From day one in our respective offices, both President Obama and I have been obsessed with… jobs, jobs, jobs! So, it is no wonder that I started my reading and analysis of the WEF report from the section on unemployment.
Key observations from the WEF Report:
- Dramatic rise in unemployment over the last 18 months: reverberations from the recession still linger
- Job creation is much slower than job evaporation (doesn’t take a genius to figure this one)
- Despite incredible growth rates, India is enduring an unemployment rate (officially) of 7.2%
- Here’s the kicker: some portion of jobless spike could be structural; remnants of the reverberations could transform into longer term underemployment
- Oh and before the perpetually paranoid protectionists start building fences, please note that curtailing immigration may actually exacerbate the situation
So, what exactly is structural (vs. cyclical) unemployment? During periods of economic growth, increased demand for goods and services drives up the demand for labor, leading to lower unemployment. In recessionary times, the reverse is observed. Nothing earth shattering here. This is cyclical unemployment; tied to the business cycle. In some cases, (consider US steel production) factors shift so drastically causing the underlying structure of the economy to change which precludes the spike in unemployment in a sector (or sectors) from reverting back to “normalcy”. This is structural unemployment; tied to the changed structure of the economy. Structural unemployment is generally more challenging (sometimes even futile) to combat.
And how does underemployment differ from unemployment? Loosely put underemployment is the younger sibling of unemployment, where the reduction in demand for labor is distributed horizontally so that more people have less work rather than a few with work and others without. However, underemployment could also imply underutilization of skills and talent or lower wages.
Finally, how do we get out of this mess? Here are some strategies that I would like to offer – in no particular order:
1) Efficient placement processes. Obviously, there are jobs out there, but the disproportionately large supply of labor is slowing (counter-intuitive as it may sound) the hiring process; for each open position, double or even triple digit resumes are being submitted. This flood of applications is simply clogging the pipeline and taxing the already overburdened HR personnel. What is exacerbating this even further is the narrow location-scope imposed by job applicants which in turn is rooted in the shift toward multi-generational housing arrangements (slowing of the economy is incentive enough for recent college graduates to move back in their parent’s houses). If we are to tear through the unemployment doldrums, applicants need to go where the jobs are and make their job searches more focused in their areas of expertise and skill.
2) Education. Which brings me to my next point. If your skills are outdated or you find that the skills you possess do not seem to match the job opportunities out there (structural shift), acquire new skills; preferably those with better employment prospects. No solution to unemployment or underemployment (particularly from a long-term perspective) would be complete without a heavy focus on continuous education.
3) Free flow of capital and labor. There is a great big world out there. Why limit your options? Seek out regions and even countries of opportunity for your field of endeavor. Having a hard time finding the right place for your skill set, this may be a good time to review #2 again.
4) Coming together. The days of going at it alone are long gone. So, find a great network (like the Ismaili Professionals Network) and get involved. Seek out others who are in the same profession or economic activity who can help you navigate through the maze of corporate hiring. Or, consider launching a start-up! The conditions may be ripe – particularly if you can seek out partners with complementary skills and/or venture funding ;-D Jokes aside, this may be a very opportune time to explore entrepreneurial options specifically in regards to innovative ideas and new knowledge areas.
5) Innovation and new knowledge areas. At the RIPBC in Dallas, Chairman Amin concluded his presentation on Global Economy with “Leaders in innovation will continue to win in 21st century.” I cannot agree more. In fact, I believe the operative word here is “continue”. Innovation leading to success is not a radically new or (forgive the pun) innovative notion, it is a time-tested phenomenon.
So, what are you waiting for? Help me and President Obama fight this monstrous recessionary quagmire – you can start by helping connect just one prospect with a suitable opportunity!