How are Governments Responding to Unemployment Around the World?

Unemployment in June was as low as it was back in April of 2000, right at 3.8%. Because of the tallies made back in June, 15,000 new jobs have been added to the labor market in the United States (Soergel, 2018). In 1969, employment rates rose greatly, which would be hard to sustain for the rest of the year. This was because new employees would be hard to locate under the labor market conditions, which could easily be shifted. The government’s efforts to restrain the economy were predicted to have negative effects on labor demands (Flaim and Schwab, 1970).

Theoretical/Conceptual Background:

Classical Unemployment, Efficiency Wage, and Cyclical Unemployment are all examples of theories associated with unemployment. Classical Unemployment theory highlights the idea that real wages and market clearing wages all affect the total number of jobs available (“Classical Unemployment”, 2018). Efficiency Wage theory is the idea that a worker who gets more done, should get paid more than the person who is less efficient in the workplace (Pettinger, 2017). Cyclical Unemployment theory is when employees lose their jobs due to negative impacts in business. GDP is used as the marker for economy recession (Amadeo, 2018). Unemployment rate is a basis for almost everything unemployment. Unemployment rate is a percentage that demonstrates the amount of citizens who do not work in a specific country. The Current Population Survey is used every month in order to calculate the unemployment rate in the United States (“How the Government,”, 2015)

Recent Developments:

North Carolina cut its maximum duration for state benefits to 20 weeks and reduced the dollar amount of weekly benefits. This reduction has led to a less known crisis for the unemployed. In October 2015, not much more than a quarter of unemployed workers received jobless benefits (Eisenbrey, 2016). The White House made a proposal to modernize the unemployment insurance system. Since the economy has been nowhere near full employment, wages have stopped increasing (Eisenbrey, 2016). In Dublin, there is currently a housing crisis going on. There are 30,000 empty Airbnb properties, but still many people left unemployed and homeless. The Airbnb market in Dublin is growing, which also leaves people in the city in a weird situation of having to choose between living in a hotel, or living in their own property. This is due to the fact that hotels have become cheaper to reside in, thanks to the sudden rise in Airbnb demand (Harris, 2018).

Thesis: This paper will investigate how governments are responding to unemployment around the world by examining cases in Yemen, The United States, Kenya, and Portugal.

Government Responses to Unemployment in Yemen

Background: In November of 2011, Yemen adopted an initiative called the Gulf Cooperation Council that was used as a solution for the year’s political disturbance. Yemen has lacked basic social services and is underdeveloped. These issues have caused problems for citizens’ health and wellbeing. These issues are traced back to a crisis in 2011 (“Facing the,”, 2012). The highest unemployment rate occurred in 2010 at 17.8% (“Yemen Unemployment,”, 2018). As unemployment is rising, Yemenis are protesting in order for President Saleh to step down and make room for a new leader (Finn, 2011).

Government Responses/Actions: Following a demand from the unity government, the World Bank, along with the United Nations, the European Union, and the Islamic Development Bank carried through an assessment based off the social and economic impacts of the 2011 political crisis (“Facing the,”, 2012). The Joint Social and Economic Assessment (JSEA) is an important part of the transition process, while informing the economic recovery plan of the Government of National Reconciliation. This plan also serves as a reference point for planning efforts of the international donor community (“Facing the,”, 2012).

Impacts: The actions taken by government officials in Yemen are impacting the country by informing people to be more inclusive with other types of people: whether that includes people in the workforce, or not (“Facing the,”, 2012). Youth economic empowerment is being used to help stagnation from still being a common occurrence, furthering what the government has attempted to do already (“In response,”, 2013).

Government Responses to Unemployment in the United States

Background: The US has been through eleven recessions since the end of the postwar period in 1948 (Sicilia, n.d.). In 1932, the Unemployment rate was 23.6%, the highest it has been from 1920 till now (“United States Unemployment Rate”, 2018).

Government Responses/Actions: After World War II, President John F. Kennedy brought Social Security and unemployment benefits to a broader range of people, after a brief recession. Not long after Barack Obama took office, Congress decided to pass a close to 800 billion dollar boost in order to spur the economy and lower unemployment (Sicilia, n.d.).

Measurable Outcomes: The Labor Force Participation Rate (LFPR) is known as the amount of people in the labor force (the employed and unemployed) divided by the civilian population (citizens 16 and up). This method has been used to show the falling ratio of 67.3% in 2000 to 62.5% in 2016 (“Civilian Labor,”, 2018). Discouraged workers are people not at the moment looking for work because they think that there is not a right job available for them (“The Employment Situation”, 2018).

Government Responses to Unemployment in Kenya

Background: 80% of unemployed Kenyan citizens are younger than 35. One of the reasons behind this fact is that 90% of younger citizens lack proper speech skills (“Tackling youth unemployment,”, 2016).

Kenya has the highest unemployment rate in Eastern Africa. One of Kenya’s youth empowerment programs, the National Youth Service, is now a trademark standing for corruption, instead of its intended job creation goal (Asamba, 2017).

Government Responses/Actions: Uhuru Kenyatta (President of Kenya) and Raila Odinga have pledged to create more jobs for the youth (Asamba, 2017). The Kenyan government has made efforts to build new infrastructure with the addition of new roads and a new railway system. They also spent money on energy generation in order to attract more manufacturers (Miriri, 2017).

Measurable Outcomes: Kenya’s current 44 million population is increasing by 2.5% every year, and 9 million more jobseekers are projected to join the market, according to the World Bank. 111 firms in Kenya have grown fairly slowly, from 39,000 workers in 2012, to 53,000 in 2017. (Miriri, 2017)

Government Responses to Unemployment in Portugal

Background: Occupational choice theory suggests that the higher the unemployment, the more start-up activity, being that the cost of starting a firm has decreased (Hurst and Lusardi, 2004). In 2013, Portugal’s unemployment rate hit 18% (Tremlett, 2013).

Government Responses/Actions: Pedro Passos Coelho’s government has been putting worse and worse severity on Portugal on the bidding of lenders who keep its economy afloat (Tremlett, 2013). You have access to unemployment benefits in Portugal if you have completed a consecutive 450 days’ worth of paid work in the 24 months before the unemployment date (“Unemployment benefit,”, n.d.).

Measurable Outcomes: Portugal government made the decision to sack 1 in every 20 public employees. The budget deficit has grown from 4.4% GDP to 6.4% GDP. (Tremlett, 2013)

Perspectives

Local Perspectives: State governments do not have time set aside to be creative or flexible, which leaves the workplace in a stressful situation, where they feel rushed to show talent (Black, 2010). The law should be forced to protect the social aspects and basic human rights of all people struggling with a mental illness (Lamichhane, 2010).

National Perspectives: Recently, unemployment has lied below the Federal Reserve’s “natural rate” prediction and inflation rates have not moved. Workers have not been paid equally to their marginal contribution to their firms. Most of the negotiating power seems to lie with the employers, not the employed. What the government needs to do is calculate a new benchmark unemployment rate that includes factors like discrimination and frictional unemployment (Spielberg, 2018). Economists have put in great amounts of time trying to find a reason why inflation and wages have remained neutral even as unemployment has fallen to record lows in countries like Germany. Rising tech companies, for example, Apple and Amazon have resulted in smaller companies becoming less powerful (Ewing, 2018).

Global Perspectives: Unemployment is a reality that on all levels, affects the current economic standing on a global scale. The Organization for Economic Cooperation and Development stated in 1982, that there are 30 million people unemployed in the industrial work world alone. Community welfare is impacted by this, partly because of government regulations (Liem and Rayman, 1984). Nowadays, there are so many shifting factors that occur within the countries we live in, which then get developed in other countries as well. Because of this, it is getting harder and harder to predict what new kinds of jobs and occupations will be available among the horizon. Countries across the world are creating workforce development programs between countries of investment (Pack, 2015).

Conclusions

Takeaways & Your Perspective: Youth empowerment is something that the government tries to enforce. They try to do this in order to keep unemployment rates from becoming stagnant and they may need to create new jobs for the youth. A strength I find with Spielberg’s perspective is that employees often do not get paid enough for the amount of work or contribution they put in for their company. A weakness is when he says to calculate a new benchmark for unemployment, including factors like discrimination and friction in the workplace. He needs to be more specific. It would help if he explained how he is going to calculate factors like discrimination, and how that calculation affects the new benchmark unemployment rate.

Solution(s): Encourage students to stay in school and to receive a proper education, so that all the hard work they do while they are in school, will then be transferred to the real world where they can get a job.

While you are in school (high school or college) try to choose a particular path that you are good at, or you are most interested in. If you follow that path, you will hopefully find a job that fits you, and that you enjoy doing every single day. Continue to support the youth in any way possible. Once they find that motivation, they will feel more productive and that they are providing meaning to the working world. Rather than unemployment being talked about negatively in the news and media, use high unemployment rates as an opportunity to reach out to people and help them find what they are passionate about. This will help unemployed people get back on track with finding a new job.

Significance: Unemployment relates to Education for All because it is posing as a risk to upcoming graduates, because of uncertainty in the job market. Some citizens fail to replicate what they did in high school in the form of their work (Raphael, 2017). Unemployment relates to Poverty & Inequality as wages have remained fairly low to people with jobs who did not receive a proper college education. Today’s poverty wage is $7.25, which is about what unemployed people are receiving with all external factors considered (Desmond, 2018).

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