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Employment and Unemployment

What is Employment? A person's trade or profession Or The condition of having paid work is called as employment.

What is Unemployment? Unemployment (or joblessness) occurs when people are without work and actively seeking work. The unemployment rate is a measure of the prevalence of unemployment and it is calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labor force.

Employment Statistics: The employed population is made up of persons above a specified age who furnish the supply of labor for the production of goods and services. When measured for a short reference period (of one week or one day), it refers to all persons who worked for pay, profit or family gain during that period. It also includes all persons who had a job or enterprise but were absent from that job or enterprise during that period on a temporary basis: persons who during the reference period were sick, on vacation, maternity leave, strike or were temporarily laid off.

Unemployment Statistics: The unemployed population is made up of persons above a specified age who are available to, but did not furnish the supply of labor for the production of goods and services. When measured for a short reference period, it relates to all persons not in employment who would have accepted a suitable job or started an enterprise during the reference period if the opportunity arose, and who had actively looked for ways to obtain a job or start an enterprise in the near past.

Statistical Measures The sum of the employed and the unemployed population measured for a short reference period is equivalent to the labor force, also known as the current economically active population. Another measure of economically active population relates to the usually active population, which is measured with reference to a long reference period such as a year. It comprises all persons above a specified age whose main activity status as determined in terms of number of weeks or days during a long specified period (such as the preceding 12 months or the preceding calendar year) was employed or unemployed.

All these definitions make reference to persons above a specified age, also known as the working age population. The minimum age limit for defining the working age population needs to be specified by each country according to its national circumstances such as the compulsory schooling age, minimum age for admission to employment, and extent of child labor. These circumstances vary so greatly among countries that it is impossible to specify any universally applicable minimum age limit at the international level. Some countries also use a maximum age limit for defining the working age population but this is not recommended by the international standards.

What is full employment and what are its effects? Ideally full employment would be 0% unemployment, but that seems to be impossible to achieve. With 0% unemployment, wages could increase to high levels since there are no people looking for jobs that would take the lower wages. Also, new businesses will have a hard time succeeding, because everyone is already employed, who is going to work for them? New businesses will have to raise wages to entice people to work there which again raises wages and lowers profits to a point where it makes no sense to even start the business. Great levels of unemployment are around 3-5%.

Is it possible for both employment and unemployment rates to rise at the same time? It depends on the base you're using for both rates. If the base is the same (let's say the "active population", people working or actively looking for a job), then employment and unemployment are mutually exclusive, and both rates can't rise at the same time. But employment rate can be calculated using the total population as base (and it is often calculated this way), and in this case employment rate (based on total population) and unemployment rate (based on active population) can rise at the same time: employment rate rising means that more people "enter the job market" (for example, if a financial crisis makes capitalization pensions worthless, then pensioners have to work again), and unemployment rate rising means that the economy can't create enough jobs for these people (specifically, that the proportion of people entering the market and not finding a job is higher than the previous unemployment rate).

Who is unemployed? The unemployed are people able, available and willing to work at the going wage rate but cannot find a job despite an active search for work Unemployed means that scarce human resources are not being used to produce goods and services to meet peoples needs and wants Persistently high levels of joblessness have damaging consequences for an economy causing both economic and social costs Problems caused by unemployment occur across a country but are often very bad and deep-rooted in local and regional communities and within particular groups of society for example in the UK, more than one in six young people are out of work.

Frictional Unemployment Frictional unemployment is transitional unemployment as people move between jobs: For example, newly-redundant workers or people joining the labor market for the first time such as university graduates may take time searching to find work they want at wage rates they are prepared to accept. Imperfect information in the labor market may make frictional unemployment worse if the jobless are unaware of the available jobs. Incentives problems can also cause frictional unemployment as some people may stay out of work if they believe the tax and benefit system leaves them little or no better off from taking a job When there are disincentives for people to accept work, this is known as the unemployment trap. Frictional unemployment happens when it takes time for a countrys labor market to match the available jobs with people seeking work. Structural Unemployment Structural unemployment happens when there is a long-term decline in demand in an industry leading to fewer jobs being available as the demand for labour falls away this leads to a decline in employment in a particular industry (sector) or a particular occupation. Examples might include: Jobs on a production line being replaced by robots e.g. motor manufacturing Unemployment caused by foreign competition (or changes in comparative advantage) Structural unemployment exists where there is a mismatch between their skills and the requirements of the new job opportunities. This problem is due to occupational and geographical immobility of labor and requires investment to improve skills, give the unemployed suitable training and work experience and make them able to move location if needed to take a new job.

Consequences of Unemployment
Governments are always trying to reduce the level of unemployment, but why? What is so bad about not working? Well, the effects of unemployment can be roughly split into direct and indirect effects:

Direct Effects

Fall in National Output Labor, remember, is a factor of production. Hence, a fall in the overall supply of labor caused by higher levels of unemployment will result in a fall in national output. However, if the unemployment is caused by factor substitution i.e. labor is substituted by new machinery, then a fall in National Output may not necessarily result Loss of personal income - Those not working will encounter a fall in their living standards, as their income falls. The unemployed will have less purchasing power, and less disposable income. Of course, the dole may in fact provide more income than working, and the increased free time may be considered more valuable than working, though this is in the extreme minority

Indirect Effects

Negative Multiplier Effect - Unemployed individuals, as mentioned above, are not able to spend as much money on goods and services, so a negative multiplier effect may result. For example, local businesses may suffer as a result of recent job losses in an area, meaning that purchases from suppliers will fall, and so on. Many areas where large job losses have occurred experience this effect, unless governments intervene. Loss of tax revenue - A fall in income results in a fall both in direct and indirect taxes. Why? Direct taxes come from wages while indirect taxes come from the products those wages would have been spent on. As a result, governments must either raise the level of tax on existing wage earners, or reduce government. Both policies have a depressive effect on the economy. Society - Inequalities in wealth and income, and high unemployment have been shown to be linked to negative social effects, such as high crime rates in these areas. The lack of money to spend on private health care, healthy goods and living, means that those who are unemployed often lead less healthy lifestyles and have less backup when things go wrong.

Unemployment in Pakistan
(Ata Rehman Zaki, Karachi) Unemployment is a central problem because when unemployment is high, resources are wasted and people's incomes are depressed; during such periods, economic distress also spills over to affect people's emotions and family lives. Now we see that in Pakistan what is the situation of unemployment and what are its economic and social impacts. In Pakistan labor force include all persons who are of ten years and above, and during the period are without work, currently available for work and seeking for work. On the basis of the existing population of 142.87 million with Labor force participation rate of 27.46 percent, the total labor force comes to 39.24 million. According to these about 2.4 million persons of labor force were estimated as unemployed in 1999, as construction and transport sectors have absorbed 11.2 percent, 6.8 percent and 5.7 percent, compared to 10.5 percent, 7.2 percent and 5.0 percent respectively in 1994-95. First of all we see the Sectorial employed Labor force. According to Labor Force Survey 1996-97, the rate of open unemployment was 6.1 percent and 5.4 percent as per Labor Force Survey of 1994-95. This indicates that rate of unemployment has increased between these two surveys by 0.7 percent officially but unofficially unemployment is much larger than this rate.

Social Development
Social development is about putting people at the center of development. This means a commitment that development processes need to benefit people, particularly but not only the poor, but also recognition that people, and the way they interact in groups and society, and the norms that facilitates such interaction, shape development processes.

While the role of formal institutions and policies has become central to the development debate, the role of informal social institutions has received less attention. Debates on growth and poverty reduction have paid relatively little attention to the impact of, for example, norms of cooperation in villages and neighborhoods, community oversight in the management of projects, or nondiscrimination against women and minorities in education and health. Of course, micro-studies invariably highlight their importance, but can we measure such informal social institutions?

What exactly are these social institutions for? We understand these as the behaviors, norms and conventions that pattern human interaction. Participation in local organizations, demonstrations, petitions, and elections are examples of such behaviors. Norms and conventions, often unwritten, govern human interaction, and are the lived relations between people. Norms of non-discrimination against groups based on ethnicity, language, or gender are examples of social institutions, as are norms of criminal behavior and about civic activism.

Social development thus implies the change in social institutions. Progress toward an inclusive society, for example, implies that individuals treat each other (more) fairly in their daily lives, whether in the family, workplace, or in public office. Social cohesion is enhanced when peaceful and safe environment within neighborhoods and communities are created. Social accountability exists to the extent that citizens voices are expressed, and heard by the authorities. Formal institutional reform for example, the provision of legally enshrined rights, better law enforcement, or more participatory governance are part of the process by which institutional change is achieved, changing the way people relate to people is an equally important part of this.

The Indices of Social Development focus on measuring the informal social institutions, how they compare across countries, and how these changes over time. It does this by using existing databases, around the world, and combining these to find the best possible match with our definition of social development.

Indices of Social Development

We have organized the Indices of Social Development into five groupings:

Civic activism refers to the social norms, organizations, and practices which facilitate greater citizen involvement in public policies and decisions. These include use of media, access to civic associations, and involvement in activities such as nonviolent demonstration or petition.

Clubs and associations uses data on levels of engagement in local community groups, time spent socializing in voluntary associations, and membership of developmental organizations, to identify the extent to which people are part of social networks and potentially supported by community ties.

Inter-group cohesion refers to relations of cooperation and respect between groups in a society; where this cooperation breaks down, there is the potential for conflict and acts of terror and riots.

Interpersonal safety and trust measures the level of trust and confidence between individuals that do not know each other personally, specifically with regard to the likelihood of criminal violence and other forms of trust violation, and combines this with measures of rates of violence.

Gender equality estimates the extent of discrimination against women, whether in the labor market, education, healthcare, or in the home.

Subconscious vs. conscious development The normal tendency of human development is to proceed from experience to comprehension. As society develops it accumulates the experience of countless pioneers down the centuries and takes the essence of that experience as the formula for success and accomplishment. The fact that experience precedes knowledge can be taken to mean that development is a subconscious process that gets carried out first while the knowledge becomes conscious later on only. We use the term subconscious to refer to those activities that people do without knowing what the end results will be or where their actions will lead them. That is the acts are carried out without knowledge of the conditions required for their success. Role of pioneering individuals The gathering subconscious knowledge of the society matures and breaks out on the surface in the form of new ideas espoused by pioneers who also take new initiatives to give expression to those ideas. Those initiatives may call for the formation of new strategies and new organizations which may be resisted by conservative elements in society. If the initiatives of the pioneers succeed, then it encourages imitation and slow propagation among the rest of the community. Later on growing success leads to the assimilation of the new practice by the society and in the course of time it becomes regularized and institutionalized. This process can be viewed in three distinct phases of social preparedness, initiative of pioneers and assimilation by the society. The pioneer as such plays an important role in the development process since it is through that person that the subconscious knowledge becomes conscious. The awakening comes to the lone receptive individual first and it becomes that person's responsibility to spread the awakening to the rest of the society. Although pioneers appear as lone individuals in reality they act as conscious representatives of the society as a whole, and therefore their role should be viewed in that light.

One of the most powerful means of propagating and sustaining new developments is the system of education available in a society. Education is the means for organized transmission of society's collective knowledge to each next generation by the previous generation. It equips each new generation to face the opportunities and challenges of the future with the knowledge gathered from the past. It shows the young generation the opportunities that lie ahead for them and thereby raises their aspiration to achieve more. The information imparted by education raises the level of expectations of youth as well as their aspirations for higher income. It also equips them with the mental capacity to devise ways and means to improve productivity and enhance living standards. Society can be conceived as a complex fabric consisting of interrelated activities, systems and organizations. Development occurs when this complex fabric improves its own organization. That organizational improvement can take place simultaneously in several dimensions. Quantitative expansion in the volume of social activities Qualitative expansion in the content of all those elements that make up the social fabric. Geographic extension of the social fabric to bring more of the population under the cover of that fabric. Integration of existing and new organizations so that the social fabric functions more efficiently.