Ageing And Youth Unemployment

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“Unemployment refers to the condition of being unemployed, or to the number or proportion of people in the working population who are unemployed.” 1There are different types of unemployment, which includes frictional, structural, regional and cyclical unemployment. Frictional unemployment, the main type of unemployment is when people are between jobs. I am going to discuss the problems of ageing and youth employment and also the ways in which the government’s can respond to these problems.

“About 1.1 million companies, or 77 per cent of employers, hire fewer ethnic minority and older employees than they should based on the workforce composition in their location.”2 The experience of the seniors are a cause for them believing that they deserve higher wages. Furthermore all of that experience would go to waste if the seniors were to all of a sudden retire or chances of them passing away increase with age.

There is also an increased costs that have to be paid by companies for due to the health insurance benefits and extra safety precautions, which need to be taken in the work place to ensure that the seniors do not have any accidents in the work place. Pension costs are another factor, which companies have to account for in their total costs. With age comes less productivity according to Doctor Manjula due to the deterioration of the workers health. There hasn’t been any real kind of shift of employment away from manual occupations due to the health related problems. According to Warr, “older workers demonstrate less absenteeism, lower turnover, fewer accidents, higher job satisfaction and more positive work values than younger workers.”

Figure 1 – Impact of Supply Side Policies on Full Employment

Figure 1 depicts a shift of the aggregate supply curve for seniors when there is a decrease in the wage rates for workers. The diagram shows how companies tend to put companies profits ahead of the cost of jobs and this can be seen by the slight decrease in the wage rate of the workers.

A few measures, which can be undertaken by the government to prevent this ageing unemployment by subsiding companies to ensure, they keep a balance of aged with younger workers in the firm. The companies can also give the senior employees in the companies consulting roles. The companies can also encourage flexible work schedules, which encourage older workers to stay on the labour force. Another interesting idea for firms to try and do with their employees is to form some sort of retirement plan with the workers to make sure that all that experience won’t go to waste.

According to the OECD, ‘older workers are more expensive than younger workers, because of higher remuneration, fringe benefits and social contributions.’ But some companies don’t see this being the case. As the training costs for the younger workers will be far more expensive, companies are better of just keeping the senior worker. “Young men, are bearing the brunt of the recent rises in youth unemployment. While male unemployment among 18- to 24-year-olds was 46,000, higher at the end of May 2005. The type of jobs males have traditionally gone into such as mining, manufacturing and the armed services have been in long-term decline,” explains Ms Meadows. The only exception is construction.”3 Opportunity cost is the sacrifice made in the next best alternative. Companies have a choice between the senior workers with the more experience or on the other hand they can choose to go for the youth with more productivity capacity.

Let us take Product B be the Younger workers and Product A the Senior workers. Assuming that the youth workers are more productive than the senior workers, due to the companies desire to have younger workers, this will cause a shift in the PPF to the left position C from position B. However if the work experience of the older workers is cherished then the PPF will move to position A and in the long run the PPF will move to position Y.

Figure 2 – Production Possibility Frontier

To solve this problem of youth unemployment, the government can set up free training schemes for the youths. In addition they could publicize jobs, which can be undertaken by the younger workers by advertising. This will also make the workers more aware about what skills they have to offer to the labour market.

After carefully analyzing the unemployment of the youth and senior workers, I have come to believe that it is pivotal to have a balance of the workforce with the younger and senior workers as this means that all the experience of the seniors can be passed on to the younger workers if the companies take the chance to accept this fact. In the short run, for companies’ costs will be high for employing the younger workers but in the long run, after that experience is achieved they can be more productive.

References

http://money.guardian.co.uk/work/story/0,,1712837,00.html

http://money.guardian.co.uk/work/story/0,,1543484,00.html

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