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The term "jobless growth" is wrong.
Growth means more or additional output from (a) more workers and entrepreneurs
employed, or (b) the same number of workers and entrepreneurs producing more
from the same input (ie, higher productivity).
If (b) happens, then higher productivity people will create new jobs elsewhere -- additional nanny for the kids, eating outside more often, jobs for those in restos/bars/hotels.
Assuming that the same number of employed
people, say 37 million, was recorded this year as last year, it does not mean
exactly the same individuals. Some of the 37 M employed people last year are no
longer working this year due to (a) retirement, (b) illness or injury, (c)
pursue further studies or skills training, (d) on extended vacation or leave,
(e) migrated abroad, (f) death, (g) other reasons.
If one would refer to the lack or absence of
incremental increase in employment this year compared to last year, the more
appropriate terms would be “job-replacing growth” or "productivity-enhanced
growth". Besides, such absence of
increase in employment is temporary and may happen for only one year, two years
at the most. The succeeding years, increase in employment should show up.
Where there is growth, there is job creation
somewhere. But most of those jobs may be in the informal sector as people find
it very costly, time consuming and very bureaucratic to go through all sorts of
business registration, from barangay to sanitation permit to mayor's permit to
DTI and BIR permit. Besides, there are less taxes to pay in the informal
sector, like being an ambulant vendor, small sari-sari store, tricycle driver,
etc.
Consider this: A furniture shop with 5
workers produced 1,000 units of tables and chairs last year. This year, the
same 5 workers produced 1,100 units of tables and chairs. Output increased by
10 percent but there was no growth in employment for that company. Is that a
"jobless growth"?
On the surface, yes, but look what happens to
employment by workers and the entrepreneur of that shop: the workers must have
gotten some salary increase (otherwise one or all of them might quit and go
elsewhere where they can be given higher pay). Worker 1 may get a nanny for the
kids, now he can afford to get one. Worker 2 may get a motorcycle, and that
creates additional job in the motorcycle shop or repair shop, and so on.
“Jobless
non-growth” is possible but “jobless growth” is not, it is an oxymoron and
hence, is technically and theoretically wrong.
The persistent high unemployment + underemployment
rates of about 24-25 percent is also cited as another example of “jobless growth.
See previous discussion here, Why a rise in
unemployment is not exactly bad.
There are two main reasons why a person is
unemployed. One is that he is rejected due to under-qualification or
over-qualification (may demand higher pay later on), and two, he chose not to
be hired at a particular job description and pay. The first is involuntary
unemployment, outside the control of the job applicant while the latter is considered
as voluntary unemployment, within the control of the job applicant.
One news report last year, Lots of jobs for
college grads, but do they want the work? cited, “more than 40 percent of the unemployed
college graduates cited ‘no job opening in field of specialization, no interest
in getting a job, starting pay is low, and no job opening within the vicinity
of residence.’ as reasons for unemployment.”
These are examples of the “voluntary
unemployment” phenomenon. There are jobs available for many college graduates
but they chose not to take those jobs, at least temporarily, hoping that a job
related to their course, or a higher paying job, or a job near their house or
city, would be available soon.
Here are more numbers, notice the high
incidence of unemployment among college graduates.
Philippine
unemployed by educational attainment, October Labor Force Surveys, 2006 to 2013
Source: National Statistics Office, www.census.gov.ph
Other instances of voluntary unemployment are
as follows:
a. Work is available at say P40,000 per month
gross pay starting immediately, but a person chose to reject it, awaiting possible
employment in another company that will give him P50,000 per month or higher.
b. Rejecting a good paying local job because
the person is awaiting job placement or hiring abroad, he/she wants to be ready to leave any day without
the hassle of resignation, getting office clearance and related burdens.
c. Rejecting a good paying job in a far away
city because the person wants to work nearby even at lower pay, and help ake
care of young kids or sickly parents at the same time.
Most economic literatures analyzing the unemployment
phenomenon focus on what the government should do to improve the employability
of the population, the college graduates especially. The common policy interventions and proposals are higher government
spending in education from elementary to tertiary. The new law, K+12 education,
mandatory kindergarten + 12 years in elementary and high school, or 13 years of
schooling before a student can go to college is along this line of thinking.
Both voluntary and involuntary unemployment
among college undergrads and graduates can be lowered if these young people were trained for
self-employment and entrepreneurship early on, and if government policies are
more business friendly than they are now.
This means that government business permits
and bureaucracies, business taxes and fees, both at the local and national
government levels, should be reduced and/or made simpler.
The key to reduce unemployment and
underemployment, whether voluntary or involuntary, is more entrepreneurship and
more business competition. If people cannot be hired by others, let them employ
themselves. Government can help job
creation by simply reducing its unnecessary intervention, bureaucratism and
taxation.
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See also:
Labor Econ 9: On 4-months Maternity Leave, June 14, 2012
Labor Econ 10: Voluntary and Involuntary Unemployment, February 18, 2013
Labor Econ 11: Employees Forever vs. Entrepreneurship, April 27, 2013
Labor Econ 12: Wallace, Lenin, Stalin, Mao, May 02, 2013
Fat-Free Econ 38: Jobless Growth vs. Jobless Non-Growth, February 12, 2013
Fat Free Econ 48: Jobs, Taxes and the World Bank, September 15, 2013
Migration 20: Overseas Employment, Positives Outweigh the Negatives?, October 09, 2013
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