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Opinion: Unemployment Rate Not Realistic

Unemployment is a very useful indicator of the general health of the economy and, more specifically, the incomes that support the livelihoods of the people. Measuring unemployment is not that
28 Apr 2018 10:00
Opinion: Unemployment Rate Not Realistic
Unity Fiji party leader Savenaca Narube.

Unemployment is a very useful indicator of the general health of the economy and, more specifically, the incomes that support the livelihoods of the people.

Measuring unemployment is not that simple. It requires us to understand a few basic definitions.

The first is the “total labour force” which is normally defined as the number of people that are above a certain age. In Fiji, it is 15 years of age. Of course, 15-year-olds should be in school, but they are counted in the labour force as they can legally work.

The second is that “unemployed” is defined as those who are not able to find work, but are actively looking for work. The “unemployment rate” is the ratio of this group of people to the total labour force.

This is the 4.5 per cent that the Government is waving around to convince us that only 40,000 people are unemployed in Fiji.

Unemployment reason

The reason many people are unable to find work and are not looking for work is because they have given up looking for work. If someone offers them work they will gladly take it. But because they have not found work for a long time, they have basically given up.

Many of our youths in the villages fall into this category. In the Census, these people were not counted as unemployed.

There are those who work for their own living. They grow their own food and fish for their meals. They don’t consider themselves as unemployed and looking for work. In the Census, these people were not counted as unemployed.

Then there are those who do not work full time. These part-time workers would jump at a full-time job. The Census may have treated these underemployed as fulltime workers and would again underestimate the unemployment rate.

Therefore, the unemployment rate paraded by Government is a serious underestimation of the level of unemployment in this country. I don’t blame the Government of the day for jumping on the gravy wagon. Any government would do the same. The problem is in the definition. We must therefore increase this low number to reflect the definitional deficiency of unemployment in a country such as Fiji.

Unemployment rate

This underestimation of the unemployment rate becomes evident when we compare it with the “labour force participation rate”. This measures the ratio of the labour force that is participating in the labour market.

It stood at 57 per cent in the recent Census. This means that a huge 43 per cent of the labour force are not in the labour market. Excluding the elderly and homemakers, we can safely presume that the rest would be unemployed. This confirms the large number that wish to work but are not looking for work and those in subsistence.

For us to be able to frame relevant and effective economic policies, we must estimate a realistic unemployment number. We know for sure that our unemployment rate is higher than 4.5 per cent. The signs are everywhere that people are struggling to get a job and that life is just difficult.

A good indicator is the increasing number of people trying to make a living by selling their wares along our streets. Based on observations, I would proffer a guess that the national unemployment rate is likely to be 10 per cent and double that for youth.

Need for data

For policy purposes, we need data on the unemployment rate in rural versus urban centers, amongst ethnic groups, amongst gender and amongst age groups. I expect unemployment to be higher in the rural than urban, with iTaukei than other races, with women than men, and finally, with younger people. This allows us to tailor make policies towards reducing unemployment in these segments of the population.

One thing is clear though that those without jobs are finding life very difficult these days because of the following decisions:

Rise in the Cost of Living: This is a big threat to the livelihoods of the poor. It’s heart wrenching to watch mothers at the supermarket checkout agonising over which items to leave out because they have insufficient money. The cost of living is not demand driven so demand management does not work. It is driven more by government policies especially taxes and exchange rates.

Compulsory e-Ticket: e-Ticketing is only appropriate in richer communities because they can afford to pay their bus fares in advance. Unemployed people do not have the money to pay their fares before they travel. They only have enough fare to reach their destination for the day. e-Tticketing penalises the poor.

Licensing fees: Rural dwellers who live on very small incomes from fishing in their own qoliqoli and selling their catch are being forced to pay licensing fees. This is unjust. They should be allowed to keep the small income that they earn to help their families

Small and micro businesses: In my view, the cash grant to small businesses is not effective. The best way to support small businesses is not to burden them with licensing and other charges.

We know the realities of our country. Life is extremely hard for everyone especially the poor and the less well off. Jobs are crucial in providing them with income. At the same time, our policies must not burden those that are poor.

Source: Unity Fiji Party

Feedback: jyotip@fijisun.com.fj

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