Unemployment triggers poverty, gender disparity

ByDaniil Filipenco

Unemployment triggers poverty, gender disparity

Poverty is often the result of a combination of circumstances most of which, such as poor education and lack of proper healthcare services, are preventable. Still, the main condition that triggers poverty is unemployment and underemployment. Of the 689 million people facing extreme poverty, for most having a job is the only recourse they have to facing fewer problems.

Thus, generating work opportunities is critical to achieving the goal of poverty eradication as well as long-term economic and social development. At the same time, quality jobs that provide financial security are extremely important for vulnerable groups such as women and youngsters.

What is poverty?

According to Encyclopedia Britannica, the term ‘poverty’ is defined as a lack of a normal or socially acceptable level of resources that allow people to access the basic necessities of life.

What are human basic necessities?

These can be defined as “required for survival” or “representing a society’s predominant standard of living”. The former would apply exclusively to those on the verge of famine or death while the latter would apply to people whose nutrition, shelter and clothing while suitable for survival, fall short of those of the general population.

Poverty is classified into:

  • Absolute poverty – is a lack of all fundamental necessities such as clothing, food, and a place to live.
  • Relative poverty – is a lack of the basic necessities that meet the living standards of other people living in the same time and place.

What is unemployment?

Unemployment, as defined by Britannica, is the situation whereby a person who can work is actively searching for a job but is unsuccessful in finding one. To be deemed unemployed, someone must be an active member of the workforce who is continuously seeking remunerative work.

People searching for a job fall into the relative poverty group since they do not lack the basic means for survival. However, being unemployed does push the relatively poor into absolute poverty. Overall, both the jobless and the poor need the same things: shelter, clothing, education, basic hygienic essentials, and so on.

According to recent ILO research, 2 billion people are involved in informal labor, the majority of whom live in emerging and developing nations. Most of these lack social protection, workplace rights, and decent working conditions.

Informal employment involves labor agreements that are not subject to national labor legislation, taxation, or the right to social security or other benefits such as paid annual or sick leave.

The poverty and unemployment connection

Since unemployment is one of the key factors that causes people to fall into poverty, there is a possibility that strong economic growth could result in a rapid expansion rate of valuable and financially rewarding employment. This in turn could contribute to poverty alleviation.

Nonetheless, poverty alleviation is dependent not just on the growth of the economy, but also on people’s flexibility to respond to growing labor demand in more productive categories of employment.

How does unemployment lead to poverty?

1️⃣ Loss of earnings

Long-term unemployment results in a loss of earnings and many households are left without enough money to cover their living expenditure.

2️⃣ Continuous the poverty cycle

Since the current youth unemployment rate increases the likelihood of future impoverishment, the burden of work falls on the shoulders of future generations. Individuals remain trapped in a poverty cycle in the face of severe unemployment shocks.

3️⃣ Rise in criminal activity

Regions with massive unemployment rates have been proven to have a greater rate of violence and vandalism, especially among young people.

COVID-19 as a major cause of massive job losses

By 2020, the worldwide unemployment rate had risen to 6.5%, an increase of 1.1 percentage points from 2019. The rate then climbed by 33 million, hitting 220 million, and 81 million people lost their jobs for good.

  • From 2011 to 2019, worldwide poverty decreased at a rate of 49 million per year with the overall number of people living in extreme poverty decreasing from 1.1 billion to 691 million.
  • The COVID-19 outbreak and subsequent worldwide economic slowdown led to an increase in the number of poor people by 50 million.
  • In 2021, around 698 million people were living in extreme poverty.

During the pandemic period, more women left their jobs to care for their children who had dropped out of school. This widened the gender disparities in labor-force participation rates even further.

In 2020, youth employment around the world declined by 8.7% compared to 2019 with middle-income nations experiencing the steepest decline.

According to United Nations’ assessments, around 75% of those people engaged in the informal economy (nearly 1.6 billion) were seriously impacted by lockdowns and/or worked in those industries that faced the most severe effects. These workers are in danger of falling into poverty, and restoring their livelihoods will be more difficult when the situation stabilizes somewhat.

Fig.1. Unemployment rate, 2019 and 2020 (percentage)

Source: UNSTATS

From 1991 to 2020, the number of unemployed people globally increased from 185.95 million to 223.67 million. In 2021, the number of unemployed then fell slightly to 214.21 million.

Fig.2. Number of unemployed persons worldwide from 1991 to 2021

Source: Statista

Fig.3. Number of people facing unemployment in 2020 and 2021 and projections for 2022

Source: Statista

According to the Director-General of the International Labour Organization, Guy Ryder, the effects of the COVID-19 crisis could last for years in terms of reduced human and economic potential, increased poverty, and inequality unless an effort is made to boost the creation of decent jobs, assist the most disadvantaged people, and restore the hardest-hit sectors of economies.

Final word

Considering the significance of employment in reducing poverty, the creation of new jobs should be prioritized in national poverty reduction plans. Emphasis should be placed on providing improved and more productive jobs that can offer work to large numbers of poor people.

It is crucial to focus on providing disadvantaged people with the essential skills and assets to increase their work opportunities.