Unemployment and the Role of Employment Services: an Economic Valuation of Employment Service
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Date
2000-05
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A.A.U
Abstract
The issue of unemployment and the operation of the labour market is a very central
issue to the modern economy, both in the developed and the developing world. The
operation of this market is a fascinating and complicated process. Workers differ in
their abilities, attitudes, and tastes. Productivity depends not only on abilities but also
on how well a worker is matched to a job. The question of unemployment is tied to
the social, political and economic atmosphere in every country. It is an issue to the
individual, to the firms and to the government as well. As a result studies on the
causes, effect and remedies to unemployment problems have captured the attention of
all these agents.
The mam cause of unemployment according to most studies is the high rate of
population growth coupled with low level of economic growth which is manifested
by the slow pace of job creation by the economy. The educational system as a major
supplier of the labour force is also an important area related with the problems of
unemployment. The existing educational system not only supplies the economy a
labour force that far exceeds in number the available jobs but also a labour force
which invariably does not fit the existing jobs and vacancies.
The problem of unemployment is also related to the functioning of the labor market,
which in large part is the concern of this paper. The existence of an adequately
functioning labor market which sends the relevant signals to help adjust the mismatch
between existing skills and the skills needed by the economic and. highlight£ the gap .
between unfilled and filled vacancies is of paramount importance to the Issue of
unemployment.
Available evidence indicates that many vacancies remain unfilled despite the
existence of a large unemployed labor force. Information found from MoLSA showed
that over 23% of vacancies remained unfilled. The existence. of the considerable
unfilled vacancies in the midst of a large unemployed labor force depicts the failure
of the labor market.
In this regard employment services can play a crucial role by addressing the
information and skill gaps as they are centers for collection, compilations and
dissemination of labor market information. In evaluating the employment agencies
unfortunately most of them are not adequately staffed and the necessary equipment
are often scarce. As a result of this coupled with a poor policy environment, legal
framework and economic incentives most employment agencies are not in a position
to provide a commendable service and hardly provide the expected level and quality
of services
The present study which examines the willingness of job seekers to pay for such
services, will contribute in drawing attention of the policy makers and the public at
large and facilitate the realization of the potential roles of employment service to play
their part in addressing unemployment problems. It also contribute for the elucidation
of economic grounds on the ongomg dialogue related to how and by whom
employment service should be provided.
In the present study an attempt has been made to economically value the role of
employment services. The study has confirmed that the job seekers attach
considerable value to employment services and are willing to pay for a placement
service rendered by employment agencies. The study has shown that in Addis Ababa
Administrative region alone the placement services of employment agencies has an
economic value worth over 18 million Birr per annum. This estimate considers only
the value attached by unemployed job seekers to placement services alone and
represents a very small portion of the service, that employment agencies are expected
to be perform.
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Keywords
Employment Services, Valuation of Employment