What Is Disguised Unemployment And Why Is It A Major Issue In The MENA Region?

Published March 11th, 2021 - 03:00 GMT
What Is Disguised Unemployment And Why Is It A Major Issue In The MENA Region?
(Shutterstock: Liftwood)

In major financial crises, efforts to tackle spiking unemployment rates start to gain extra significance, due to the danger high joblessness numbers can pose to the overall health of the economic system.

In the modern world, every economic shock has resulted in millions of people losing their jobs and their basic sources of income, pressuring governments to think of ways that can overcome this obstacle, so a challenging economic recovery becomes possible.

Once the number of people losing their jobs starts to rise in a certain country, the whole economic system starts to feel the consequences, as it starts to affect the consumers' behaviors and therefore weakens the economy. 

In past employment crises, especially ones that hit on regional levels, countries resort to offering their best talents to other economies around the world, ones that could make use of the millions of jobless people, who would be making money in their new economies, before sending money back home to support their families and home countries.

Yet, global financial turmoil usually makes it hard for governments, particularly in developing countries, to take that track, as unemployment becomes a major hurdle in even the strongest economies. This is why many governments have been trying to find other solutions, ones that are for the most part easier, but not necessarily sustainable.

Ever since the 1920's Great Depression, individuals who lose their jobs amid abnormal economic conditions are willing to take any other paying jobs, including ones that are not related to their fields of expertise, so they can only make ends meet without having to face evictions.

In some other cases, governments start to offer more jobs in public departments despite the lack of actual need for them, just so it minimizes the number of unemployed people. This practice has been referred to as Disguised unemployment.

Disguised unemployment happens when the number of people involved in the job market is higher than the number of people needed for it, which reflects negatively on overall productivity.

Thanks to the COVID-19 crisis, fears are back that job markets in the region are going into the disguised unemployment mode again, so governments can tackle the sharp rise in the number of unemployed people as a result of the pandemic.

While disguised unemployment can be an ideal temporary solution to help overcome the economic turbulence, it can have some serious repercussions, such as a drop in the quality of services provided by businesses and or administrations that are too crowded with unneeded workers.

As an alternative, several developed countries have considered providing their jobless populations with stimulus checks and other incentives that help them cope with the current meltdown without having to affect unemployment stats.

Moreover, governments should start to think of investing the money allocated for its new unneeded workers' salaries in projects that can eventually be more profitable to the local economy in the long-term and allow for a better, more healthy economic revival once the crisis is over.

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