Unemployment & Poverty: Sub-Sahara's Woes & Economic Fluctuations - Essay Sample

Introduction

Unemployment has been an issue reported worldwide. Poverty has gotten linked to unemployment. Unemployment rates are high for the poorest countries, which are the sub-Sahara region are the ones with the highest unemployment (Caballero and Hammour 1997). When economies want to measure the economic health of a particular country, they just have to enquire about the number of individuals who are unemployed and divide it to that of those in employment.

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Economic fluctuations, which is the dynamic state of the national income, is thought to be significantly affected by the unemployment rates in a country (Lin 2009). When the unemployment rate is high, the economy is said to be in distress, but while it is low, the economy is said to be overheated (Choudhry et al. 2012). It is so because unemployed individuals contribute nothing towards the economic production output. A country with high numbers of unemployed individuals is prone to political and social problems since, as much as they are unemployed, they must seek to satisfy their basic needs. The living standards of unemployed individuals are said to be reduced since they cannot afford to meet all their basic needs due to a lack of money (Galbraith 2000). The main issue of this study is to analyse the economic fluctuations of countries worldwide and to discuss how unemployment has been the major contributor to these fluctuations.

To begin with, according to OECD (Organisation for Economic Co-operation and Development), unemployment refers to a state in which an individual who is above 15 years of age falls off the category of being self-employed or in a paying job (Torres and Martin 1990). Unemployment is the outcome obtained as a result of not engaging already available resources in production. There are, however, four types in which unemployment can get grouped. They include; cyclic, seasonal, frictional, and structural unemployment. Cyclical unemployment, also termed as involuntary unemployment, is when individuals get forced to be in that state due to a decline in the economy. It is thus said to be contributed by the business recessions cycle. Low production and low demand for goods and services are the core reasons why these individuals are unemployed (Torres and Martin 1990). The type of unemployment is said to accelerate when the economy is under contraction and to decline when there is economic growth. Fiscal and monetary policies were established with the aim of eliminating this type of unemployment by mainly avoiding contractions in the business cycle.

Seasonal unemployment is caused by regular declines in certain occupations and industries inhe the year. It is so because some activities such as harvesting or planting, teaching, and construction are seasonal. It is thus considered as employment's condition since it is predictable (Torres and Martin 1990). Frictional unemployment results when resources are getting changed from one production to another. There is a geographical separation that aids in matching production with resources. Eliminating this type of unemployment, information to employers and workers should get improved to decrease the job search time length. Structural unemployment is when job seekers fail to have the required technological skills. Given a case where a company needs an analyst, and the only present worker is an engineer, he/she fails to meet the required skills and qualifications. The individual is thus said to be unemployed structurally.

An article got published by the WEF (World Economic Forum) in June 2019 investigating the status of various top economies in the world. The findings confirmed that countries with good economies have less number of unemployed individuals. A healthy market gets enjoyed in those countries with a higher number of employed personnel. Concerning data obtained from the IMF (International Monetary Fund's), a decrease in unemployment got reported for the major economies.

Figure 1: Unemployment status of the largest world's economies.

As of February 2020, the unemployment rate in the U.S. got reported to have gone down to 3.5% (Montgomery et al. 1998). From 2009 to 2010, the unemployment levels in the U.S. were relatively high due to the financial crisis (Montgomery et al. 1998). Black Americans got reported to be the majority of people with unemployment cases in the U.S. Germany, and Japan has shown a considerable decrease in the unemployment levels, which is even much lower than that of the U.S. Japan despite having a low unemployment rate of 2.4%, various effects like having a working population full of aged individuals (Montgomery et al. 1998). When these people reach the retirement age, very few individuals can fill up the positions.

German is also a country that has made history according to the above statistics by recording very low levels of unemployment of 3.4%, which has not gotten witnessed in the last three decades (Mundial 2003). The levels of unemployed individuals are said to be relatively up in Italy and France, but with comparison to the past years, a decline got recorded. Of all the largest economies worldwide, Brazil's values, which is 11.4%, seems to not fit with the rest (Mundial 2003). Instead of the figures declining, the Brazil figures have shown an increase since 2014 (Mundial 2003). A recession that occurred in 2015 to 2016 is said to be the major contributor to the high levels of unemployment, which led to stagnant growth (Mundial 2003).

Lesotho, Palestinian occupied territories, Eswatini and Mozambique, are the countries reported to have the highest number of unemployment cases worldwide and are found in the Sub-Saharan and brutal warzone. Their unemployment rates are 28.2%, 26.4%, 26.5% and 24.8% respectively (Mundial 2003). These countries got reported to be the poorest worldwide. Mozambique and Eswatini got also reported to have high prevalence rates of HIV and AIDs. Lose of manpower due to this pandemic.

Analysis

To help elaborate more on the issue of unemployment, the Marxian theory gets brought to the picture. The theory tries to illustrate why a vast multitude of people struggle to find jobs. Marxists, in his theory, confirm what Keynesian had in mind while formulation his theory (Gali 2011). Both try to explain how employment and economic demand relates to cause unemployment. According to Marx, capitalists' investments get partitioned into two parts: the one that rents or buys production means, which includes raw materials, factories, and machines, and the other is that which hires employees (Laclau 2012.). When capitalism increases, the hiring capital of workers gets reduced by the use of two processes. Capitalism is when an organization wants to make a profit but is unwilling to pay the worker for the extra labour. The first process is that it can result when two companies merge to form one bigger company. The merged companies tend to enjoy economies of scale much more than when they were operating as separate (Summers 1988). When this happens, a single employer tends to run on a larger capital share than before. Lay-offs of employees is also another outcome of merging.

The second process is when the capitalists purpose to improve productivity as a result of external competition. When a small investment generates mass production of goods and services is when a company is said to have high output. A company can achieve this by increasing the employees working hours while cutting down their wages (Summers 1988). It can also obtain it via the provision of more advanced and efficient tools or machines. Switching to the use of technological machines only implies that some of the employees are going to get laid off.

Marx theorised that capitalists require a group of workers what he termed as an "industrial reserve army." It means that the capitalists get to have control of the workers and can throw them out or draft them anytime, depending on the market requirements, which keeps on fluctuating. A positive fluctuation in the economy calls for more employment vacancies. When a decline in the economy get encountered, the employees get laid off for the company to make a profit (Moorhouse 1978). It means that unemployment levels are high when the economy faces some setbacks.

For instance, in World War II, the most affected countries by the war drew men who were in employment to join in military forces. To fill the spaces left by the men, women get hired. At the end of the war, all women were laid off and went back to their unpaid home jobs. During the formal statistics, the majority of the women got counted as part of the employed workers, but in the real sense, they were only part of the army referred to as industrial reserve (Moorhouse 1978). The pool of employees helps maintain the demand and employees' wages down. Demand and supply of labour is what capitalist economists operate in.

The theory got proposed since it gets able to bring out the real nature of world leaders today. Their opportunistic character and nature portray how determined in all situations to acquire the best. His theory gets also based on realism and facts, thus makes it easier for everyone to understand. Unlike in other cases where unemployment is said to contribute nothing towards the country's income, this theory of capitalists, unemployed individuals, helps save the company money by lowering the worker's wages. It also aids in solving conflict issues that arise in society (Moorhouse, 1978). According to the theory, the problem of unemployment can get solved by abolishing the idea of wages, competition, and capitalism. Adaptation of a new economic system referred to as communists can aid transform most businesses. The theory also tries to bring about the issue of gender equality (Moorhouse, 1978). Women have been viewed as inferior people in society and are disadvantaged in most aspects, but this theory has been able to equalize both genders. Since also all people of the community work together debt cases are eliminated

However, as much as the theory is said to contribute to equality, individuals are denied their human rights when they have no freedom to choose what they want. According to Marxism theory, the leaders decide who gets maintained in the job and who gets sacked at any time, depending on the economic fluctuations. The theory is appropriate in offering solution and explanation of the unemployment issue in that it gives the society production ownership (Pissarides 2000). The theory has found its application in today's world in that most of the organisations has adopted the use of new advanced technology to increase their production. The use of machines implies that most of the employees get to laid off since the machines can perform more than they can (Pissarides 2000).

Evaluation

Capitalism was a thing that Marx predicted in his theory, where he theorised how it could destroy companies. In today's world, many people would agree with me that it has affected the whole world. The operation of capitalism has become a significant problem. For instance, equality rule seems not to be upheld by most nations (Pissarides 2000). In the United States, the median income household was put in place to deny the poor their rights. It was there to father the rich who have continued to soar. Most companies are also at the forefront of maximising their profits by investing more in new technology. By doing so, wages and productivity get affected. Many private companies do still exploit their employees by making them work for long hours with less pay. In the political arena today, Marxism theory is perceived as valid in that most seats are given to males and females denied their equal rights of having them. A woman running for the presidency despite her qualifications gets denied...