Wed | Oct 21, 2020

How unemployment affects the economy

Published:Tuesday | June 9, 2015 | 12:00 AM



What causes unemployment?


THE DYNAMICS of employment in Jamaica change from year to year, increasing in sectors where production/output is increasing and decreasing in sectors where output is falling, assuming all other things equal.

Fundamentally, the number of persons actively seeking work but are unemployed is caused by three main factors:

1. Cyclical factors - including seasonal unemployment, for example, low tourism arrival in a particular season means fewer people are needed to work in the hotel and tourism industry that particular season. When arrival increases, employment increases, and so on.

2. Frictional factors - where people become unemployed while switching between jobs.

3. Structural factors - these are innate to the construct of the economy including, technological change for example, rather than fluctuations in supply and demand.


How has unemployment changed from last year to this year?


According to STATIN, the unemployment rate increased from 13.6 per cent in January 2014 to 14.2 per cent in January 2015. During this time, unemployment among young people age 20-24 and 25-34 increased from 31.4 to 33 per cent and from 16 to 16.8 per cent, respectively. Unemployment among the older workforce aged 45-54 fell from 7.1 per cent to 6.9 per cent, while unemployment among the 55 to 65 age group almost doubled, increasing from 3.3 to 6.3 per cent. Unemployment among retired people aged 65 and over increased marginally, from 2.1 per cent to 2.5 per cent from January 2014 to this year.


What is the unemployment distribution among men?


The male unemployment rate increased from 10.1 per cent to 10.7 per cent from January 2014 to January 2015. Unemployment among young men age 20-24 increased from 25.7 per cent to 29.4 per cent over the same period, and for men age 25-34 increased marginally from 11.2 per cent to 11.4 per cent. Unemployment among the older men aged 45-54 fell from 5.6 to five per cent while the increase in unemployment for men in the 55 to 65 age group was more severe; moving from 3.9 per cent to 5.8 per cent over the same one-year period. Unemployment among retired men aged 65 and over did not change much over the same period.


How has employment changed among women?


Unemployment among women increased from 17.4 per cent in January 2014 to 18.5 per cent in January 2015. Contrary to their male counterparts, unemployment among young women age 20-24 fell from 38.8 per cent to 37.5 per cent. Unemployment among women age 25-34 increased from 21 to 22.8 per cent, while unemployment among women age 35-44 increased from 13.4 per cent to 14.5 per cent between January 2014 and January 2015. Unemployment among retired women aged 65 and over increased marginally, from four per cent to five per cent over the same period of time.


How has unemployment changed among industries?


The number of employed people in the agriculture, hunting, forestry and fishing industry fell considerably from 207,100 to 199,700 from January 2014 to January 2015. Employment also fell in construction over the same period from 81,500 to 76,200, and in real estate and business activities from 70,600 to 64,500.

Employment increased, however, in the manufacturing sector from 71,700 to 78,900; in the transport storage and communication industry from 71,600 to 77,100; and in the community, social and pension activities from 54,200 to 57,900.


What is happening overall?


The country is not only hampered by domestic challenges, but has to remain flexible to withstand the effects of global economic conditions on the stability of the domestic economy. Falling oil prices seems to have led to an increase in production in the manufacturing sector, evidenced by the increase in employment figures in the industry. In the meantime, drought conditions continue to have a negative impact on farming, made evident by the falling employment in the industry. Overall, a balanced approach to economic growth is important. Economic conditions in the country remain fragile as the International Monetary Fund agreement enters its third year. Failure to deal with the water problem farmers have been facing will continue to have a negative impact on agriculture and gross domestic product in general. Unemployment among youth and women continue to be a concern. Overall, it is important to find avenues to create your own employment through entrepreneurship and enterprise.

- Dr Andre Haughton is a lecturer in the Department of Economics on the Mona campus of the University of the West Indies. Follow him on twitter @DrAndreHaughton; or email