Unemployment, youth and the economy

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  • 8 years ago
  • Posted: August 22, 2013 at 8:31 pm

[pullquote]Spending a lot of valuable time to master complex formulas and concepts to end up as a boda boda rider is not amusing.[/pullquote]

Steve Biko wrote in Daily Nation that Kenyan youth have willingly chosen to suffer from dungeons of their laziness and ineptitude; that instead of either joining the informal sector or borrow loans from the government to start business enterprises, they desire to acquire a lifestyle of “playing PS, going out and drinking and eating weed cookie as they tweet and facebook”. I agree with Steve on a number of points that he raises especially on the point that self employment in businesses and informal sector offers opportunity to reduce unemployment rate among young people that stand at 48%. This figure translates roughly to 12 million unemployed youth.

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However,what Steve did not discuss are the market forces that determine economic situations, which in turn determine the level of unemployment. The market forces (including relevant government policies and intervention strategies) dictate the willingness any entrepreneur will have to invest and create jobs. The economic situation that discourages big investors from establishing enterprises in an economy are also very likely to kill small businesses that can be set up. Actually small enterprises do not have the capacity to absorb shocks from unpredictable economy.

Secondly, it is important to forecast on the number of youths who can be absorbed in the informal sector. If each of the 12 million unemployed youth became small businesspersons, and the economy is not in a position to increase disposable income, then giving the youth hopes in informal sector is in vain. Also, assuming that 5% of the unemployed could successfully establish small enterprises to employ two other people, the level of unemployed would decrease by 15%, which would still leave over 10 million youths without jobs. When on the other hand economic growth is such that it attracts entrepreneurs to invest, then large scale investments will automatically create jobs, open up the markets, which will in turn generate demand for goods and services that the youth are more than willing to be associated with.

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Instead of encouraging graduates to enter into businesses that non-schooled population can perform better at, the government should identify the sectors that are under developed, which, if invested in, will open up the job markets for the educated (or semi-educated) youth. One such sector is Information and Technology. I would like to repeat, spending a lot of valuable time to master complex formulas and concepts to end up as a boda boda rider is not amusing.

In summary, well performing economies generate jobs in all sectors of the economy due to increased disposable income and money circulation. An under-performing economy will always generate higher unemployment rates, and the victims of such economic decline should not be vilified.

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