23 Feb 2011

Sample Essay: Causes of High Unemployment Rate Among Young People

The most recentsis continues to take its toll, and according to the International Labour Organization, young workers aged 18 to 35 years old may have been the hardest hit – resulting in a compelling rise in the population of unemployed young people all over the world (Moody, 2010). In a report published by the ILO entitled “Global Employment Trends for Youth,” the United Nations agency disclosed that by the end of 2009, there have been 81 million unemployed young people world-wide. This high unemployment rate “typically hovers around roughly double” the normal rate for the general global population (CBC News, 2010). Canada is no ex global economic criception. According to Statistics Canada, national unemployment rate was at 8.2% as of March 2010; and among youths, the rate escalated to 15.6% (CBC News, 2010). The Depository Services Program of the Canadian government points out that youth unemployment relative to that of adults is at a worse level since the country’s 1990-1991 recession (DSP, 2011). Closer scrutiny will reveal that the main causes for these dismal numbers are lack of skills; frictional unemployment; and minimum wages.

One of the most pressing needs for employers is a shortage in employee skills. Emerging evidence culled from the labour market implies that a good number of industries are confronted with a serious shortage of “high-skilled technical and non-technical workers” (OAYEC, 2003, p. 5). As the “Baby Boom” generation reaches retirement age, the current knowledge-based economy continues to demand a more highly-skilled labour force and the more recent concerns pertain to not having the sufficient number of workers who possess the required skills-set to match. A positive development in Canada is that the youth are generally staying in school much longer, and pursuing higher education that will be expected to meet the skill requirement for many industries (OAYEC, 2003, P. 5-6). For now, the dilemma is that a lot of young people find themselves marginalized from the labour market, mainly because the sill they have are not in demand, or simply because they do not have the required skills.

Participants in the labour market move in a very dynamic environment and the usually require time before they finally understand their objectives. In light of this, it is not therefore surprising that unemployed individuals and job vacancies do not co-exist. The reason for this is simply that fully-qualified unemployed people are yet to find job openings. This phenomenon is called frictionally unemployed. Job seekers collect information on available jobs, while employers go through a selection process from a line-up of candidates. Moreover, frictional unemployment has a high rate among young people because they have a low attachment to the labour force. More alternatives are available to them so, typically, they enter, withdraw and re-enter the labour market at will, more often. For instance, young people do not have the financial responsibilities like more adult workers and consequently, may elect to work for a while, then withdraw from the labour market – sometimes to travel perhaps or go back to school (ILO, 2010, pp. 9-10 and DSP, 2000).

Meanwhile, certain policies adopted by countries may exacerbate unemployment. One example of this in Canada is the minimum wage legislation. A minimum wage which “exceeds the competitively determined rate” will have a tendency to decrease the level of employment in a covered sector. To note, a covered sector refers to employees who are covered by minimum wage legislation (DSP, 2000). Thus, laws that mandate minimum wages for employees block the lowest skilled workers from the labour market – and this demographic is largely made up by young people. In order for an employer to justify a new hire, they need to calculate its costs: a new employee must be able to contribute more per hour than what they are actually being paid (Moody, 2010). Hence, less experienced young people with more or less the same qualifications will have to compete with more experienced adult workers for employment.

Conclusion

Global statistics show that the unemployment rates have escalated. It is alarming to note that the unemployment rate among young people, is typically double that of the general population. Three main reasons for this are lack of skills, frictional employment and minimum wages. In Canada, global trends are reflected in the country’s employment rate. A positive development in Canada is that students generally stay in school longer. This will be a great advantage in addressing the three causes of unemployment, which are largely associated with an individual’s skills-set.

References

CBC News. (2010). Youth unemployment skyrockets: OECD. Retrieved on 03 February 2011

from http://www.cbc.ca/money/story/2010/04/21/youth-unemployment-oecd.html

Depository Services Program. (2000). Youth Unemployment in Canada. Retrieved on

February 3, 2011 from http://dsp-psd.pwgsc.gc.ca/Collection-R/LoPBdP/CIR/824-e.htm

International Labour Organization. (2010). Global employment trends for the youth.

Retrieved on February 3, 2011 from http://www.ilo.org/wcmsp5/groups/public/—

ed_emp/—emp_elm/—trends/documents/publication/wcms_143349.pdf

Moody, Chris. (2010). Unemployment among young people way up; Does the minimum wage

play a part? Retrieved on February 3, 2011 from http://dailycaller.com/2010/08/15/

unemployment-among-young-people-way-up-does-the-minimum-wage-play-a-part/

Ontario Association of Youth Employment Centers. (2003). Models of economic impact in a

skills shortage context. Retrieved on February 3, 2011 from

http://www.oayec.org/res/userfiles/PDF/past_research/economic_impact.pdf

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