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According to Investopedia,
unemployment is a phenomenon that occurs when a person who is actively
searching for employment is unable to find work. Unemployment is often used as
a measure of the health of the economy. Unemployment rate, by definition it is
the number of unemployed people divided by the number of people in the labour
force is the most common way to measure unemployment.

Zambia has been facing
the problem of high unemployment since the early 1990s.From the data provided by
the World Bank its highest unemployment rate as 19.07 percent in 1993. The
problem of unemployment is more widespread in Urban Areas and amongst the
youth, women and people with disabilities.

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Poverty levels have
remained significantly high despite the economic growth the country has recorded
in the past years. The objective of this research is to examine the extent to
which unemployment levels affect Zambia’s economic output, determining whether
its economy is growing or contracting because of high unemployment. It also
reviews the policies and strategies that aim at reducing unemployment.

This study uses
internet based secondary data of Zambia’s unemployment rate and gross domestic
product (GDP). The data is mainly collected from the Central Statistics Office
of Zambia database. Gross domestic product (GDP) is ”the monetary value of all
the finished goods and services produced within a country’s borders in a
specific time period.” It is the best way to calculate a country’s economic
growth because it takes into account the country’s entire economic output. It
includes all goods and services that businesses in the country produce for
sale. It doesn’t matter whether they are sold domestically or overseas.

LITERATURE
REVIEW

 

C.R
Frank Jr (1968) wrote one of the characteristics of the less-developed
economies of the world is a rapidly growing urban population and urban work
force combined with a much slower increase in employment opportunities in the
larger scale urban establishments. The result has been either unemployment or
under-employment in small-scale, often individual or family-run,
establishments. Those countries which are industrializing rapidly seem to
suffer from this phenomenon just as much, if not more, than those which are not
industrializing quickly.

 

Shamenda
(2012) wrote Poverty levels have remained significantly high despite the
economic growth the country has recorded in the past years. Some of the causes
of the high unemployment levels include: Low manufacturing and industrial base,
weak forward and backward linkages within the economy i.e. Between SMEs and
Multi-National Corporations, low levels of economic diversification and
productivity, weak education system that doesn’t support practical work related
skills,  lack of investments in areas of
high potential for employment generation E.g. Agriculture  and Focus on primary/raw products exports due
to lack of investments in value addition. 
He stated that the greater the unemployment rate; the less opportunities
to achieve high economic growth as well as the emergence of the negative social
aspects.

 

Riley
(2011) stated that unemployment persistently high unemployment involves a loss
of potential national output (i.e. GDP operating well below potential) and is a
waste of scarce resources. Unemployment creates huge costs for individuals and
for the economy as a whole.

People
who choose to leave the labour market permanently because they have lost the
motivation to search for work, this can have a negative effect on long run
aggregate supply and thereby damage the economy’s growth potential. Some
economists call this the “hysteresis effect”. When unemployment is high there
will be an increase in spare capacity – in other words the output gap will
become negative and this can have deflationary forces on prices, profits and
output.

 

There
are a number of policies and strategies that have been made, aiming to address
the challenge of unemployment. For example;

•           Industrialization and Job Creation
Strategy 2012–16

•           In industrialization and Job Creation
Strategy, the Government of Zambia (GOZ) sets a goal of creating 1 million
formal jobs between 2012 and 2016. This is to be achieved through both foreign
and local investment, and will require economic growth above 8 per cent per
annum during the period. The strategy focuses on four growth sectors with the
greatest potential to achieve the objectives of promoting growth and
employment, increasing value added and expanding National Employment and Labour
Market Policy (NELMP) 2007–11

 

The
main objective of the NELMP, adopted in 2006 and currently under revision, is
to create quality jobs under conditions that ensure adequate income and
protection of capital. The specific targets identified were to bring the
unemployment rate below 10 per cent by 2011 and ensure that by that date 90 per
cent of the workforce was operating in an environment where their rights are
respected (GOZ, 2005, p. 17). As well as identifying sectors with the potential
to create employment, namely agriculture, mining, manufacturing, tourism,
trade, transport, and information and communications technology (ICT), the
policy highlights the promotion of small and medium-sized enterprises (SMEs),
efforts to make the financial sector more inclusive, and the provision of relevant
skills by the education and training system. It addresses several cross-cutting
issues, such as the HIV/AIDS pandemic, environmental degradation, gender and
governance. To ensure the continued relevance of the NELMP, the Government of
Zambia has asked the ILO to support the review of the policy and to suggest
strategies for more and better jobs for inclusive growth that would be in line
with the Industrialization and Job Creation Strategy. (Harasty, Kwong, Ronnås ,
2015)

 

The
World Bank’s Country Partnership Strategy (CPS) for Zambia for fiscal is
closely aligned with the Zambian government’s Vision 2030 and Zambia’s National
Development Plans. The plans are organized around the theme of broad based
wealth and job creation through citizenry participation and technological
advancement. Specific development goals are to foster a competitive and
outward-oriented economy in order to significantly reduce hunger and poverty
and reach middle income status.

 

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