Chapter 13: Population and Employment

13.1 Definition of Population

Population refers to the number of human beings living in a particular region at a particular time. Population data of a country is mainly obtained through a census. The characteristics of the information collected include: age, religion, gender, marital status and education level.

Basic Concepts in Population

Population is never static but keeps on changing with time. These changes may be associated with the concepts below.

  • Population growth rate: this refers to the rate at which the size of population changes over a given period of time usually one year.
  • Birth rate: this is the number of live births in a year per 1000 people over a given period of time usually one year. It is also called crude birth rate.
  • Fertility Rate: Fertility has an effect on birth rate. It refers to productivity of a country’s population i.e. average number of children per woman that women in the child-bearing age are likely to give birth many African societies, fertility rate are determined by socio-economic, political and cultural factors.
  • Mortality Rate: This refers to the number of deaths within a given area/group over a given period of time. This is the rate for every 1000 people in population. It is also known as attrition rate and is calculated as:

MR = number of deaths/total populationX100.

  • Infant mortality rate: refers to the number of deaths in the first year of life per 1000 live births.
  • Child mortality rate: refers to the number of deaths of children aged between 1-5 years per 1000 live births.
  • Adult mortality rate: refers to the number of adults dying per 1000 of population.
  • Life expectancy: This is the average age at death of the inhabitants of a given area. Information on mortality is useful as it helps decision makers in making projections and also in planning for health provision.
  • Migration: This refers to population movement from one place to another leading to change in residence in which a recognized boundary is crossed.
  • Immigration refers to the movement of people into a given area.
  • Emigration/out-migration: refers to movement of people out of a given area. Migrants-tend to be young and have little attachment to any given area/community.
  • Population growth rate: This refers to the rate at which the population of a country is increasing per year i.e. birth rate – death rate + net migration. Using graphical representation x axis is Population and y axis output per capita
  • Over population: this exists when a country’s population is large compared to its resources such that the resources are over is a social and economic problem associated with unemployment, high dependency ratio, insufficient housing, insufficient medical facilities, insufficient educational facilities, declining living standards and output per person falls with every increase in population.
  • Under population: this is where there is insufficient labour compared to other factors of production i.e. capital and land. It occurs when available resources in a country are greater than size of population in a country. It is usually not in numerical figure but the population in relation to a country’s resources.
  • Ageing population: This refers to population which has a high proportion of old people i.e. above 65 years. It is as a result of decrease in fertility rate and decrease in old age mortality rate. This kind is not economically desirable because it leaves the country with insufficient labour force for resource exploitation. Provision of pension and medical facilities pose heavy financial burdens to them

Factors Determining a Country’s Fertility

  • The age and sex structure of the population.
  • The incidence of barrenness.
  • Social/cultural attitudes towards child bearing before marriage.
  • The marriage rate among people in the productive age bracket.
  • Social/significance of children to parents
  • Technological progress: Children have ceased to be economically important with industrialization. Mechanisation can now be applied in almost all sectors in economy reducing need for labor intensive techniques e.g. in agriculture.
  • Famine epidemics and war: they disrupt normal family life reducing the likelihood of women to conceive.
  • Government policies: this is through specific policies and programs. A policy like provision of family planning services and education benefits of having manageable family sizes.
  • Health and education: With improved medical care, child survival has improved eliminating need for having many children. Women who are educated get married at a later stage contributing to falling fertility rates.
  • Socio-economic considerations-some discourage people getting many children leading to a decline in fertility rate. Ignorance-No planning in families thus high fertility rate.
  • Some religions do not encourage family planning.

Factors that are Likely to Lead to High Birth Rates

  • Some cultural practices taking children as security during old age – this case may create desire to have many children.
  • Early marriages prolonging the woman’s reproductive life.
  • People wanting to have many children in areas of high mortality rate so that if some die others will be left.
  • Children being seen as a source of cheap labor.
  • Where people are ignorant or are oppressing family planning methods.
  • Religious beliefs which are encouraging large families.

Factors That May Lead To Decline in Birth Rates

  • Delayed marriages due to such things as staying in school for long periods.
  • Craving for high standards of living leading to people having few children.
  • Desire to give children better lives than parents has made some people want to have few children.
  • Where a small family is considered fashionable.
  • Due to a decline in mortality rate, people have the confidence that few children would all survive.
  • Availability of viable retirement benefit schemes that have made people stop viewing children as security in old age.
  • Family planning.

Disadvantages of Under-Population

  • There is underutilization of resources.
  • High transportation costs because people are thinly distributed hindering internal trade. Inhabitants engage in subsistence production and specialization is absent leading to economic development not realized.
  • Small market: under population does not stimulate development of industries since the size of market is too small to support large production from industries
  • Lack of social amenities: it becomes uneconomical to build them because of low capital per head used to construct roads, dams, schools, hospitals and other social amenities.
  • Slow economic development-lack of pressure on resources reduces creativity due to limited competition. This makes people more comfortable thereby slowing down economic development.

Advantages of Over Population

  • Market: a large population can support large productions from industries as it offers a large market.
  • Labour: a large population increases the supply of labour for large scale production and also makes it possible for labour to move to areas where it is required.
  • It has a high consumption level i.e. there is a high demand for goods and services and this stimulates investment in production of various commodities.
  • There is better utilization of resources.
  • Technological improvement is likely to be prevalent due to ideas combination due to competition and pressure of population on resources which may lead to high efficiency and inspire people to look for new methods of productivity improvement.

Disadvantages Of Over Population

  • Poor standards of living
  • High levels of unemployment.
  • Strain on social amenities
  • High dependency on a small working population
  • Imbalance in demand and supply.
  • Immoral activities are usually rampant.
  • Pollution is also experienced.
  • Savings and investments levels are likely to decline.

12.2 Meaning of Unemployment

Employment: Refers to the engagement in any type of productive income generating activity. It includes public and private wage employment and personal employment such as farming. It can also be defined as the engagement of a person to some productive work or to some legal income generating activity.

Full employment refers to a situation where all people who are willing and able to work are employed. This concept does not however exist in real life world.

Unemployment: This refers to a situation where people are willing and capable to work at the existing wage rates but cannot secure jobs.

Unemployment rate = Total unemployed (working ages)/Total population

Unemployment is that situation of a country when a greater proportion of such people who are able to work and willing to work are unemployed. Those people who are not willing to work or unable to work are known as unemployable. Unemployment is the condition of not being put to productive use, and is usually applied to people without jobs or” gainful employment”. Not having a job when a person needs one can make it difficult to meet financial obligations such as purchasing food to feed oneself and one’s family, and paying one’s bills; failure to make mortgage payments or to pay rent may lead to homelessness through eviction.

The unemployment problem is harmful for economic, social and political stability of any country. In economics, unemployment refers to the condition and extent of joblessness within an economy and is measured in terms of the unemployment workers divided by the total civilian labour force. Unemployment in an economic sense has proved a surprisingly difficult thing to define as there is some controversy about what exactly is meant by “unemployment”.

The terms unemployment and unemployed are sometimes used to refer to other inputs to production that are not being fully used-for example, unemployed capital goods.

The unemployment problem is of concern to the government because it means that a scarce factor of production (i.e. labour) is lying idle and being wasted. Unemployment can also lead to social problems such as crime as well as being a cause of social and personal distress.

Impact/effects of unemployment on society

  • Lacking a job often means lacking social contact with fellow employees, lack of self-esteem, mental stress and illness and of course the inability to pay bills and to purchase both necessities and luxuries. The latter is especially serious for those with family obligations, debts, and /or medical costs, where the availability of health insurance is often linked to holding a job. Rising unemployment increases the crime rate, the suicide rate, and causes a decline in healthiness.
  • The combination of unemployment, lack of financial resources and social responsibilities may push unemployment workers to take jobs that do not fit their skills or allow them to use their talents i.e. unemployment can cause underemployment. For example, in Kenya it’s common to find university graduates working as watchmen or other lowly paid jobs.
  • Rise in crime and other anti-social activities.
  • Low economic growth
  • Low standards of living due to high levels of poverty.

Types of Unemployment

  • Transitional Unemployment: Transitional unemployment is that situation which prevails due to some temporary reasons.
  • Turnover Unemployment: Turnover unemployment-occurs when a person resigns or leave their present job to look for another. He will be temporary unemployed in the meantime
  • Casual Unemployment: Casual workers are employed for a specific job and when that job is completed, these workers become unemployed. For example, workers employed by shipping or building construction companies are employed on casual basis.
  • Seasonal Unemployment: This is a type of unemployment experienced where demand for goods and services is seasonal. Some industries have seasonal demand and the products of such industries are manufactured for a specific period of the year.  The workers of such industries remain unemployed for a few months
  • Structural Unemployment: Structural unemployment is that situation which prevails due to some structural change e.g. improvement in technology.
  • Cyclical Unemployment: Cyclical unemployment is caused by economic factors leading to poor performance by the economy. It is associated with the trade cycle. During a slump (business cycle recession), prices are too low and profit margin disappears.  In this case, investment decreases and unemployment increases as there is not enough aggregate demand for the labour.
  • Technological Unemployment: Due to technological development, capital intensive techniques have been invented. The use of latest technology does not require a large number of labourers because most of the work is completed by machines. This decrease in demand for workers is known as technological unemployment.
  • Industrial Change: The establishment of new industries decreases the demand for the products of old industries.  For example, the rapid increase in the demand for the products of Japan’s industries is one reason for greater unemployment in some European countries.
  • Keynesian Unemployment: According to Keynesian theory of income and employment, unemployment occurs due to lack of effective demand i.e. a decrease in demand for a product, which causes reduction in its production and workers are laid off. If effective demand is less, then production of goods and services will fall which will further result in unemployment of labor force. Another feature of Keynesian unemployment is that unemployment of labor is associated with unemployed capital as plant and machinery become idle during the period of depression.
  • Urban Unemployment: Due to availability of more facilities in urban areas, more and more people tend to move to urban areas. The employment opportunities are not enough to absorb all those people who come to settle in urban areas. This situation creates urban unemployment.
  • Disguised/Unemployment: Disguised unemployment is that situation when some people are employed apparently, but if they are withdrawn from this job, total production remains the same. It is also called underemployment. In under-developed countries, there is 20 to 30% disguised unemployment in the agriculture sector. If there is disguised unemployment, measures should be taken to employ these people in other sectors of the economy.
  • Frictional unemployment/search unemployment. This is a type of unemployment caused by industrial upheavals such as power shortages, immobility labor, machinery breakdown etc. It occurs when a person may have been made unemployed in a certain area but vacancies exist in the same occupation in another area.
  • Voluntary unemployment or real wage unemployment: This is a type of unemployment where a person is able to work, work is available, but he is unwilling to work. Some degree of unemployment will always exist because some people do not want to find work due to idleness or their chosen way of life.
  • Residual unemployment: There will always be a category of unemployment consisting of people who, because of physical or mental disabilities find it very difficult to find work.  Some firms attempt to employ a certain number of workers from this group but not opportunities exist.
  • Hidden unemployment: Hidden (or covered) unemployment is the employment that is not reflected in official unemployment statistic, due to the way the statistics are collected. Because of hidden unemployment, official statistics often underestimate unemployment rates. Thus, it is almost impossible to have a situation of 100% employment (full employment).  In consequence, full employment is taken to mean an acceptable percentage of unemployment is taken to mean an acceptable percentage of unemployment (between 2 and 3%).
  • Involuntary unemployment: This occurs when people are actively looking for jobs at the existing wage rate but cannot get the job.

Causes of Unemployment

  • Lack of capital: The shortage of capital is the hindrance in the establishment of more industries and due to this reason, more employment opportunities are not created.
  • Lack of education and training facilities: Sometimes, employment opportunities are available for skilled and trained persons. The lack of education and training facilities may be another reason for employment.
  • Rapid population growth: The rapid increase in population compared to the overall growth of the economy and the available resources leads to unemployment. In many countries, the employment opportunities are not increasing at the rate of increase in labour supply.
  • Inadequate co-operant factors of production
  • Use of inappropriate technology in developing countries. Most developing countries use capital intensive techniques of production i.e. techniques that make use of more machines and less labour which displaces human labour and reduces chances of other people getting jobs.
  • Seasonality of jobs: This is especially important in developing countries where the agricultural sector is dominant. Changes in weather leads to seasonality in agricultural production which causes seasonal unemployment. Seasonality of jobs also affects the tourism sector whereby unemployment tends to be high during off-peak seasons
  • Job selection
  • Rural to urban migration: The massive movement of the young and energetic people from the rural to urban areas leads to urban unemployment owing to the limited job creation capacity in the urban areas
  • Lack of product market
  • Inappropriate education system: The education systems in most developing countries were adopted from developed countries. These education systems are geared towards white collar jobs and this does not conform to realities in developing countries most of which have high populations and low rates of white collar job creation in the formal sector.
  • Poor planning and mismanagement
  • Poor government policy on informal sector
  • Unfair competition leading to closure of
  • Low demand for goods and services.
  • Minimum wage laws: some people do not mind working for lower wages than minimum levels set by the government. These laws do not ease the problem of unemployment instead they cause more people to be laid off by firms that can’t afford to pay them

Measures to Solve Unemployment

  • Use of appropriate technology: The Government should adopt pricing policies that encourage the use of appropriate technology. This can guide investments towards labor intensive technologies in different sectors which are appropriate to labor surplus economies of many less developed countries. Labor-intensive techniques must be adopted in such countries in order to absorb more china, Indonesia and tyland are the leaders in the clothing sector.
  • Decentralization of Industries and markets: Industries must be established in different regions of a country. The establishment of industries in various parts of the country will provide employment opportunities to greater number of people.  It will also induce people not to migrate to other areas of the country.
  • Diversification of economic activities: The diversification of agricultural and industrial production can be also agricultural and industrial goods are produced then there will demand for more workers. As a result, creation of alternative employment opportunities will increase. This reduces seasonal unemployment in areas that over depend on tourism and agricultural activities.
  • Greater use of natural resources: Greater use of natural resources can also increase the employment opportunities. In most of the countries including Kenya, there are uncultivated lands. If these lands are brought under cultivation then more and more people can be employed.
  • Use of fiscal and monetary Policies: The Government can use fiscal and monetary policies to create more employment opportunities. Central bank can encourage advancing more loans to those projects which can provide employment to greater number of people. Similarly, the expansion of public work programmes can solve the problem of unemployment to a greater extent.
  • Adopting relevant education system and training facilities: Sometimes, there is greater demand for skilled and educated people. The education and training facilities should be provided to the individuals to enable them to increase their knowledge and technical skill.
  • Control of population growth: The rapid increase in population is the main cause of unemployment in less-developed countries. The Government should take some steps such as encouraging family planning and educating the population on the need for small families to control the population growth in an effort to solve the unemployment problem in the long run.
  • Employment offices: The Government should establish employment offices to various parts of the country. These offices can co-ordinate between employers and jobseekers.
  • Encouraging employment creation in the private sector: Government policy can support private sector development by creating an enabling environment for the private sector to develop. This includes providing incentives such as micro financing to offer capital to small and medium term enterprises, developing infrastructure, provision of cheap land, lowering the tax rates on profits, offering subsidies etc.
  • Encouraging foreign direct investment: This can be achieved by providing a conducive political and economic environment to encourage the inflow of foreign capital.
  • Encouraging the use of domestic goods: This tends to create employment domestically. Considerable use of foreign inputs and goods should be reduced since such usage generates employment abroad and not domestically
  • Intensive rural development by the government
  • Providing appropriate education and training that provides relevant skills & knowledge
  • Delocalization of firms to reduce urban unemployment which is brought about by rural-urban migration
  • Ensure there is political stability to boost foreign investors’ confidence
  • Protect local industries from unfair foreign competition
  • Promote the informal sector
  • Increasing government expenditure on projects that can create more jobs.
  • Development of the informal sector
  • Favorable government policies i.e. raising money through taxes, training programs to the unemployed on how they can raise their skills
  • Marketing and research (information): this leads to better prices that encourages producers or investors to expand production scale and creates need for labor reducing unemployment.