Unemployment, particularly the youth unemployment, continues to stubbornly top the national “worry” chart, and has become a perennial thorn in the side of the government. Unfortunately, the government has yet to crack the youth unemployment nut in a meaningful way.
The government says that unemployment has dropped from 4% in 2009 to 2.1 % in 2012. Ostensibly, youth unemployment rate has also decreased from 12.9 % in 2009 to 7.3% in 2012. There are, however, some very serious doubts about the accuracy of declared figures.
How is unemployment rate calculated? The most accurate method for calculating unemployment is to count every unemployed person each month. To do this, every home in the country would have to be contacted – just as in the population census conducted every 10 or so years in Bhutan. This procedure would very costly, and take far too long to compile the figures. Developed countries like the US, conduct a monthly sample survey called the Current Population Survey (CPS), to measure the extent of unemployment in the country. The CPS has been conducted in the United States every month of the year since 1940.
In the US, there are 60,000 households that are covered as the sample list for the survey. This translates into approximately 110,000 individuals, a large sample compared to public opinion surveys, which usually cover fewer than 2,000 people. Every month, one-fourth of the households in the sample are changed, so that a household is not interviewed for more than 4 consecutive months. This practice avoids placing too heavy a burden on the households selected for the sample. After a household is interviewed for 4 consecutive months, it leaves the sample for 8 months, and then is again interviewed for the same 4 calendar months only a year later, before leaving the sample for good. This procedure results in approximately 75 percent of the sample remaining the same from month to month, and 50 percent from year to year.
Labor Force refers to the number of people of working age and below retirement age who are actively participating in the work force, or are actively seeking employment.
The formula for calculating the unemployment rate (expressed as a percent) is as follows: Unemployment Rate = Unemployed Workers / Total Labour Force x 100
Example of Bhutan’s unemployment rate calculation:
Total labor force: 336,391
6,904/336,391 X 100 = 2.05% or rounded up to 2.1% unemployment rate.
This is the easy part. The difficult part is arriving at an accurate figure of the total labour force, and implementing the lopsided definition of “employed” by the MOLHR. According to Labour Force Survey Report 2012 (LFSR 2012), a person is considered “employed” if he/she performed some paid work in cash or in kind, during the reference period (of one week) for at least one hour.
This suggests that if an unemployed graduate, or for that matter any unemployed person, helped load/unload a truck for one hour, a week ago, and was paid Nu.200 for it then he/she is enumerated as “employed” even if he/she has not done any other paid-work for the last one year. Does this reflect real employment or unemployment?
The MOLHR that conducted the survey and published the results on unemployment rate in Bhutan seems to have conducted only one national sample survey.
This is the biggest downside to MOLHR’s approach. One survey in a year will never yield accurate unemployment figures. At the very least, two national sample surveys should have been conducted, one during summer, and one during winter that captures seasonal employment/unemployment rates and patterns. In effect, the more national sample surveys conducted annually, the more accurate the unemployment figures will be and vice versa.
Bhutan has based its unemployment figures on just one survey. In most countries, this would be unacceptable and the figures from just one survey in a year would not enjoy much credibility. When it comes to the country’s unemployment rate, the problem that needs to be “corrected” is the frequency of the sample surveys that form the foundation of accurate unemployment figures. Conducting one labor force survey in a year leaves too much room for too many loose variables to influence the actual figures.
The big drop in the unemployment rate between 2009 and 2012 could suggest that the long-term unemployed workers are getting discouraged and dropping out of the labour force, and are thus not considered unemployed, although in every respect, they remain unemployed. This denotes that the people who are now or were previously unemployed, but are no longer looking for work, are excluded from the definition of “unemployed”.
Those who work part time, but want to work full time are called underemployed and they are not figured in at all. The LFSR 2012 does not provide any details on the number of underemployed in the workforce. The report states that “of the total employed persons 60% were employed in agricultural farming”. It is the farming sector that is most vulnerable to high underemployment and could actually show many who for all purposes are unemployed as being employed.
In Bhutan, the unemployment rate is based on the number of unemployed people who are without jobs, who are available to work and those who have actively sought work in the week prior to the survey. The “actively looking for work” definition is very broad, including people who have contacted an employer, employment agency, job center or friends, sent out resumes or filled out job applications, or applied online for a job, or answered or placed ads, among the other things.
I am not sure how “marginally attached workers” were factored in. “Marginally attached workers” are those who are neither working nor looking for work, but say they want a job and have looked for work recently (may not be as recent as a week ago); and people who are employed part-time for economic reasons, meaning they want full-time work, but took a part-time schedule instead because that’s all they could find. How have they been reflected in the LFSR surveys and its interpretation?
How did MOLHR apply the “discouraged job seeker” (not considered as unemployed) concept in adjusting the actual numbers to get a better idea of where we are in terms of unemployment? Are discouraged job seekers in any less in need of employment?
Another question running through the minds of people is, how has the unemployment rate decreased to 2.1% when unprecedented layoffs, have and are, occurring in the now anemic private sector due to the credit crunch, ban on numerous imports, INR crisis and the economic downturn? People are now questioning whether there was a conflict of interest with MOLHR, the parent ministry responsible for employment, conducting the survey and studies themselves, and coming up with self-back-patting results.
Youth unemployment is spilling out of control. One simply has to look at the number of youth applying for an announced job vacancy, to find the claim that youth unemployment has dropped so drastically from 12.9% to 7.3%, doesn’t correspond to reality. If ignored and unchecked, unemployment can become a poverty-producing machine.
Bhutan has, indeed, experienced a high economic growth rate of over 8 percent in the last few years, but this growth appears to be exclusive growth not inclusive growth. We must bear in mind that inequality is an unintended consequence of such rapid jobless growth.
The government’s war on unemployment cannot be won by distorting perceptions to make reality more palatable through statistical construct, which is just a fancy way of saying it wasn’t real or accurate. It’s hard to keep people convinced that the unemployment rate is decreasing so rapidly when they can judge every day with visual evidence that it is not the case. Our national interests are simply too important to be sacrificed for the maintenance of a comforting façade, or to gain electoral mileage during elections.
The obsession with economic growth may be diverting attention from the more fundamental problem of youth unemployment. The issue, then, is this: for how long can the government tolerate such a trajectory of growth? If the answer is that it cannot for long without triggering social unrest and political upheaval, then perhaps it is time the government dropped its obsessive concern with the pace of growth, and turned its attention to the pattern of that growth. Otherwise, youth unemployment has the potential of transforming poverty from a short-term misfortune into a career choice.