Unemployment In Somalia

851 Words4 Pages
While there are several nations confronting the issue of high unemployment rate due to unstable global economy, Somalia is in the worst situation by far. According to the United Nations Development Program statistics, the overall unemployment rate in Somalia has reached approximately 70%. Due to such unstable economic status combined with other social issues, Somalia is now one of the most fragile countries in the world, as stated in the article. Unemployment occurs in an economy when the individuals who are willing and able to work are actively searching for jobs, but cannot find one. High rates of unemployment may be witnessed for various reasons, but Somalia is mainly suffering from the unemployment crisis due to lack of job opportunities…show more content…
They also may not receive enough public welfare, including health care, from the government during this period of time, because the government will spend most of its money on war. Such conditions combined lead to a decrease in the income of the people, which causes poverty in the long term. Decreased income also means that there will be less disposable income for the consumers. As the consumers spend less money due to decreased level of disposable income, the consumption rate in the economy will fall as well. Thus, the aggregate demand, which refers to the total amount of goods and services demanded in an economy overtime, will fall in the economy. The aggregate supply will fall as well, because the production of goods and services is hampered during the period of war. This can be illustrated using the diagram below: As the aggregate demand curve shifts to the left from AD1 to AD2, the firms will decrease their aggregate supply from AS1 to AS2, so that the economy is in equilibrium. As a result, the real output decreases from Y1 to Y3, while the average price level stays at PE. Due to decreased level of AD and AS, the need for supplying goods and services will fall. Since the quantity of products to be supplied in the market has decreased, the firms will reduce their size of labor force by employing less workers. This is because the producers want to maximize their…show more content…
Consequently, the market equilibrium shifts from (QE, PE) to (Q1, P1). This suggests that not only the less number of workers are demanded, but also at a lower rate of average wage. Wartime also disables the young population to receive proper education from the school. This is because not only the school infrastructure is destroyed during the war, but also the government subsidy on public education decreases during this period of time. Instead of investing on the education, the government is prone to spend money on the military force during the period of war. Lack of education disable the people from acquiring professional skills, which virtually reduces the job opportunity for the workers. In the long term, such inability to find stable jobs cause the unemployment rate to

More about Unemployment In Somalia

Open Document