The Government Should Play an Active Role in Solving Unemployment
Unemployment rate is the litmus paper of a country’s economy, security and its overall production force. When unemployment rate increases, consumption rate decreases. Since unemployed rate is high, the people spending power struggles, causing the economic wheel to stop rotating. At the same time, high unemployment rates indirectly induce a widespread of insecurity within the general population which very likely cause social unrest and increasing crime rate. An unsettled society is never attractive to investors, and this will cause the country to lose investment which is a major solution to unemployment.
Therefore, to avoid this vicious cycle to keep repeat, government needs to step in and play an active role to resolve the unemployment problems. Here are several policies that government can implement to improve the unemployment situation: Education and Training Education and training are necessary to obtain the long-term growth and to provide job opportunities for the entire workforce. It is essential to encourage individuals to pursue further education and training as it will enhance their human capital and place them in a better position as wage earners.
The government should aim is to educate the youth and unemployed to equip them with the adequate skills for them to compete with those experienced and enable them to find jobs in developing industries. Programme like the “Support to Human Resources Development through Vocational Education and Training Project”, funded by the EU, its aim is to develop a qualified and skilled labour force. The project is based vocational education and training programmes, in line with business demands, aims to reduce unemployment and poverty in the eight provinces of Eastern and South-Eastern regions of Turkey, which have the lowest employment rates.
Education and training is never the fastest solution to unemployment, but the best cure in long term. Employment Subsidies It is always expensive and tedious to introduce on job training to the long term unemployment, and this is why most firms would rather not employ the long term unemployed workers. To deal with situation like this, government can encourage firms to employ with incentives such as tax discount or subsidies for taking on long term unemployed. This will help to boost the confidence level of unemployed and encourage them on the job training.
In a study done by the World Bank on the effect of employment subsidy on the employment rate in Turkey; one of the high labor tax country. In Turkey, combined employer-employee contributions constitute 36. 5 to 42% and income tax ranges from 15 to 35% of the individual’s gross wage. With the government incentive plans and subsidies to encourage investment and employment, there’s a significant net increases in registered jobs ranging from 4% to 13%, whereby 40% of it is long term unemployed workers. Improve Labour Market Flexibility
It is argued that the high unemployment rate in Europe is due to restrictive labour markets which discourages firms from employing workers. Using Dutch as example, for the passed two decades Dutch unions and the government, have been in struggle against unemployment. This pushes the government to agree on increasing labor market flexibility. The policy started off with abolishing maximum working weeks and making it easier to hire and fire workers may encourage more job creation. Result of the policy has been apparented, around ten percent of flexible jobs have been created in Netherlands over the years.
Although some will argue that increased labour market flexibility could cause job insecurity among the workers, but undeniably this is a solution to overcome the unemployment problem. However, like United State’s President Barack Obama stated, “The American people, don’t expect government to solve every problem. ” Individuals should never rely on government for their future and livelihood. Government is nothing without its citizens, all these policies such as educations and tax subsidies are merely payroll paid by those people who still working and paying the government.
But soon when the taxed person feels unjust sweating and working just to pay the taxes in order for the government to meet this payroll, this person might giving up being independent, and relying on the government. This is just going to be a vicious cycle, and this is what that caused the breakup of the Soviet Union – no one was independent. Therefore, we should never depend on the government solely for answer to unemployment, individuals should also be positive and put in effort to overcome the unemployment problems themselves.