How Surging Global Unemployment Rate Blemishing The World Economy

There have been sufficient empirical researches that underscore a strong link between a nation’s fiscal scenario and its employment market. This can be clearly indicated through example of emerging economies like the Middle East and African nations like Nigeria, South Africa and Egypt, who have come out of their shell and have proved themselves as one of the economically powerful nations on a global platform. These federations have succeeded by generating high-paying jobs for nationals as well as global expatriates.

‘Rome was not built in a day’ and this idiom aptly describes the economic upsurge of the mentioned countries. The foremost reason behind the grand accomplishment is much bigger and higher than figurative foreign direct investments (FDIs) or economic diversification programs. The reason is a single thought, a single mission and that is to eliminate the problem of high unemployment rate, which if not controlled can boil down the growth figures, to almost zero.

Apart from GDP, inflation and all the factors mentioned above, employment data has also been tagged as an important factor that affects global fiscal scene.

Right before disclosing here the deep impact of unemployment, let us first have an economy watch for the year 2014:

Global economy watch: 2014-15

According to International Monetary Fund’s world economy outlook, countries like the United Kingdom, Germany and Japan are not expecting a positive and elevated economic projection. The study clearly reflects that the global economy data has a mixed review to share wrapped with sweet and sour growth figures.

The good news is that the emerging economies, such as the Middle East and other Arab federations, are on the verge of another golden age of booming economy and an employment market that is shining bright with some of the excellent career opportunities. Therefore, the employment rate here is under control.

But for the global economy to flourish and reflect better projections overall, the employment rate altogether should go higher. The call is for uniformity in all the numbers and hard data.

Here’s a detailed view that will enlist countries, world trade volumes and other economic indicators along with their projection:

The weaknesses highlighted here were anticipated to persist for some time now but with brighter prospects of obtaining improved returns in the advanced economies; investors’ sentiments have started showing good picture. The inclination is now positive and is now favourable towards market risks.

After analysing the projections of both developed and emerging economies, let us have a look at the effects of unemployment and see through the ways in which it is hampering the a particular country’s growth:

The sour effects of unemployment

Part of macroeconomics, unemployment rates lay a very negative impact on the economy of a given nation and also guide the stock markets to some extent.

The global economy is recuperating, albeit slow. The last quarter of 2013 and the first quarter of 2014, i.e. until March 2014, the global economy was fumbling and owing to a stuttering fiscal scenario, the international labour market was also suffering severe blows.
Here are some of the blemishes that the economy and the society are bearing:

1. Loss of fiscal capital

This is a grave issue that the nations across the world are experiencing. The problem is that unfortunately both developed and emerging nations are susceptible to heavy debt crisis that asks for higher tax revenues in order to prevent a default. Now in situations wherein unemployment number is surging; every single jobless individual will be eyeing upon the basic right of unemployment insurance and will slowly suck money from the economy. This will ultimately lead to an increased deficits and tax revenue.

2. High bankruptcy rates

Economic growth and strength of the labour market are closely related. A weaker fiscal projection can’t catalyse job generation process and therefore, high unemployment rates shall persist. As a result, continuing joblessness can lead to ever-surging foreclosure rates resulting in higher bankruptcy rates and drooping home values. This is a significant negative contagious effect, unemployment rates can have on the fiscal scenario of a country and its constituting states.

3. Burden on industrial sectors

It’s not only government that has to pay the price of bearing the burden of high unemployment rate; the industrial sectors also have to incur heavy capital here. The situation of high unemployment rate will lead to a nation looking out for restocking their assets by increasing taxation on businesses. This discourages the industries to hire more workers. This can also lead to massive skill gap.

4. Cost to society and individual

Apart from economy, unemployment leaves a deep mark on the concerned societies as well. All such negative scenarios are surely going to hit the economy, ultimately. Crimes are likely to increase as wage-less individuals belonging to weaker sections of society, may seek to reach callous ways of fulfilling their economic needs.

Here’s a statistical exemplification:

The Image URL: http://www.whocrashedtheeconomy.com/larceny.png

There is one more aspect, which is associated with overall slower economic progress and surging employment rates and that is Vulnerable Employment. Let us unfold the strange co-relation between the two nasty elements.

Vulnerable employment: A result of economic crisis

Vulnerable employment is not directly related to the increased global unemployment rate; however, individuals employed in the vulnerable job roles are likely to go jobless if the economic condition of a country is not sturdier enough.
It is important for nations across the globe to have good fiscal scenario and strong institutional management so that jobs are secured and the employment rate remains stable.

Final words

Most of the global nations are witnessing poor growth figures. The reasons could be many but the most highlighted one is increasing unemployment rate. There are certain initiatives that can be taken so that the rate can be stopped from surging further:

· Governments of respective nations that are victimised at the moment should try partnering with financially powerful nations to assure a good fiscal boost

· The government should take initiative towards eradicating economic dualism

· The education system should be improved and initiatives should be directed towards lessening widening skills gap

· In-house businesses should be given a boost by giving more encouragement to locally manufactured and retailed products
With a mission to eradicate a nasty element from one’s own society and economy, countries across the globe together can definitely remove the problem of unemployment from its root.
(Image 1: Thinkstock, Image 2: Internation Monetary Fund, Image 3: whocrashedtheeconomy.com)

About the author: Vineeta Tiwari, a professional writer and blogger, has deep interest in world economy and job markets. She has written research-based articles on hot economies and expat activities as well. Currently, she is professionally associated with Naukrigulf.com.