Why jobs are good for economy? Let’s start
Jobs, Jobs, and Jobs. Everyone wants one. Of Course, everyone wants to earn and live a good life.
But there is always an economic consequence to everything we do in a country. Don’t worry, this time it’s positive.
So, let’s first understand what a job is. We know you know. But still
Piece of work done for money. That simple.
Now, let’s understand what is the status of employment in the world? and later why jobs are good for economy?
As per ,World Bank’s latest data of 2019. The global average of employment stood at 57.4%
But some countries fall behind.
For example- India’s employment rate is less than 40%. Meaning less than 40% of the population, over 14 years of age is employed. On top of that, the pandemic happened to make things worse. 122 million Indians lost jobs due to the pandemic. Some jobs became irrelevant in this short period and it increased demand for IT jobs.
Amid pandemic, in the US, 22.1 million jobs were lost. That’s almost half of the working force. And till new, as economies are picking up it has recovered 42% of lost jobs which is 9.3 million. Most of them filed for Unemployment benefits.
Every country is losing its fair share of GDP, in these unprecedented times. But how does it work?
How jobs help economy?
The employment rate and economic growth are linked. Hence, employment contributes to economic growth.
For example- If you are working in X company producing computers, and now you get a Y amount of salary from that. You spend that amount in various areas mainly groceries, clothing, and healthcare among others. Now, stop for a moment. And think if you weren’t employed. Would you buy them?
NO, but now as you are buying groceries, the demand for groceries increased, so the shopkeeper from whom you purchased, will buy more from the manufacturer. Manufacturers will produce more. Also, in producing more, he’ll require additional workforce and more raw material. Which again generates employment.
It’s a never ending cycle
Now, that will increase income for all. And this increases demand as discussed above. As a result, increased demand adds value to the economy. It is good for the economy until it starts moving too fast and inflation is born. Read more here
NO JOBS. NO GROWTH
If jobs aren’t there. Growth is unlikely.
We’ll take example from this pandemic pushing all to corners-
As the World Bank points out, Global growth is projected at –4.9 percent in 2020, 1.9 percentage points below the April 2020 World Economic Outlook (WEO) forecast. The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated. In 2021 global growth is projected at 5.4 percent. Overall, this would leave 2021 GDP some 6½ percentage points lower than in the pre-COVID-19 projections of January 2020.
As demand fell due to pandemic, this led businesses to fire its employees and staff. In turn, global growth is turning out to be negative this year.
Law and order
Now, this is also an important facet.
You may also agree that high employment rates have positive sides for peace in the country. The law and order are high then.
But if any country’s youth is unemployed. This makes them vulnerable to crimes and hampers peace in the nation.
It is a well-proven fact that Labor market success in the form of employment, high wages, job stability, and occupational prestige are correlated with reduced criminal activities.
For example- Sweden has an employment rate of more than 70%, and crime levels there are as low as 1 person per 100,000. This makes Sweden a happier country.
India where unemployment rates are high, crime rates are as high as 1050 per 100,000 in some areas.
And if crime persists in any nation, it is less attractive to foreign companies, investors and is bad for long term growth of any economy.
So, having a job just not for money, but for time also matters.
Globalization and Foreign Reserve
All the same, if any country has additional workforce, then it can supply it to other companies as well by outsourcing services. As demand of any skill is less and supply is more. Then it becomes cheaper. So, companies based out of developed countries can outsource their work to save costs.
Other than that, if any individual is well educated. Countries with better opportunities attract them. Although, this has both positive and negative sides. First, Brain drain isn’t good for the supplying country but if an individual is earning abroad and sending money in the home country. This brings foreign exchange to the country which helps it in the long term.
After citizens are employed, they are taxed by the government. It helps the nation prosper. The employed people become cash cows for the government giving taxes every month.
For instance- Employees are charged at various levels like 0%, 5%, 20%, 30% depending on their income in India. Their tax is deducted at source, known as TDS. More here
Every government receives a large chunk of taxes from employees which are employed by various companies.
This helps the government to invest in infrastructure, healthcare, and other increasing output in the economy. It ,again, facilitates long term growth.
As we see that there are various benefits associated with having jobs in the economy. Also, we haven’t covered all of it, such as Investment and Education which also have fascinating sides to them.
Also, the one who creates jobs, An Entrepreneur, is always the first baby of any nation’s government. This leads to govts. to provide benefits for startups and small businesses. Not to mention they are taxed fairly once the company’s established. Read more about startups here
The government always focuses on creating jobs. Their every action has deep thought about employment rates.
Lately, the job market has plummeted and has taken a deep steep. But as this rises , the economy shall too.
Concluding, it can be said that the benefits of Jobs in the economy far outweigh the risk associated with it. And they aren’t even worth discussing.
If everyone’s who willing to employ is employed. That’s a win-win situation for all.
And governments are working for centuries to ensure just this.
However, it’s hard. But let’s see…
Until next time…
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