Question

What will happen if there is no additional employment generated in the economy even though we are able to produce goods and services in the economy? How could jobless growth happen?

Answer 1

If the economy does not generate additional employment, unemployment may rise even as the production of goods and services increases, because the growing labour force will not find enough new jobs. This situation is called jobless growth. It happens when economic output increases without a corresponding increase in employment. Jobless growth may occur because:

• Firms use more machines, automation and technology instead of hiring additional workers.
• Growth takes place mainly in capital-intensive industries that require fewer workers.
• Existing workers become more productive, so firms can produce more without increasing employment.
• There may be a mismatch between the skills of workers and the skills required by new jobs.
• Economic growth may be concentrated in sectors that do not generate much employment.

Hence, Economic growth alone is not enough. For development to benefit people widely, growth should also create adequate and productive employment opportunities,