Economic Chapter 12: Economics of unemployment 

Definition of unemployment

Unemployment  refers  to the  failure  of  member   of  the  labour  force  to  obtain  the job  at  the  ruling wage rate despite  his ability  and willingness   to work.

Unemployment  is divided into two broad categories:

(a) Involuntary unemployment.  This  is a situation   where  a member   of  labour  force  is willing   and actively  looking  for jobs  but cannot  find employment   at the ruling  (ongoing)  wage  rate.

(b)  Voluntary Unemployment.  This  is  a  situation   where  jobs   are  available   but  a  member   of  the labour  force  is not willing  to take on the job  at the ruling  (ongoing)  wage  rate.

Causes of Voluntary Unemployment

1. The low unacceptable current wage. Such individuals prefer a higher wage.
2. Rich family background. Some individuals come from rich families and they are not willing to do certain jobs of low status.
3. Strong desire for leisure by an individual.
4. Expectation of better paying alternative jobs. Some people may prefer to remain unemployed hoping to get better job in future.
5. Early retirement. Some individuals can decide to retire before retirement   age and therefore   they become voluntarily   unemployed.
6. Desire by certain workers to remain at home and attend to their families for example house wives.
7. Existence of money reserves. Some people might be having a lot of money on reserve   and  they can survive  even if they are not working.
8. Existence of unfavorable working conditions.
9. Laziness of some workers.

Rate of Unemployment

Rate of unemployment refers to the ratio of unemployed labour force to the total labour force.

Example 1

Suppose a country has the total labour force of 15million people and 13 million people are employed. Find the rate of unemployment.

Solution

Employment multiplier (E.M)

This refers to the number of times a change in primary employment multiplies itself to give a final change in total employment.

Suppose the government   increases its  expenditure  on  sugar  production, it will  create  employment   in this sector  which  is primary  employment.    Due to increased sugar output, employment opportunities will be created   in other   sectors   for example   in transport,   storage,   processing   etc.  This   is called secondary   employment.

Example 2                                                                                                     

Suppose   20 additional   people are employed   in a sugar cane plantation   so that secondary   employment increases by 40, find the employment   multiplier.

Under employment

This is the state of underutilization   of economic resources.  In case of labour, it is a situation where a person’s   capacity to work is under-utilized

Under employment   can be experienced   under the following conditions

1. Labour working fewer hours than desired.
2. Working  full  time  in  a socially   un  desirable   activities   even  if they  are  productive    for  example prostitution,   thieves  etc.
3. Doing a job which  is not  in line  with  one’s   training   for example   a lawyer  working   as a History teacher  or as a farmer.
4. Working full time  in un productive   activities  due to lack of cooperate   factors  for example  peasants using  digging  sticks  instead  of hoes.
5. Working full time but getting wages below the wage fixed by the government.
6. Being fully employed  but not wholly  effective  because  of poor  attitude  towards  work.

 

Types of unemployment

(a) Seasonal unemployment.  This  is the form  of unemployment   where  labour  is unemployed   during certain  periods  due to seasonal  changes  for example  change  in the climatic  conditions   may render people  previously   employed  unemployed   especially  in the agricultural   sector.

Solutions to seasonal unemployment

1. Diversification of economic activities. Individuals  should be involved   in a variety of activities   as a way of increasing their employment   opportunities.
2. Promoting industrialization. Industries are not affected by bad weather and other natural factors
3. Irrigation in case of agriculture during dry seasons.

(b)  Technological unemployment.   This   is  the  type  of  unemployment  caused   by  change   in  the techniques   of production   where  machines   replace  labour  for example  the use  of capital  intensive techniques   of production   results  in some people  being replaced  by machines.

(c) Structural unemployment.  This is a long-term   form of unemployment    resulting   from structural changes in the conditions   of supply and demand in the economy.

Causes of structural   unemployment

1. Changes in fashions , tastes or reduction in demand for example  when tiled houses   replace   iron roofed   houses,   the makers of iron sheets become unemployed.
2. Changes in production techniques which   reduce   the demand   for labour   for example   use of capital intensive   technology where machines   replace labour.
3. Exhaustion of supply  of major    natural  resources  for  example   mining   which   makes   miners unemployed e.g. exhaustion of copper from Kilembe mine
4. Rural urban migration due to regional imbalance  between rural and urban areas.
5. Political instability
6. High population growth rates in the structure  of the economy.
7. Lack of co-operant factors of production  for example capital.
8. Laying off of workers involuntarily and permanently due to government   policy
9. Technological changes which make the economy to demand for capital intensive then labour intensive technology.
10. Labour immobility where labour cannot move from a declining industry to growing industry due to lack of adequate skills.
11. Poor management that causes collapse of industries and production units

12. Structural rigidities in economy such as breakdown of the main transport systems.

13. Seasonal unemployment especially in agriculture.
14. Company reallocation. For example, if a region only has one airport and that airport moves to a new area, the employees may become structurally unemployed.

Solutions to structural unemployment

1. Encouraging flexibility in production to enable industries   to change   with the changes   in tastes and fashions.
2. Encouraging the use of appropriate technology which suits the socio-economic conditions of the economy.
3. Diversifying labour skills and retraining workers whose skills are no longer   in demand.   This enables the workers to cope with the changing   structure of the economy.
4. Controlling rural urban migration by making rural areas attractive for example establishing   good economic   and social infrastructure in rural areas.
5. There is need for serious man power planning to forecast future trends of labour demand  in the economy.
6. Ensuring political stability
7. Reducing the unnecessary laying off workers by the government

(d) Frictional (normal/transitional) unemployment.   This  is the  short  term  form  of unemployment which  arises   when  the  labour   force  is unemployed    in the  process   of  moving   from  one  job   to another.  This is because workers and firms may take time to locate each other.

Cause of frictional unemployment

1. Lack of information about the available job   opportunities   on the   side of the unemployed workers.
2. Geographical immobility of labour that is where  labour is not willing   to move   to other   areas where jobs can be found.
3. Lack of information on the side of employers of the existence  of those unemployed    whom they can employ.

Solutions to frictional unemployment

1. Providing workers with information about the availability  of jobs through   advertisement    of jobs in Newspapers,   Radio etc.
2. Providing firms with information about unemployed workers.
3. Encouraging labour mobility such that the unemployed  can easily move to areas where there are jobs.

(e) Residual unemployment.   This is unemployment     resulting   from physical   or mental   disabilities which makes the worker unable to work.

(i)  Disguised    unemployment.      This  is  the  form  of  unemployment     where   the  marginal   product,  of labour  is  zero or negative   and  a  worker   can  be  removed   from the  job  without  affecting   total output.

(g) Search    (Graduate)    unemployment.   This is the form   of unemployment where newly qualified individuals   are not working but are busy looking for jobs.  This is mainly due to poor manpower planning.

(h)  Hidden    unemployment.     This is the form of unemployment    where   labour is employed in a low grade occupation   as compared to the high skills and qualifications attained   for example a female university   graduate   becoming   a house girl.  Or   It is where  one  does  a job  which  is not  in line with   one’s    educational    training    and   qualifications     for  example    an   engineer    working   as   a secondary   school Mathematics   teacher.

(i) Casual (Erratic)   Unemployment.    This is where a worker  becomes   unemployed   when  work  is completed   for example  people  working   on contract such  as building contractors.

j) Persistent unemployment. This is where people   remain unemployed whether it is a depression   or a boom (business   cycle).

(k)  Open-Urban Unemployment.    This is where educated people are actively   looking for jobs in urban areas but cannot find them.   It is mainly  caused  by increased  number   of job  seekers  from  rural  areas  as a result  of Rural  Urban  migration.

(l)  Keynesian (Demand Deficient/Cyclic/mass/general) unemployment.      This is  the form of unemployment     which  is  caused   by  deficiency  in  aggregate demand   for  goods  and  services especially   in times  of economic  depress ion.

General causes of unemployment in developing countries

1. Rapid growth of population. The fact that population grows faster the rat rate at which employment is created; many people remain unemployed.
2. Existence of the defective (poor) education system. The system is theoretical in nature therefore prepares job   seekers   instead   of job   creators.   The white-collar    jobs   are in short supply yet the turnover of the   education   system is high, leaving many school graduates   unemployed.
3. Rural urban migration.    Due  to  rural-urban    wage   gap  and other   push   and  pull   factors, most people  migrate   from  rural  areas to urban  centers  primarily   in search  of better  wage  employment opportunities which  are  not always   available   in  urban  centers.   Since   the  rate  of  rural  to  urban migration   is higher   than  the  rate  of urban  employment    creation,   many migrants   from  rural  areas become unemployed   in urban centers.
4.  Use   of   inappropriate     technology:  Use of capital    intensive    production   technique by some industries reduces the demand for labour hence unemployment.

5. Discrimination and sectarianism in labour market.  This is based on tribes, gender, religion, political   ideologies    and many other socio- economic factors.   This leaves   some members of the society unemployed    due to 1ack of connections.
6. Seasonal variations in economic   activity.  This is brought about by climatic changes especially in the agricultural   sector leading to seasonal unemployment,
7. The IMF structural    adjustment    programs.     Policies   like   privatization, retrenchment   of civil servants and demobilization    of soldiers   aimed at reducing the number   of government     employees as a way of reducing   government expenditure. This leads to short run unemployment,
8. Lack of information regarding the presence of jobs in the labour market. This leads to frictional unemployment.
9. Existence of political instabilities in developing   countries.  Political   insecurity   destroys productive infrastructures   and distorts production activities.    This greatly discourages   both domestic and foreign investment hence unemployment.
10. Lack of serious manpower planning by the government. Governments do not effectively   relate training in higher    institutions     of   learning    with   the   available     employment     opportunities. Consequently,   more labour force is produced   for certain professions   than the country’s   ability to absorb   the   trainees.   This   results   into   surplus   labour   supply    for   certain   professions     hence unemployment.
11. Excessive use of foreign expatriates at the expense of the local labour. This is common  in foreign    funded    projects,    NGO’s     and   in   businesses    owned    by   foreigners.    This    leads    to unemployment   of the local labour force.
12. Deficiencies in demand for some products. This forces some industries  to layoff   some workers hence unemployment.   For example the coffee industry.
13. Poor infrastructural facilities. This  is in form of poor   road   network,   poor   communication facilities etc. which lead to   low levels of investments   hence unemployment.
14. High levels of inflation in the economy.   This   increases    the   costs   of production     which discourages   both domestic and foreign investment hence unemployment.
15. Existence of natural disabilities in form of physical and mental handicaps   leading   to residual unemployment.
16. The poor land tenure system. Land tenure system refers to the rights regarding ownership   and use of land   in the economy.  Some people have plenty of land   which is under-utilized   while others do not have land at all and therefore they remain unemployed.
17. High levels of poverty. Most people earn low incomes and therefore  this leads to low aggregate demand.   This discourages   investments   hence low levels of economic   growth and employment.

 

Policies (Measures) being used to reduce unemployment   in Uganda

1. Educational reforms. The education system is being revised to suit the man power requirements of the country.  More  emphasis   is being  put  on vocational  education   in  order  to make graduates  job  makers  instead  of job  seekers.  Science based subjects are also being emphasized   by the government.
2. Economic diversification.  The   government    is diversifying    the   economy   in order   to reduce dependence   on one sector.  This  is being  done  by encouraging   the  growth  on   number   of sectors like  small  scale  industries,   fisheries,   tourism  etc.  in order  to increase   the  rate  of job  creation   in the economy.
3. Control of population growth rate. Measures  are being taken to control population   growth   rate through family planning,   emphasizing   girl child education   etc.  This is aimed at ensuring   that the population      growth    rate    matches     the    rate    of    resource     exploitation      hence     controlling unemployment.
4. Modernization and commercialization of agriculture. This is being done through the application of modem techniques  of production,   use of resistant crops and animals,   agricultural   research   etc. aimed at increasing production and reducing unemployment.
5. Encouraging the use of appropriate technology.  Use of labour   intensive   technology    is being emphasized   so as to absorb the surplus labour and reduce on unemployment.
6. Rural development and transformation. The government    is transforming    rural areas   through infrastructure development,   rural   electrification,    health, rural   water   and sanitation   etc.  This is aimed at increasing   economic   activities and employment   opportunities    in rural areas as a way of reducing rural urban migration.
7. Political Stability.   The    government     is   promoting     political     stability    through    democratic governance   and the use of the amnesty   laws.   This  is helping   to create  a conducive   investment climate  both  for local and foreign  investors  hence  creating  more  employment   opportunities.
8. Promoting investment.   The   government     is   attracting    foreign    investments     by   providing investment   incentives   to foreign investors   in form of tax holidays and tax exemptions.    This is helping to increase investment and creation of employment   opportunities   in various sectors of the economy.
9. Infrastructural development. The government   is setting up and improving   on the infrastructure for example   construction   roads,   transport   and communication    facilities,   as well as banks   and educational   facilities in the country.  This is aimed at creating more employment   opportunities.
10. Economic integration. This  is  aimed   at  expanding   the  market   for  goods   and  services   in  the economy  as a way of stimulating   investment   hence  creating  more  employment   opportunities.
11. Privatization policy. The government    is expanding   the private   sector   as a way   of creating efficiency   in production   hence creating more employment   opportunities.
12. Economic liberalization. The government    is removing   unnecessary    controls   from   economic activities   to allow private   individuals   to freely participate   in business   activities.   This helps to create more employment   opportunities   as many people are involved in trade.
13. Advertising of the existing jobs. The government  is guiding jobs seekers on the availability    of jobs by advertising   them in mass media.   This is helping to reduce on frictional unemployment.
14. Providing credit to the local investors. The government   is  providing   soft  loans  to  people   to enable  them  invest  and  create  employment    opportunities.    This is being done through   schemes like poverty eradication programs,   prosperity   for all funds etc.
15. Control of inflation. The government  is controlling   inflation   by using   restrictive    fiscal   and monetary  policies.     This    has    encouraged     investment     hence    creating     more    employment opportunities.
16. Land reforms. The government  is reforming    the land tenure   system   in order   to enable   the landless to have access and ownership   over land.  This  is being  done  by introducing   the  land  act which  stops  the eviction  of squatters  by landlords.

Theories   of unemployment

There   are two basic   theories   which   explain   the causes   and solutions   to unemployment.  These include;

(a)   The Keynesian   unemployment   theory

(b)   The rural urban migration  theory of unemployment

(a)  The Keynesian theory of unemployment

This   theory   was   put forward   Lord Keynes.   According    to Keynes,   unemployment     is caused   by deficiency   in   aggregate demand for   goods   and services in   times   of economic   recessions (depression).

Since  demand  for labour  is derived   demand,  it means  that  low  aggregate   demand   for final  products   forces   firms  to  reduce   their   output.   This discourages    investments    in the economy hence less demand for labour.

The level of unemployment Y_eY_f  is due to deficiency in aggregate demand   dg.

Lord Keynes based his theory on the following assumptions;

1. A closed economy with well-developed private sector
2. Full employment of labour and other factors of production
3. Well-developed industrialized economy
4. Existence of excess capacity in consumer industries

 

According  to  Keynes,  the  major  remedy  (solution)  to  unemployment  is  increasing   effective aggregate demand through the use of the following policies.

1. Reducing direct taxes. When income taxes are reduced, consumers’ disposable incomes increase . This enables consumers to increase their demand for goods and services.
2. Increasing government expenditure  as  a way  of  stimulating  consumption  and  production  of goods and services in the economy.
3. Subsidization of consumers. This increases consumption of goods and services which leads to an increase in investment hence more demand for labour.
4. Using expansionary monetary policies aimed at increasing money supply for example reducing bank rates, buying government securities to the public etc. This increases aggregate demand, hence increased employment.
5. Increasing wages for labour
6. Encouraging private investment by providing incentives. This encourages investment hence more demand for labour.
7. Trade policy by encouraging exports and discouraging   imports.  This promotes   domestic investment hence increased demand for labour.

Relevance (Applications)   of the Keynesian theory of unemployment   in developing   countries

To a small extent, the Keynesian theory of unemployment is applicable to developing countries in the following ways.

1. In LDCs, the element of industrialization exist, hence the theory applies. Increased demand for industrial products can cause demand for capital and labour employed to increase thus making the theory applicable.
2. Use of expansionary monetary policies increase purchasing power has tended to increase employment level in LDCs.
3. Measures to stabilize export earnings through IMF compensatory arrangements to ensure stable export market reduces the rate of unemployment.
4. Since investment climate affects employment, then it is true that improved investment in LDCs will expand employment hence relevancy of the theory.
5. The supply of co-operant factors e.g. labour can increase in the long run.
6. A fall in demand can lead to unemployment hence the applicability of the theory
7. Reducing direct taxes on consumers’ incomes can be used to increase household expenditure and aggregate demand which induces firms to increase output and employment thus making the theory applicable.

Limitations   (irrelevance) of the Keynesian theory of unemployment   in developing   countries

To a greater extent, the Keynesian theory of unemployment   is not applicable   to developing     countries in the following ways.

1. It is one sided. It is mainly concerned with demand deficiency yet unemployment in LDCs is basically from supply side hence inapplicable.
2. It assumes full employment. The theory is only applicable under conditions of full employment of resources, which condition do not exist in LDCs since there is excess capacity.
3. It considers industrialized economies. The theory is mainly concerned with industrialized economies like Britain and yet LDCs are agrarian economies.
4. It can be inflationary. As a solution to unemployment, Keynes prescribes policies, which raise the levels of aggregate demand such as increase in money supply which is always inflationary.
5. The theory is based on a highly monetized industrial economy. LDCs are basically subsistence where production is intended for producer’s own consumption.
6. The theory is drawn basing on the existence of a strong private sector in LDCs is weak.
7. The theory is based on a well-functioning product, money and factor markets which is not the case in LDCs.
8. The theory is based on assumption that firms respond quickly and effectively to change in demand. Firms in LDCs due to structural difficulties tend not to respond quickly and effectively to demand.
9. Keynes based his theory on investment multiplier as a major contributor to employment. In LDCs, it is export multiplier that contributes more employment than investment multiplier.
10. The theory of unemployment was based on a closed economy. LDCs economies are open in that they have trade interactions with others.
11. Keynes did not consider the causes and solutions to other types of unemployment, for example seasonal, structural and frictional unemployment   which are prevalent   in developing
12. Most industries in developing countries are located in urban areas. Therefore   setting up more industries in urban areas would lead to rural urban migration   hence open-urban

(b) Rural- urban migration   theory

• Rural urban migration  refers   to  the  movement   of  people   from  rural  areas  to  urban   areas   in search  for better  opportunities.   These are as a result of push and pull factors.
• Push factors are those which tend to push people   from rural   areas.  That is the unfavorable factors in rural area.
• The pull factors are those which attract people from rural areas. That is the favorable factors existing in urban areas

Causes of rural urban migration

1. The wage-gap between the urban and rural areas. People move to towns in search for higher wage earning opportunities.
2. Availability of jobs in towns. People move to towns with the hope of securing urban jobs.
3. Availability of social amenities such as access to clean   water,   power   supply,   good   schools, hospitals, recreational   facilities   etc.  in urban  centers   attract  people   from  rural areas  to urban centers.
4. High population pressure on land in rural areas which leads to land shortage. Therefore the land less are forced  to move  to urban  areas to look  for better  opportunities.
5. Political insecurity in rural areas. These include  rebel  activities,   wars,  cattle  raids  which  push people  from rural areas  to towns.
6. Social-cultural factors existing in rural areas like witchcraft, circumcision,    forced marriages, genital mutilation   etc.  force those  who  are  opposed   to these  cultures   to  seek  for refugee   urban areas.
7. 7. Inappropriate education system which trains people for white collar jobs that are found in urban areas. In addition,   students   migrate   from   rural   areas   to urban   centers   in search   for better educational opportunities.
8. 8. Use of capital intensive production techniques  in agriculture   in rural  areas  for  example   use  of tractors  reduces  the  demand   for  labour  in rural      Therefore   the surplus labour migrates   to urban areas to look for jobs.
9. Occurrence of natural calamities for example drought, pests and diseases, poor soils negatively
10. High population growth rates in the rural area leads-to population explosion where population exceeds the available resources    especially   land.  Those   that cannot   be accommodated     by the limited rural resources migrate to urban areas in search of opportunities   and economic survival.

Consequences of rural urban migration

1. Open-Urban unemployment. In most  cases  those  who  go  to towns  in search  for jobs  fail  to get them.   They end up on streets still looking for jobs.
2. Increase in urban dependants. Those who fail to get jobs   end up being dependent   on few working relatives hence increased dependence
3. Development of slums  and  the  related social  evils  for  example   prostitution,    easy  spread   of diseases,  high crime rates
4. Shortage of social amenities (facilities) in urban areas. For example   shortage of health services, educational   services, transport   facilities, poor housing etc. due to overcrowding   in urban areas.
5. Increase in the cost of living in urban areas. This is due to increased demand   for goods and services as compared to the limited supply.   This leads to inflation.
6. Low agricultural output as the energetic youth migrate to the urban areas leaving the young and the old in rural areas.
7. Reduced government tax base. This is due to a high number of people who are unemployed    in urban areas.
8. Balance of payment problems are likely to result due to a reduction in food production   in rural areas.   This forces the government   to import food products.
9. Labour exploitation in form  of under  employment   as employers   enjoy  cheap  labour  from  rural areas
10. Increased government   expenditure   on provision   of social services.  Rural   urban   migration increases government   expenditure   as government has to increase the provision of socio-economic sustaining requirements   for the fast growing urban population.

Policy measures to reduce rural-urban migration

1. Rural industrialization. Industries   can  be  set  it  its  rural   areas  in  order  to  create   employment opportunities   in the rural  areas  and  discourage   people  from  migrating   from  rural  areas  to urban centers  in search of employment   opportunities.
2. Education reforms.  The education   system should be made practical   and relevant   for living in rural  areas  in  order  to  avoid  migration   of  educated   people   to  urban  areas  in  search   for  white collar jobs.
3. Provision of social and economic infrastructures   such   as banks,   roads,   rails,  school,   health facilities,  electricity  and recreational   facilities    to make  rural  areas  as attractive  as urban  centers.
4. Ensuring political stability. This avoids   a situation   in which   people   insecurity   in rural   areas migrate to urban centers for safety.
5. Stabilization of agricultural prices to minimize rural urban income gap. This can be done by finding new markets  for agriculture   products   whose prices   are high.  It can also be achieved   by processing   agricultural   products to add value.
6. Encouraging the   use of   appropriate  techniques   of  production   to   provide    employment opportunities    to  rural   population    instead   of  using   capital   intensive   techniques    that   displace labour.
7. Diversification of economic activities in the  rural  areas   to  reduce   dependence   on  nature   that causes  seasonal  unemployment   and seasonal  migration   of people  from rural to urban  centers.
8. Rural support schemes and credit schemes. These   are systems,   which need to be created   to stimulate the productivity   of both small and large agricultural   farms.  These  include  making  more effective   and  efficient   the  rural  institutions   directly   connected   with  production   such  as banks, money   banks   lenders,   public   credit   agencies   and  provision    of  services   such  as  technical    and educational   extension  services,  storages  and marketing   facilities  etc.
9. Establishment   of irrigation schemes as well   as research    into drought   and disease   resistant varieties to avoid seasonal unemployment.
10. Population control through family planning as a means of increasing employment   in the long run.  This  is because   reduced   population   growth  rates  reduce   the  number  of  future  jobs   seekers which  is one of the primary  causes  of rural- urban  migration.

Manpower planning

This is government   attempt to influence,   direct and control educational   priorities   and investments    in accordance   with the future human resource needs of the country.

Causes of manpower problems in developing countries

1. Poor education system. The education  system tends to train job seekers rather than job creators (makers) that is, theoretical   subjects are emphasized   at the expense of practical subjects.
2. High levels of illiteracy and low skills. The  majority   of  labour  is unskilled   and  less  educated skills  necessary  for economic  development   such as engineers,  doctors,  etc. are still wanting.
3. Poor manpower planning whereby   in certain   sectors,   there   is excess   labour   supply   while   in others, there is labour shortage (Arts and Science related employment).
4. Unemployment problem. This   is due to high population    growth   rates   beyond   the   country’s capacity to create jobs.
5. Excessive use of expatriates. This limits the citizens   to take up vital positions    since the expatriates   are trusted more than the nationals.
6. Poor standards of living. This is due to low incomes   and malnutrition    which   reduces    labour productivity   and efficiency.
7. Negative attitudes towards work. Many people have poor attitude   towards work.    They prefer leisure to work and they believe in making easy and quick money.
8. Brain drain. This  is the  flow  of  skilled  and  educated   manpower   from  one  country   to  another. This is mainly due to political instabilities,   under employment,   poor working conditions   etc.

Possible solutions   to the manpower problems in developing countries

1. Education reforms.  The education   system   should   be made practical   and relevant.    Vocational subjects should be emphasized   to encourage job creators.
2. There is need to train labour in accordance with the socio-economic needs of the country.  This can be implemented   by the ministry of economic development   and planning.
3. There should be a reduction in the use of expatriates and more trust should be put in the local manpower.
4. Industrialization. Industries    should   be   set up   especially    in   rural   areas   in   order    to   create employment   opportunities  in the  rural  areas  and  discourage   people   from  migrating    from  rural areas  to urban  centers  in search  of employment   opportunities.
5. Encouraging the   use   of   appropriate   techniques    of production    to   create    employment opportunities   for the population   instead of using capital intensive   techniques that displace   labour.
6. Population control through family  planning  as  a means  of  increasing   employment    in  the  long run. This is because reduced population   growth rates reduce the number of future jobs seekers.
7. There should be improvement in the wages paid to workers so as to improve on their standards of living.  This can help to improve on labour productivity.
8. Brain drain  can be solved  by the government  adopting strict emigration laws and  even  the home remuneration   package  of the educated  people  should  be improved.
9. Diversification of economic  activities  in  the  rural  areas  to  reduce   dependence    on  nature   that causes  seasonal  unemployment   and seasonal  migration   of people  from rural  to urban  centers.

Ways of attracting foreign investment into the country

• provision of incentives
• privatization
• increasing international publicity
• liberalizing of economy
• political stability
• improving infrastructure
• economic stability

Revision questions

Section A questions

1  (a) Distinguish   between  seasonal  unemployment   and demand  deficient  unemployment.

(b) Give two solutions to seasonal unemployment   in an economy.

2  (a)  What  is meant  by structural  unemployment.

(b)  Mention two causes of and two solutions to structural unemployment    in our country.

3  (a) Distinguish  between  frictional  unemployment    and residual  unemployment.

(b) Give any two solutions to residual   unemployment   in your country.

Section B questions

1 (a)  Account  for open urban  unemployment   in your country

(b)  Explain  the measures  being  taken  to tackle  unemployment   problem in   your  country

2  (a)   What,  according  to J.M,  Keynes  are the solutions  to unemployment   in developing   countries

(b)   Explain the limitations of the Keynesian   theory of unemployment    in developing   countries.

3  (a)   Explain  the Keynesian   theory  of unemployment

(b)  To what extent are the Keynesian unemployment   policies relevant to your country?

4  (a)   Distinguish   between  structural  unemployment    and disguised  unemployment

(b)  To what extent is unemployment    is a result of structural factors in your  country.

5   (a)  Define  the term  “manpower   planning”

(b)  Discuss the major manpower   problems in your country.

(c)  Suggest the possible remedies to manpower   problems in your country.

6. Explain the causes and solutions to the following  forms  of unemployment

(a)  Frictional unemployment

(b)  Keynesian unemployment

(c)  Cyclical unemployment