Emplotment and Unemployment

Question: Discuss about the Emploment and Unemployment ? Answer : INTRODUCTION Amongst the various macro-economic factors such as the supply and demand chain equilibrium, employment and unemployment, inflation in a country, the performance of banks etc, employment and unemployment is one of the most important macro-economic factors which has a great impact on the economy of a country. Before analysing how employment and unemployment as an economic indicator determines the economic conditions of a country, it is very important to understand about these factors. Thus a situation when an individual is looking for a job but is unable to find one is termed as unemployment. It determines how an economy of a country is performing. The unemployment rate of a country is used as a measurement scale. It is basically the number of unemployed individuals divided by the total number of people who are a part of the labour force of a country. Thus it can be rightly said that in any country the entire workforce can be divided into three categories namely employed, unemployed and those not a part of the labour force i.e. still not eligible to work. In this report we will basically discuss how the employment and unemployment rate changes in any country during various periods ranging between 2000 to 2013 wherein there has been a time period for expansion of firms, recession as well as a period wherein the economic conditions were just average (Bertoni, Ricchiuti, 2014). In this report we will be discussing about how has the economy of Egypt been affected due to the employment and unemployment conditions prevailing over a period of 2000 to 2013. LITERATURE REVIEW Egypt is one country whose unemployed rate has always been averaging at around 10.83 percent from 1993 to 2016, just to report a record low of 8.10 percent in the second quarter of 1999. Egypt has always been a low middle income country. The poverty rates in the said country are found to be as high as 60 percent in rural Upper Egypt. The main section of the country which is unemployed is the women and the young generation. Further to this, the infrastructural development of Egypt is unable to cope up with the increasing population of the country. Due to this the economic development has slowed down considerably and the country is looking for further reforms which would help to improvise the conditions of the population. The graph below indicates the unemployment rate of Egypt for a short period between 2014 January to 2017 January, portraying the actual situation of the recent past. Source: tradingeconomics.com. 2017 The August 2015 data clearly reveals that the unemployment rate of the Country has fallen to 12.5 percent however it has not made any significant improvement amongst the conditions of the younger generation. The youth unemployment rate of Egypt was as high as 42 percent in 2014 as per the data released by ILO (reuters.com. 2016). The main characteristics of the labour market of Egypt are high employment rates within the job seekers who are very well educated, the labour market becoming informal, the scale of dominance is shifting from public sector to private sector, low levels of labour productivity and dearth of skilled labour force which are unable to match up with the requirements of the economy which would help to become more competitive and globalised (Ibrahim, 2013). The unemployment structure in Egypt mainly comprises of youth below the age of 30. Unemployment is directly proportionate to the number. The main reason is high dependency in the public sector wherein people know that they are sure to secure a job after graduation but the only issue is the wait time of around 1-3 years before being placed somewhere in the public segment (Levine, 2013). Furthermore, those who are not educated, cannot become a part of this segment and hence are generally engaged in doing some casual job or do some sort of a small self employed work to sustain a living. Gender discrimination has been one of the other main reason behind such an unemployment rate in the Egyptian Labour Market. There are a large number of women work force which are unemployed and those who have a job are not paid as per their qualification. Unfortunately the said distance and discrimination has been increasing (Assaad, Arntz 2005). The unemployment rate of Egypt has reached at such an alarming rate simply due to reasons such as from the supply side the rate at which the population is growing but the income level is falling. However on the demand side, the economic growth rate of the country was a very big help for the countrys employment and unemployment issues. The growth rate which was around 5-6% during the period 1999/2000 had seen a sharp fall during the shocks of September 2011. However by 2007/2008 it had again regained to around 7%. Unfortunately the global financial crisis of 2008 which had hit the entire world, dipped the GDP to 4.1% due to a decline in the tourism earnings of the country. The graph below clearly reveals the unemployment rate being the highest amongst the university graduates and those who have achieved only intermediate level of education. FIGURE 1: Unemployment distribution in 2013 education and gender wise. Source: CAPMAS 2014 The country was worst hit by the 2011 revolution which had a pessimistic reaction over the countrys GDP which fell to 1.8% in 2011. It eve had a drastic impact on the unemployment rate of the country which touched to 12%. From the above intervention about the employment and unemployment of Egypt it is very evident that there are some differences between the actual meaning and reasons of unemployment than what is stated in our theories. Unemployment has taken an unexpected toll over the economic conditions of the country wherein the maximum population is below poverty line (Malec et.al. 2016). The reforms made are not clearly spelt out and rolled out in the public. DISCUSSION From the past two decades now, the unemployment rate in Egypt has been fluctuating between 8% and 12%. The governments main agenda for the upliftment of the Egyptian economy also comprises of unemployment issues. Since the unemployment figures are in double digits, therefore the policy makers have realised that the country is in deep trouble. As per the Egyptian Labour Market Survey, the unemployment rate increased to such an extent that it became difficult for the economy to absorb he increasing number of new labourers entering the market each day seeking for work. The economy is facing dual challenge with regards the employment and unemployment. Firstly, it is unable to provide jobs to a population of six lacs every year and secondly there is a mismatch in the quality of the labour force between the one supplied and the one demanded by the corporates. The mismatch is so much that as per the 2006 statistics the educational qualifications and the demand for labour has contributed to a greater amount of unemployment amongst the youth wherein women unemployment rate is 45% and that of males is 25% (Amin 2014). FIGURE 2: Unemployment and GDP development-chain indices, Source: CAPMAS 2014, FAO 2014 The figure 2, above clearly shows that there is some difference and lag due to which the GDP growth s delayed by one year and dependent upon the growth in the employment force. One of the most sought after method to deal with the ever rising issue of unemployment in Egypt would be the intervention of the Government. Thus in the year 2009, the government had set up a strategy to increase the number of jobs in the country by investing in providing high-end education to the youth of Egypt, managing the energy consumption and pollution control techniques and investing in higher level of research and development programs. However apart from these strategies, even then the unemployment rate increased to 13.2% in 2013 from 9% in 2010, thus making it clear that the policies spelt out by the government was not implemented in the right manner. Thus on a concluding note it can be rightly said that one of the biggest hurdle towards the economic development of a country is unemployment specifically for the developing countries such as Egypt whose economy has become highly volatile full of challenges for the government to deal with. Unfortunately there is a greater imbalance between the supply and demand and more so is the imbalance in the quality of the labour available and that demanded for. Thus due to this mismatch the present university pass-outs are all jobless as they lack the required skills and those organizations who need labour are also unable to match the available supply with their desires. Taking a note of the said imbalance, the government will have to introduce reforms and strategies so as to be able to deal with the severity of the situation. References Assaad, R., Arntz, M. (2005), Constrained geographical mobility and gendered labor market outcomes under structural adjustment: Evidence from Egypt. World Development, vol. 33, no. 3, pp. 431-454 Amin, G. (2014), Egypt Country Report: Policies and Mechanisms for Integration into the Workforce and Job Creation. Egypt Country Report for the 2014 Ministerial Conference on Youth Employment. Available at: https://www.adeanet.org. (Accessed on 13th March 2017). Bertoni,E., Ricchiuti,G., (2014). A Multilevel Analysis Of the Unemployment in Egypt. Available at https://www.siecon.org/online/wp-content/uploads/2014/10/Bertoni-Ricchiuti-286.pdf (Accessed 13th March 2017) Central Agency for Public Mobilization and Statistics (CAPMAS), (2014). Available at:https://www.CAPMAS.gove.eg. (Accessed on 13th March 2017). Food and Agricultural Organization of the United Nations (FAO), 2014. Available at: https://www.faostat.fao.org/. (Accessed on 13th March 2017) Ibrahim, M.A., (2013). The Determinants of Private Sector Demand for Employment in Egypt :1990-2007. Advances in Management Applied Economics. Vol.3.no. 1. Pp. 163-182. 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