Is this labor market efficient? why or why not? Discuss some of the factors that

Question

Is this labor market efficient? why or why not? Discuss some of the factors that may hinder efficiency of the labour market in your home country. What could be done to make the labour market function more efficiently?

Total Male Female 2015 2016 2015 2016 2015 2016 Population 15 years old and over (Thousand) 57 475 28 713 25 454 4 842 20 612 3 259 28 761 28 385 20013 17 896 2710 15 186 2 117 8 372 28 828 20 411 18 312 2742 15 570 2 099 8417 29 090 8701 7559 2 133 5426 1142 20 389 29 539 9 153 7 962 2 070 5 893 1 191 20 385 Population Labour force Employed 58 366 29 565 26 275 4 812 21 463 3 290 28 802 Agriculture Non-agriculture Unemployed Not in the labour force 70.8 63.5 10.3 11.5 50.0 Labour force participation rate Employment rate Unemployment rate Non-agricultural unemployment rate 50.7 44.3 45.0 11.1 13.0 70.5 63.0 10.6 11.9 29.9 26.0 13.1 17.3 31.0 27.0 13.0 16.7 11.3 13.4 15-64 age group 54.6 55.4 48.3 49.2 11.3 13.0 Youth unemployment rate (15-24 age) 20.0 19.2 Labour force participation rate Employment rate Unemployment rate Non-agricultural unemployment rate 75.8 76.2 67.6 68.2 10.5 11.5 18.4 33.3 34.6 30.0 13.3 17.3 16.8 22.4 20.5 28.8 13.4 11.6 13.4 10.8 11.9 18.7 Figures in table may not add up to totals due to rounding

Explanation / Answer

Data indicates that labor market is not efficient. From efficiency, full employment of all the workers in the labor force is not necessary. There is an unemployment at full employment level also (natural rate of unemployment) and so full employment of the entire labor force is neither desirable nor required. From efficiency, there should be a clear relationship between worker incentives, there is an appropriate promotion programs at work and there is no discrimination on the basis of gender or race. Workers should be allocated in their most efficient use.

The major reasons for inefficiency include gender discrimination, higher rate of unemployment among the youth, higher unemployment rate overall. Note that in 2015 employment rate was just 44 percent of the population which also indicates that the only half of the population is in the labor force. Generally the natural rate of unemployment is 5 percent but here, actual unemployment rate has reached 11 percent which is higher than its natural rate. Unemployment rate for men is around 11.5 percent while for women it is quite higher at 16.7 percent. This shows that women are on an average less preferred to men, for the same job. These facts indicate that all is not well in the labor market.

Some corrective measures can be taken. More women should be hired. The participation of population in labor force is low which should be encouraged. Baby boom generation is retiring so working wage population must increase. Conducive environment for working, job promotions, performance appraisal, and other methods should be adopted.

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