Causes of high unemployment in Zimbabwe Essay

IntroductionThe unemployment reckon is the proportion of the economic all toldy active population that is commerceless and actively looking for employment. In 1990, Zimbabwe embarked on a programme of sparing Reforms popularly k forthwithn as Economic Structural Adjustment plan (ESAP) and 1991-1992 saw one of the worst droughts. With close to 70% of the population documentation in the awkward atomic number 18as (CSO 1992) and dependent on agriculture for their livelihood, this constituted a major disaster. One result of these events was increased migration to the urban areas by plenty in search of employment. A further drought in 1995-1996 heighten the effect.Worsening economic conditions plus ever increasing corruption and offensive activity ca-ca been the norm since 1995. Unemployment is currently soaring and the current rate stands at 70%. This has been from retrenchments, bloodline closures e.t.c. According to EMCOZ survey, well-nigh 6000 cheats in the different se ctors of the rescue were lost by the end of 2001. The figure for 2002 was a great deal advanceder as a result of the worsening business environment as the government fails to create opportunities to stimulate industrial magnification.Causes of UnemploymentUnemployment is Zimbabwe has been caused by quite a heel of factors. Most of these are mainly because of political reasons. The following are rough of the factors that are causing unemploymentSluggish investment and processWeak tradeing performancePoor macroeconomic form _or_ system of government environmentThe investment/business clime is unfriendlyPopulation growth rate/age organizeThe growth path reliance on primary products is suboptimalGeography (proximity to siemens Africa, no direct access to the sea)Tertiary EducationThese are now explained belowSluggish investment and growthThe investment and growth of the Zimbabwe frugality has been shrinking of late. This has had a significant impact on the Zimbabwean c ompanies. In the past 3 stratums, over 500 companies closed operations because of prohibitive operational conditions characterized by gamy input costs, hard cash shortages, high levels of interest rates, inflationary levels as well as the uncompetitive export grocery. Both the company and the government has been failing to effectively invest and thereby slowing growth. As a result, this has resulted in abundant unemployment.Weak export performanceUsually governments and exporters worry most virtually the exotic gingersnap of demand for the exports. But in Zimbabwe today the most important is doubtless the domestic elasticity of tag on of exports. This is reflected in the export volume issue forths. In 2003, tobacco prices are still virtually unchanged from last year and higher than in previous years, but volumes are down by two-thirds. This then means that if we involve very few goods that we are exporting, no we end up having a weak generation of foreign currency which we direly need for all our imports. This has significantly impacted on most organizations who in conclusion resort to the black market for the foreign currency.Poor macroeconomic form _or_ system of government environmentThe role of monetary policy is crucial because macroeconomic policy walk outsthe REAL economy, greatly through the credit and capital markets. At the loot of the 21st century monetary policy is the most powerful gun that governments have at their disposal. Monetary policy influences interest rates (directly) and alter rates (indirectly). It also influences investment, and thereby economic growth and employment. It has major implications for the fiscal markets bonds and equitiesAnd today, its most important role is that of ensuring price stability. All this seem to have been ignored in the Zimbabwean scenario, where the macroeconomic policies are arm malformed just for the sake of political expediency. As a result, many sectors have been affected, and no jo bs were created and thus an increase in unemployment.The investment/business climate is unfriendlyThe to a greater extent(prenominal) profitable and cajoleive the business investment climate, the more firms forget want to raise new money to expand and the more they will issue bonds. During a business boom or upswing the supply of bonds rises. The investment climate in Zimbabwe is not sufficiently favorable to attract the type of Foreign Direct Investment needed to transform exports. on that point are so many regulations concerning capital repatriation and profit/dividend remittability. This discourages investment and therefore at the same time increasing unemployment.Population growth rate and age structureThe population in Zimbabwe has been increasing at a decreasing rate, but the fact that the population is increasing without a laudatory increase in job opportunities, this therefore means all the job candidates are jobless.The growth path reliance on primary products is s uboptimalZimbabwe has been relying in the main on the products which are just primary. Such dependence has had no bliss creation found for the thousands of youths in Zimbabwe who are looking for jobs.Geography (proximity to south-central Africa, no direct access to the sea)Zimbabwe is a landlocked country and has been relying mostly on its neighbours namely South Africa and Mozambique. This has placed the country in a state of disadvantage hence the employment creation rate outlet down.Tertiary EducationA number of tertiary colleges have sprung up in Zimbabwe, and yet the existing infrastructure is unable to absorb the ostentatiousness numbers of youths seeking training opportunities. There is also a high mismatch of skills acquired from training on one hand and the labour market opportunities on the other has led to increased job seekers.Seriousness of the lineThe issue of unemployment in Zimbabwe has reached such alarming levels which have brought discontent among the cit izens of the country. This has been demonstrate by the massive increases in the crime rates and other issues which implicate prostitution. This whole lot is as a result of a number of job seekers who are on the market failing to secure anything.personal effects of Land Resettlement and HIV-AIDS on unemploymentHIV and AIDS has been much talked about and discussed in Zimbabwe. This deadly incurable disease and virus has brought about much untold suffering and orphans. This also means that the number of job seekers satiny into the market will fall sharply. This might be a clemency in disguise in that it will provide a incomplete solution, but it will also highly likely slow the growth rate of the economy and thereby the rate of job generation.The issue about the effect of HIV-AIDS is two fold as it erodes both the employed and the unemployed. In the long run, there might end up there being very few numbers seeking for employment. The high levels of people who arejoining the job ma rket make this a good pessimism.The massive land reform initiated by so-called war vets and the government produces more losers than winners. More than half a million farm workers have already lost their jobs and source of income, without gaining any of the redistributed land. Those displaced from the farms have found themselves on the job market. This then means that instead of solving a problem, the government has created more problems for itself. The problem with that is that this produces a chain of other problems interrelated to the nation business.On another note, if the land resettlement programme was well managed, this could found a partial solution to the problem. This could temporarily create self-sustaining jobs for the rural community. The only problem is that the government in principle banned all commercial agriculture and villagised the whole country into small villages. This can neer be a lasting solution to the unemployment problems as agricultures share of total employment falls as economies develop. Thus in the long run, this ceases to be a solution.Many hopes are on the open sector which people say could expand given enough resources and incentives. Unfortunately, unemployment has arise far beyond the capacity of formal sector establishment succession employment in the loose sector has grown phenomenally. Others, however, argue that expansion of the informal sector would generate new and equally serious economic problems destroying the viability of formal sector operations, worsening crime levels, and devastating the environment, negatively affect national health programmes and affect state revenue inflows.Those in the informal sector remain an economic burden for the country because their incomes cannot meet staple fibre needs and that most, if not all, operators subsist below the poverty datum line.It is a pre-requisite for employment creation in Zimbabwe to be enhanced by militarisation of resources in capital markets through an unprecedented improvement of savings as a percentage of the Gross Domestic Product (GDP)to around 25 percent so that funds would be invested and hence forth job creation. But to achieve this, the country should offer competitive investment incentives such as consistently low inflation and interest rates, stable foreign exchange rates, minimum state controls, low taxation and a politically stable environment. Improvement of conditions of services in the sector could be sustainable because of low wages, and there is need to realise that the economy could be affect through the rural sector, small scale and medium enterprises or large corporations.ConclusionAll the stake holders, citizens and the government must all be actively involved the reduction of unemployment. Without this combined effort and commitment, unemployment is likely to come about rising since the economic conditions are worsening and it is becoming more punishing for the companies that had survived before to contin ue surviving. If things are left unattended to as they at the moment, unemployment will grow to be a self created time-bomb for the government and will eventually build enough pressure in it to force it to explode.