Transcript GEC 274 ECONOMY AND SOCIETY

UNEMPLOYMENT
Outline
 Unemployment definition
 Unemployment in the classical model
 Frictional and structural unemployment models;
search and job mismatch theory
 Botswana Labour market
 Employment
 Unemployment

Youth unemployment
 conclusion
UNEMPLOYMENT
DEFINITION
Unemployment,
as defined by
the International
Labour
Organization
occurs when
people are without
jobs and they have
actively looked
for work within
the past four
weeks.
Frictional and structural
unemployment
It occurs mainly because of the following reasons:
1. Imperfect flow of information; it takes time for
employers with vacant position to find suitable
employees and employees do not know enough about the
potential employers.
2. New entrant enter into the job market every time, it takes
time before they get settled in a job.
3. Some of current employees quit their job in anticipation
of finding new and better job. They are unemployed until
they find another job.
4
Structural unemployment: Labour
Market Rigidity
 It occurs because of redundancies due to the structural
change in the economy.
 Some skill become obsolete and people with these skills
become unemployed.
 It happens when an old technology is replaced by new
technology of production.
 Some sectors and regions experience outflow of capital
resources, become less attractive place for investment,
therefore experience less demand for labour and higher
unemployment rate.
5
GDP, EMPLOYMENT RELATIONSHIP
•Botswana has a history of strong economic growth
•The rapid economic growth has been accompanied by
rapid employment growth
•In long tern, employment has failed to keep up with
GDP growth
High formal sector employment
Small informal and subsistence agric
LABOUR FORCE
•Govt is the largest
single employer
•Formal employment –
no decline during
recession
•Only impact was on
mining employment –
small proportion of
total
Unemployment
by age
•Botswana Unemployment
rate around 17.5%
•Female unemployment- 20%
•Male unemployment – 15%
Unemployment high among
the youth
•High female unemployment
among the youth
YOUTH UNEMPLOYMENT
•AROUND 70% total unemployment is youth
unemployment
•Historically high youth unemployment rate
•Why high youth unemployment?
•Young people fall within the intermediate sector with
low paying jobs
•1% increase in adult unemployment will be matched by a
2% increase in youth unemployment
Employment opportunities revolution
A young man on fire in Tunisia
protesting against his stall
being shut down as he
couldn’t afford a trading
licence
Measures to reducing unemployment
Remedy deficiencies in the labour market as a whole;
 Improve the quality of supply e.g. Training to suite the
market demand
 Improve demand of labour e.g. Luring FDI,
wages/salaries need to be more flexible and responsive
to market conditions
 Improve quality of information and understanding
market needs e.g. Create CV and HR institutions