An Useful Essay on Unemployment

An Useful Essay on Unemployment!

“Employment of a factor” refers to its use in the process of production. Employment of labour is an important macro-economic variable. In relation of labour, therefore, usually, the term “employment” refers to the employment of workers. A worker is said to be employed when he is engaged in an act of production. Usually, it is thought that a worker is employed at a particular wage rate.

When a worker is employed he feels that the work he is doing is an irksome act, because his labour services are used in the process of production. Not only is his leisure sacrificed, but he also feels the pain of strain, physical as well as mental, and a fatigue or tiredness after some hours of work.

The end result of employment is the creation of some type of utility or an addition to value, in other words, employment of inputs in the creation of output. It is from the value of this output that the factors employed are compensated for their economic contribution.

The concept of employment then is a complex phenomenon. This is because it has to be related to some notion of “value” of the work accomplished. The question of valuation is very important in this context, because employment cannot always be defined in terms of physical activity only. For instance, a film actress just lying in the bed on the set is engaged in gainful employment.

Economists have not paid much attention to the crucial problem of the measurement of employment. Keynes, for instance, treated the measurement of employment as essentially a trivial problem. However, this is erroneous thinking. Again, in developing countries, the problem of the measurement of employment becomes more serious. In these countries, the concept of employment has become vague on account of the weak wage system and the widespread practice of self-employment and of “unpaid family labour.”

Indeed, as Professor Sen says, for an economy of peasants and artisans, the concept of employment loses its straightforward meaning and economic activity merges into a wider complex of family-based activities. The criterion of being paid a wage does not apply, and that of productivity is difficult to use since it is not easy to separate out the productive contribution of any particular member of the family in the total family enterprise.”

According to Professor Sen, there are three important aspects of employment:

(i) the income aspect

(ii) the production aspect

(iii) the recognition aspect.

The income aspect indicates that employment of a worker yields an income to him, that is, when a worker sells his labour services for a wage, he is accepting employment in exchange for some earnings. A worker always wants that his earnings should be sufficient enough for him to maintain himself and his family. The firm, under the profit motive, considers what returns are received by it from the employment of the worker against what has been paid to him.

The production aspect of employment suggests that employment leads to generation of output. When a worker is gainfully employed, he must contribute to the increase of GNP. The worker’s employment is judged by the fruit of his labour. His marginal production must be positive. A worker, who is employed in an activity, but whose marginal product is zero, cannot be regarded as gainfully or fruitfully employed. He is said to be disguisedly unemployed.

In policy matters, sometimes the income aspect of employment is divorced from its production aspect. For instance, when government wants to increase the income of a section of society, it may do so by just expanding employment in that section, irrespective Of its productivity.

In such cases, income would rise due to employment, but the production may not in some public projects (like digging out holes and refilling them). Such disharmony between the income and production aspects of employment is dangerous for the economic growth of an underdeveloped country. It results in inflation rather than growth.

Thus, in selecting investment projects which are employment-oriented, it should be carefully determined as to what extent they are output-oriented, along with their income-orientation. In case of self employment, however, the income aspect is difficult to separate from the production aspect.

As Professor Sen mentions, “a family farm’s income comes from its production and contributing to the latter expands the former as well.”² From the income point of view, a person seems to be employed but, from the point of view of production, he may really be unemployed. Thus, his outward employment may actually be disguised unemployment. In this way, a contrast between the different aspects of employment may suggest contrasting estimates of employment and unemployment in the economy.

The recognition aspect of employment implies that employment gives a worker the recognition of being engaged in some occupation which makes his life worth living. “Employment can be a factor in self-esteem and indeed in esteem by others.”

In any society, an unemployed person just does not remain without income, but also receives no respect as unemployment is regarded as a mark of disgrace. Again, the type of employment gives him a specific social prestige. For example; a professor enjoys a higher social prestige than a cabaret dancer does even though both may receive equal earnings in their respective jobs.

Professor Sen, thus, specifies two important problems in the evaluation of employment in an economy: (1) identification of who is “employed” and who is “unemployed”, and (2) weighing of different types of employment in order to arrive at a total sum. In this view, thus, employment is not simply a number but a vector, i.e., a set of numbers giving employment of each kind of labour.