hand, job creation had not risen by anywhere near as much.  The population had disregarded these economic factors.  Of course, we can say, economic and bedroom choices do not always mix.

At rates of six-fold increases, just that layer of the population would quite easily add over another 1/3 million persons by the next generation.  These are figures before immigration.

So what is happening?

In short, we are now attempting to “fight” the problem somewhat oblivious to these realities. We saw the fire. But not what caused it! We had hoped that the supply of labour could influence the demand for labour. But that is just not economics.

Still, I wonder if, as citizens, we can totally absolve ourselves from not understanding these figures and how they play up in our everyday lives.   What do you think?

At some point we would no longer be able to shut our eyes to this.  The reality would soon wake us up, as as we see our children stay unemployed.

Have we come back full circle here?  Who designed this circle of causality?  Is this unique for one country?

What should we do today?

As citizens should we know what these numbers look like for the country?

Understanding this trends, profoundly changes the game plan in many ways.  Firstly, it allows the problem to be solved where it started (the community), not where it ended (government).  There is leverage here, as it allows the greatest changes to happen with the least amount of effort.

I have tended to believe that should citizens understand these numbers, they would become clearer at steering the country out of this problem.  Even by themselves.  These may include making choices such as coming up to speed in ways to create jobs rather than wait for jobs to be created.  Or consider seeking employment outside the country.  It is the go-getter attitude by such individuals that will eventually help draw revenue to any country and themselves.

That’s for today.  How may we better prepare ourselves for tomorrow?

Families are key

We could actually become better at matching birth with job creation rates.  Knowing these trends, may free us as families, to consider channelling resources to the building of the primary industries of the economy.  This is a strong system of production of raw materials for all levels of the economy.  Farmers, and growers of raw materials, who see this impact beyond putting food on their table for their family, are beginning to pay attention to this systemic reality.  Production is now greater than consumption in the country.

When they do so, the family is now taking a step towards ensuring that jobs are more likely to be created at other levels of the economy, for the children we produce.  We may find that as more resources are allocated to primary industry production (and less to child production) we become better at learning to manage our population numbers more in line with the capacity of the country to produce jobs for our children.  There is an order in which causality happens.

Unemployment, at that point, stops becoming a problem.

How do you see this issue?  Given the above, do we need to understand the picture that is happening for the country today?  What’s stopping families allocating resources to primary industries?

Go forward another twenty years from now.  What trends would you like to see?  For our families?  The economy?  And our country?  For employment?

Hope this inspires discussion amongst your family and friends for ways you see us resolve this issue.

English: US Whig poster showing unemployment i...

English: US Whig poster showing unemployment in 1837 (Photo credit: Wikipedia)

by sheilasingapore

Newspaper Column #1: Is unmployment the real problem – Part I

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

This is the 1st 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 2nd and 3rd 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

Countries by birth rate in 2008World map showing countries by nominal GDP per...

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.

by sheilasingapore

Regional Article 23: Unemployment, labour disputes, economic diversification and fertility

 

Most countries think supply of labour should drive demand.  We forget then (or choose not to admit to ourselves) that it is demand that drives supply in any situation.  Not the other way around.  It is just not realistic to believe that because we have so many ‘young ones’ here, that there should be jobs out there for them.  But we do.  The two however are not related in reality.  But we ‘force that relationship in our minds’.

When we dug for data over time, to our surprise we were noticing that unlike what the country thought, its population was not declining.  Yes, it’s overall population numbers may be dropping to attrition due to deaths (in part speeded up along by HIV/AIDs) and migration.  However, its fertility rate on the other hand had been quite high and continues to grow.

English: Total Fertility Rate vs GDP per capit...

English: Total Fertility Rate vs GDP per capita (2009, USD). Only countries with over 5 Million population were plotted to reduce outliers. (Photo credit: Wikipedia)

So what was causing its fertility rates to increase?

This was in part driven by a few reasons.

The first, and the least inconspicuous of the three was a hidden matriarchal system (the mothers and women here wield more power than it thought).  This was fuelled by fears of security they held on to as young women themselves as they watched their husbands leave them for long-term employment in mines in neighbouring countries and had to learn to cope to fend for themselves and their children very quickly.  Over time, this evolved to driving their children to produce more children in the belief that the more there are children within one’s own family, the more potential the family had in  eventually bringing in income from their lands and the economy.  It was a long-term retirement plan for the women. (Need for Security on Maslow’s Hierarchy of Needs)

Diagram of Maslow's hierarchy of needs.

Diagram of Maslow’s hierarchy of needs. (Photo credit: Wikipedia)

Men on the other hand, played a hand in this too, each trying to outdo the other in producing children.  The more children he had, the better a man he was going to be in the eyes of the persons around him.  It was an immediate gratification or ego trip for the men (Need for Ego / Belonging on Maslow’s Hierarchy of Needs)

These children in turn grew up over time, seeing a world where they knew who were their friends and who were their enemies and this line was drawn up by who is within their core family and who was outside it (to a point it sometimes included the fathers who bore them).  This often meant that as they grew up they were learning not to ‘let go of the families they were born into’ enough to build long-term relationships with their spouses (someone who is ‘outside’ their families) and their in-laws to help build core family systems (husband, wife and their children) for themselves.   It was the need for maintaining or finding sense of belonging for the child or security in the familiarity or long-term childhoodness which sometimes perpetuated in older age as girlfriendhood or boyfriendhood syndrome and the need in not having to assume responsibilities for the consequences of one’s actions.  (Need for Security on Maslow’s Hierarchy of Needs)

The core Brodie family (L-R: Adeeb, Leyla, Con...

The core Brodie family (L-R: Adeeb, Leyla, Conor, Michael, Nicole) (Photo credit: Wikipedia)

Hence this meant the demise of the core family system and the growth and existence of the extended family as a support system for the individuals.  Today, these numbers are rising up to 70% levels.  Less than 30% levels of the population stay married and these numbers continue to decline.

However, when core families do not develop within the system, the system (particularly the males) does not learn a key lesson of life which is “what it takes to hold, build and share perspectives outside its comfort zones needed for a more “collaborative, extended and systemic organizations and industrial relations” and therefore the birth and growth of corporations (by the locals).

This would lead locals themselves particularly as the males to learn to build (not just participate) the economy.  For men to do so, it is in part as a result of the type of relation he enjoys with his spouse (but not his mother).  The more intimate the couple is emotionally (not just physically), the greater is his sense of resilience and motivation he is able to gain to meet and overcome the challenges he would face in the world of businesses and the economy.

Sir Robert Hotung, with his 3 generations of e...

Sir Robert Hotung, with his 3 generations of extended family (Photo credit: Wikipedia)

And so, when the economy does not grow, it is unable to create more jobs within the economy (as revenues are declining as much as costs may be rising) and therefore, unemployment continues to exist and worsens in the face of growing population numbers (fertility) which means the family in turn finds more of its people are not participating in the economy and therefore able to bring in resources into it. When this part of a man’s life is not growing, he becomes more conservative and reserved and succumbs to addictions, substance abuses and violence and a general disregard for respect for themselves and others.  The signals a death knell for the economy.   The organized economy suffers.  The subsistence economy takes over.

Gradually, this in turn leads women to bear children outside of marital relations (most children born in this country are born to women who are not married and that trend is rising).

In the mind of the woman, bearing a child to a man (particularly if he has the means to support relative to herself) would ensure a somewhat steady source of income for their family through their children (sometimes to the point of coercing the father of the child to continue to bear expenses for it and the family) or it stops the existing male persons within the extended family to build relations outside his family in order to support the needs of the family (to children and sisters who are not married).

Have we come full circle yet?  Do you see the vicious circle?

How would we treat this vicious problem?

Can the government realistically solve this problem?

Do not expect to learn to solve the problem, if one did not create the problem!

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