Educated 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.
Unemployment is very common among developing and poor countries like Bangladesh, Pakistan, India etc. but situation has become worst now even graduates are not able to get any job now a days. once there was a time in Mughal age in Hindustan if one knows how to read Arabic or other languages was employed by emperors, then new educational system came in to being after form 5 or standard 5 people were able to get jobs, then Matriculation become standard for the job. As time passed simple metric lost its value, for job graduation become compulsory, then technical education came and create hope for emplacement, later part computer or IT Technology came who knew MS Office were selected for jobs, as programmed developed, people who knew one of program offered by some one, now even in Masters of IT we can find jobless.
Now we see that in Bangladesh what is the situation of unemployment and what are its economical and social impacts. In Bangladesh 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 millions 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.
Unemployment: General discussion, category and theory:
Unemployment is the state in which a worker wants, but is unable, to work. The unemployment rate is the number of unemployed workers divided by the total civilian labor force. The unemployment rate is also used in economic studies and economic indexes such as the Conference Board's Index of Leading Indicators.
Generally unemployment is classified into three categories (a) Frictional unemployment (workers who are simply moving between jobs (b) structural unemployment (workers who are in regions or industries that are in persistent slump) (c) cyclical unemployment (workers who lay off when the overall economy suffers a downturn.
A. Frictional Unemployment: This unemployment involves people being temporarily between jobs, searching for new ones; it is compatible with full employment. It is sometimes called search unemployment and can be voluntary. New entrants (such as graduating students) and re-entrants (such as former homemakers) can also suffer a spell of frictional unemployment.
B. Structural Unemployment: This involves a mismatch between the good workers looking for jobs and the vacancies available. Even though the number of vacancies may be equal to the number of the unemployed, the unemployed workers lack the skills needed for the jobs — or are in the wrong part of the country or world to take the jobs offered. It is a mismatch of skills and opportunities due to the structure of the economy changing. That is, it is very expensive to unite the workers with jobs. One possible example in the rich countries is the present combination of the shortage of nurses with an excess labor supply in Information Technology. Unemployed programmers cannot easily become nurses, because of the need for new specialized training, the willingness to switch into the available jobs, and the legal requirements of such professions.
C. Cyclical Unemployment: This type of unemployment exists due to inadequate effective aggregate demand. It gets its name because it varies with the business cycle, though it can also be persistent, as during the Great Depression of the 1930s. Gross domestic product is not as high as potential output because of demand failure, due to (say) pessimistic business expectations which discourages private fixed investment spending. Low government spending or high taxes, under consumption, or low exports net of imports may also have this result.
In Bangladesh, Pakistan and India’s unemployment is of structural and cyclical nature.
Educated or graduate unemployment:
Graduate unemployment is unemployment among people with an academic degree. Research study undertaken proved that the unemployment, and much more so, the underemployment of graduates, are devastating phenomena in the lives of graduates and a high incidence of either, are definite indicators of institutional ineffectiveness and inefficiency. It was found that an increasing number of graduates were in an unemployed occupational situation. However, the incidence of underemployment among the graduates much higher.
As an example, The markets for China's graduates shares much in common with those of other countries. China's recent upsurge in graduate unemployment relates to a number of things. One important aspect is its education policy-making and economic development as well as reforms in the economy and in its higher education. Recently, the annual growth in the numbers of new graduates, estimated at four million for 2005, and in the rate of young unemployed graduates should logically bring about a withdrawal from higher education. Because with 8% annual growth, the Chinese labour market may well generate about eight million jobs, but these are mainly ones in manufacturing requiring low-level qualifications. [2]This rising enrollment made employment an issue and a serious challenge for China. Unemployment Situation in Bangladesh:
Changes of Unemployment Rate [IFS code: 67R] Bangladesh
Units: Percent per annum (1)
From: Prices, Production, and Labor
ES Source: International Financial Statistics
Unemployment rate: 2.5% (includes underemployment or educated unemployed) (2006 est.)
This entry contains the percent of the labor force that is without jobs. Substantial underemployment might be noted.
Source: CIA World Factbook - Unless otherwise noted, information in this page is accurate as of April 17, 2007
It is obvious from the above table that in Bangladesh unemployment rate is increasing in both rural and urban areas in absolute as well as in percentage terms. Recent studies shows unemployment rate including educated workforce in rural areas is greater as compared to urban areas. Because of industries there are more chances of employment in urban areas. In Rural areas businessmen are setting up industries due to which now rural people seek manufacturing sector for employment. As in rural areas there is no proper source of earnings for educated unemployed due to which unemployment rate is increasing. As agriculture sector is not absorbing them due to adaptation of mechanical instruments and bad conditions and educated young chap generally doesn’t like to do agriculture instead of doing job in an office. Small scale industries are not working efficiently due to worse economic conditions. So, rural people are not finding proper source of earning. It is clear from Percentage distribution of employed persons by major industries division.
Impacts of educated unemployment:
A. General Impacts:
This is the worse come worse scnerew that is alarming us for the future that how worst it could be, if we don't control this unemployment now people have degrees but no job for them, that is enforcing some of them to do illegal things which really destroying peace of our society, crime rate is increasing due to this unemployment. If we look there are some reasons for this, like governments are not able to produce opportunities to employee more people or countries are not able to pay more people. One other major reason is these educated people are not capable or not fit for jobs most of them are academic when they come in the field they don't know, because education system is itself not producing require graduates, if we just compare our south Asian graduates with European, we will see that their diploma personnel are capable to do the tasks which our graduate can not do.
In south Asia people and governments are so poor can not produce opportunities to all fellows resources are very limited and policies are not good that is why people are not getting job now a days. Upgrading skills did not result in solving the educated unemployment problem in India and Sri Lanka. South Asian economies or particularly those sectors of economies that employ educated people did not expand much. There was also a mismatch between the qualities of workforce demanded by the market and those that were supplied by the systems of education and training. Before the nineties, the public sector usually absorbed most of the educated people in South Asia but in the nineties, this situation changed. Instead of employing new graduates, reducing the size of the public sector employment was the policy.
B. Economic impacts:
From Okun's law we know that for every 2% fall in GNP relative to potential GNP, the unemployment rate rises by 1% point. High unemployment is a symptom of waste — for during recessions, when unemployment is high, the economy is not producing up to high level. When economy is not producing sufficiently, we can say that we are unable to use our full resources for production purposes. Economy will not grow as fast as it can if become able to produce at high level.
Educated unemployment or underemployment is due to a mismatch between the aspirations of graduates and employment opportunities available to them. If the only benefit of a degree is improved workplace productivity, this represents a wasteful investment of scarce resources. Large sums of money have consequently been invested in educating unemployed or underemployed graduates which could otherwise have been invested in job-creating productive programs
C. Social impacts:
However, large the cost to economy of unemployment, a recounting of moneys lost does not adequately convey the human, social and psychological toll that periods of persistent involuntary unemployment bring. Although unemployment has plagued capitalism, the Industrial Revolution, understanding its causes and costs has been possible only with the rise of modern macroeconomic theory. It is apparent that recessions and the associated high unemployment are extremely costly to the economy.
Understanding the sources of unemployment has proved one of the major challenges of modern macroeconomics. Voluntary unemployment may be or when qualified people chose not to work out the going wage rate unemployment occur. The key element in understanding involuntary unemployment is the inflexibility of wages in the face of economic shocks. The same situation is in Bangladesh, inflexibility arises because of costs involved in administering the compensation system.
The upward creep in the natural rate arises mainly because of demographic trends particularly the higher proportion of teenagers in the workforce. In addition, government policies are also increasing unemployment rate i.e. Golden Shake Hand, ban on jobs increasing unemployment rate mainly educated unemployment.
Causes of educated unemployment:
Here I would like to present a report provided by Asian development banks regarding Development and educated Unemployed in South Asia, “The withdrawal of the public sector from the labor market did not result in a large expansion in the private sector, as was expected. The expectation that the retreat of the public sector from the job market would be filled by job creating activities of the private sector and civil society did not materialize. There is also a kind of ‘waiting’ nature of unemployment or ‘voluntary unemployment’ in South Asia. Young people extend their unemployment and do not accept available jobs if they cannot find jobs that match their expectations. They remain dependent on their parents or extended family. (Asian Development Bank)
It was furthermore found that two factors are important regarding graduate unemployment or underemployment, namely incidence and duration. The duration of graduate unemployment in particular, appears to be a sharply declining function of age. It is principally a youth problem, most graduates finding a job after some time, the length of which varies with the fields of specialization.
Some fact finding of educated unemployment:
The recent developments instead of mitigating the problems of unemployment among educated youth have, in fact, aggravated the problem of unemployment as well as the problem of left outs. The South Asian countries, as a whole, suffer from this problem. The recent study on Human Development in South Asia 2003 notes that in case of Sri Lanka, for instance, for the year 1999 in contrast to an unemployment rate of 1.9 percent among those with primary education, those with secondary and pre-secondary education and higher secondary school education registered an unemployment rate of 8.2 and 17.9 per cent respectively.
Other countries in the region show similar findings. In case of urban India, in 1997, it was found that those with higher secondary education, 41 per cent were unemployed. In general, unemployment rates among the educated (secondary and above) were higher in urban than in rural areas. Below primary level of education the unemployment rate was merely 3.9 percent. Employment prospects of the educated youth have worsened during the past decade or so because of low or negative growth in public sector employment that was the major employer of educated youth.
Whatever employment had occurred within the private sector was mostly in the semi-skilled or low skilled areas. Thus, very little employment was generated for the educated. (Human Development in South Asia, 2003, p.26).
The important aspect of the failure to have job is that this led the educated youth towards inactivity. Data on Pakistan and India reflect these tendencies. For instance according to 1998-99 Labor Force Survey of Pakistan, 20 per cent of the post-graduate degree holders were out of labor force, who were neither working nor looking for work. Almost 50 per cent of female doctors and 35 per cent of graduates in different disciplines were reported to be out of the labor force. In case of India, the study cited above provides evidence on with drawl of educated youth from labor force.
Conclusion and Suggestion:
To conclude, an important point that emerges from the above may be noted. A simple perspective of upgrading skill is not the only solution for the problem of the left out youth, as they may remain unemployed even after upgrading the skill. The up gradation of skill must match the quantity and the quality of the labor force demanded in the market. Secondly, what can be done to the policy shift relating to the withdrawal of the public sector from the labor market or to the unemployment resulting from the open economy de-industrialization? This begs a much larger question of shift in developmental strategy and the structure of the growth process that impinges upon the problem of the left out youths from the demand side. Some suggestion to rescue from this problem:
1) Govt. should make efforts to push economic growth process. For this purpose Economic Revival Package should announce for the revival of industries sector, to stimulate production and investment.
2) Govt. should seriously try to boost exports through broadening the tax base and lowering tariffs.
3) Govt. should announce a package for the development of agriculture sector.
4) Beside this a number of fiscal and monetary measures should take to attract industrialists and particularly foreign investment.
5) More Technical and Vocational training facilities should be provided. In this way unemployed people will get the chance to enhance their skills and become able to earn reasonable income.
6) With a view to reduce educate unemployment; self-employment scheme should be encouraged in true manners.
References:
1) http://en.wikipedia.org/wiki/Okun
2) http://en.wikipedia.org/wiki/Unemployment_types
3) http://en.wikipedia.org/wiki/Unemployment
4) http://en.wikipedia.org/wiki/Graduate_unemployment
5) http://en.wikipedia.org/wiki/Underemployment
6) http://www.indexmundi.com/bangladesh/unemployment_rate.html
7. First destination graduate employment as key performance indicator: outcomes assessment perspectives, Prof. Johan Bruwer, unit for institutional planning and research, Cape Technikon, South Africa, November 1998.
