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Lord, if we knew this answer, we wouldn't be in the pickle we're in. For one thing, people need to pull their own weight and not depend on the government to support them. This is exactly how the US pulled through the Great Depression in the 20's...people traded skills and services for the things they needed. Today, we've got an awful lot of people who are lazy and who feel that somebody owes them something, so they're going to sit back and wait for that to drop in their laps. Of course, the Lord helps those who help themselves. Rarely does anything worth having just drop into your lap without your having to do something to get it. People have to be willing to work to support themselves. Look at Hurricane Katrina. In Orlando, the city had a huge job fair for the visitors from New Orleans with thousands of jobs available to help out those people. Very few of them showed up to interview, but everyone wanted FEMA checks and the government credit cards and hand-outs.
From what I've read, most economists feel that to decrease unemployment, you have to make it more advantageous (usually that means less expensive) for businesses to hire people. That can be accomplished through tax cuts for companies or small businesses, incentives to increase hiring, or by allowing more self-governance on the businesses' part so that they can determine how best to meet the needs of their consumers/clients/patrons.
Another way to reverse unemployment is to try to ensure as a business owner or even as a city that one location is not dependent on a sole employer or type of employment. My hometown of Flint, Michigan, is an example of what happens when one area is based almost completely on one industry (automobile manufacturing). Back in the 50s, Flint was a booming city with GM plants that employed over 30,000 people. But as the American automakers industry has virtually collapsed, so have the locales that depend on that industry. Unemployment would not be such an immense issue in these cities/regions if laid-off workers had more options than one industry for their new jobs.
The minimum wage, subject to the forces of the supply and demand curves, creates unemployment. Removing it would free employers to hire. Of course, no one wants to work if an appropriate wage cannot be earned; however, keeping many people at least partially employed is better than keeping then unemployed. New jobs are created by innovation; old jobs are destroyed by innovation. But failing to innovate for fear of creating or increasing unemployment causes economic and eventual cultural stagnation. To keep employment high, innovation must be fully embraced so that the creation of new jobs allows for employment. Here is where education is paramount -- the ability of a given employee to successfully manage the transition between jobs winding up and jobs winding down is directly proportional to employability.
Downsizing a massive, intrusive government, and allowing people to create, provide, and consume as they see fit without any "help" from Washington, allowing people to pursue opportunities as they come along without undue regulation would be the greatest cure to unemployment.
A long range plan to keep a skilled and educated work force is efficient in that the work force tends to be better paid, and the children of those workers are more likely to be educated. Denmark is a good example of a society that has done well with that. India has followed that path as well and made a lot of progress from colonial days.
In the short term, however, some economists have argued that targeted tax breaks for businesses, especially factories with jobs that cannot be outsourced, are an efficient use of government funds to create permanent jobs. Once the factory is established and profitable, it is self-sustaining and needs no more government aid. Government can also specify that the tax breaks apply to factories in specific industries, or specific geographic regions with the highest unemployment. As opposed to highway projects and the like, where the jobs are temporary.
If people knew the answer to this for sure, there would not be unemployment problems. But here are some thoughts:
You ask about education. If a country wishes to have a workforce that can fill good jobs, it needs to have a good system of education. However, education is not needed if most of the jobs in a country are unskilled. So education is more important for economic growth (making better jobs) than for solving unemployment per se.
Many economists would argue that the best way to solve unemployment is to make it easier for small businesses to start up and for businesses of all sizes to hire and fire people. In other words, they would say you need less government regulation.
For example, if you have to go through an elaborate process to start a business, fewer people will start businesses. If this happens, there will not be so many businesses to employ people.
As another example, many countries make it hard for businesses to fire people. Because of this, businesses are less willing to hire for fear of making a mistake and getting stuck with a bad employee that they cannot fire.
-start with the development of small businesses
You ask a great question. Even in this high unemployment times, people are finding out that it's not simply education they need, but the right skills. Pick up any newspaper and you will see that there are still so many openings for qualified technology and science people; people that have particular skills in electrical, computer, and engineering fields.
The level of employment or unemployment in an economy is influenced by three factors. first is the existence of demand for products and services that will be produced by the employment. Second is the existence of capital resources that which the employed people need to use to produce the goods and services. Finally, the people should have the required capability including skill and knowledge for doing the work. A great extent all these three factors are interrelated. For example, when people are employed they earn income to spend on goods and services, creating a demand for that. Then when there is demand for employment, the rate of wages rise creating greater motivation for people to develop the capabilities to improve their employability. Also higher wage rates also leaves people surplus for education and for capital formation.
Thus we find that the relationship between various factors influencing can become quite complicated, and there is no single effective way to improving employment in all situations. Different economies face different kind of situation requiring different approaches to increase employment. Even within an economy the situation changes over time requiring modification in its approach from time to time.
However there is no doubt that under all situation it is necessary to provide facility to provide educational facilities to prepare people to take up the jobs that arise in the economy. Also it is essential that some way is found to build up capital. IN short term an economy may rely on borrowed fund to create capital resources, but in the long term it is essential to have an optimum saving rates that builds up capital in long term without, damping the demand in the short term.
Another important ingredient for increasing employment is entrepreneurship, which plays a very important part in converting potential demand into actual business venture organizing the factors of production including capital, labour, raw material, technology and all other required input to form an efficient and effective enterprise. Many countries now have educational programs to improve the availability of entrepreneurial talent also.
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