Unemployment and the Economy
leaders and business investors. Unemployment is also a symbol of economic performance for all nations in the world. Low rate of employment means that the economy has the ability to sustain its members. On the other hand, high rate of unemployment has also become the symbol that the government within that economy is not doing what it supposed to. There are several kinds of unemployment: people who are between jobs; people who had skills that are unsuitable with the needs of the society; and people who cannot get jobs because the economy is in an overall bad shape.
Unemployment is caused by several conditions, one of them is poor economic conditions; caused by lack of education, continuing war and political debacle, non-existence of valuable commodity or skill, over populated regions, etc. These types of unemployment are generally the hardest to deal with because the government has to deal with various other dreadful issues also (‘Measuring’, 2007). Other causes are mismanagement of the economy, includes: minimum wage laws, overpowering labor unions, lead time to search for jobs, etc.
Under minimum wage laws, companies have no choice but to pay employees and workers a sufficient compensation to meet the requirements of the laws. For
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How Unemployment affects the economy Generally, people all over the world rely on their jobs to generate sufficient income to support their standard of living. Without jobs that could supply people with sufficient earnings, their standard of living will lessen and finally drop below the lines of poverty. Using a wider perspective, unemployment could hurt the entire economy because it means that people are using more products and services within their daily lives compare to what they produce.
In other words, people are using more money and resources compare to what they can reproduce themselves, which could dangerously lead to more unemployment in the future. In terms of real economic measurements, high unemployment indicated low GDP performance. This is true because high unemployment means that human resources are not used in the optimum manner, creating inefficiencies within the economy (Measuring, 2007). II. Liberia and Kiribati: The Unemployed Nation In this paper, we are discussing the two countries that have the highest unemployment rates in the world, Liberia and Kiribati.
Liberia According to the CIA World Factbook, Liberia is the country which has the highest recorded employment rate, which is 85%. The country is a picture of a nation destroyed by internal civil war. Thus, because the causes of unemployment are hardly economical in nature, it is categorized as the country which has one of the hardest unemployment cases to deal with. Due to the civil war in 1989, most of the businesspersons and investors choose to perform their business elsewhere (Liberia, 2007).
The economy rely mostly ion its mineral and forestry resources rather than human capital. Most of the larger business in the economy is owned by foreigner. Until today, the economy is on the process of repairing its infrastructure and in critical need good government policies and for foreign investments From the 15% that is employed, there is a balance between employed by private or public sectors, while the other 36% of the unemployed are employing themselves in the informal sector, which includes jobs which has no regular stream of income returns.
The other 64% of the unemployed are employed partially in the subsistence agriculture or totally unemployed. The GDP growth during recent years is 6. 7%. However, the existing trend in employment indicated no meaningful increase from year to year. For instance, from the year 1998 to 1999, there is only an increase of 0. 7% employment rate. Most of the increases are from the private sector. The public sector is considered weak and unstable (Liberia, 2007). II. 2. Kiribati Kiribati is the country recorded to have the second highest unemployment rate in the world.
However, different from Liberia, the official unemployment is only 2 % while the rest is categorized as underemployed. Kiribati is recorded as one of the weakest economies in the world. The country relied on its natural resource, minerals above others. Thus, when the expiration of phosphate occurred in 1979, the economy fell into a shock, because the mineral accounted for 50% of the government revenues (Kiribati, 2007).
Despite having a slightly higher employment rate, the country’s GDP growth rate is significantly lower than Liberia. Kiribati has only grown 0.3% from the last year and previous trends are not far different. Most of the country’s income is generated from the service sectors with foreign interference and from agricultural activities. Ironically, the government of Kiribati has not yet set policies to fully support and protect foreign investment within the country. Analysts indicated the country lack the economic development policy which should be a priority due to the country’s domestic potential. Therefore, there is little positive trend that could be expected from the economy (Kiribati, 2005).
‘Kiribati’. 2005. Asian Development Bank. Retrieved January 29, 2007 from http://www. adb. org/Documents/Books/ADO/2005/kir. asp ‘Kiribati’. 2007. CIA World Factbook. Retrieved January 29, 2007 from https://www. cia. gov/cia/publications/factbook/index. html ‘Liberia’. 2007. CIA World Factbook. Retrieved January 29, 2007 from https://www. cia. gov/cia/publications/factbook/index. html ‘Measuring the Economy’. 2007. Sparknotes. Retrieved January 29, 2007 from http://www. sparknotes. com/economics/macro/measuring2/section2. rhtml