Understanding The True Cost of Unemployment

This posts’ thumb nail picture reflects the true reality of unemployment in Kenya today. A skilled labour force with no form of employment. In a country with a working age population of 24 million, one in every six Kenyans is unemployed. In Uganda and Tanzania, the figure is about one in every 20 people of working age. Such images and statistics should not be taken lightly, especially by any sitting government. The effects of an unemployed population can spread across the society if not addressed effectively.

The direct cost of unemployment is the loss of personal income. During these tough economic times, those not working will encounter a fall in their living standards. The unemployed will have less purchasing power and less disposable income. With time a negative multiplier effect may result. This will lead to drop in purchasing power, local businesses may suffer since the number of customers has reduced. Purchase from the local business suppliers will fall, and so on. There is a risk that this chain of unemployment will continue as the suppliers are forced to produce less and, or may, lay off some of their employees. In general, there would be an overall reduction of productivity of the economy.

Unemployment results to drop in income which translates in a fall of both direct taxes i.e. the pay as you earn taxes and indirect taxes such as the value added taxes placed on basic goods and services. As a result, the government will either be forced to raise taxes on existing wage earners, reduce spending (highly unlikely given the ambitious nature of our current Government) or borrow more. All of the options have a depressive effect on the economy in the long run.

Unemployment and inequality go hand in hand. High unemployment has been linked to negative social effects such as high crime rates and radicalization among the youths. People who can’t find jobs are left with no hope of making a living. This might push them to either make placards and go to the streets to beg for a job as seen in this blogs’ thumb nail picture or even plead for a husband, on the streets, as witnessed in Nairobi this week or turn to crime. As the trend continues, a time will come when the unemployed will rise against authorities because they feel that they owe them the responsibility to provide jobs. Signs of this are already visible given the pockets of violence that emerged after the 2017 Presidential General Election results were announced, in parts of the country such as Kibra and Mathare that are home to thousands of unemployed youths.

We derive our identity and moral core from being able to work. Being able to provide for our families and express our creativity gives us a sense of purpose. So long as one in every six Kenyans is unemployed, the society will continue to function below its potential. The Government needs to identify measures that can help reduce unemployment in the country.

Communications guy, activist, blogger, car enthusiast (#SubrinaIsBae), jazz head

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