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Eureka: On unemployment
by Jay Gutman
2017-11-24 11:11:54
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Unemployment here will be discussed from an economic perspective, but also from an anthopologic, sociologic and psychologic perspective. This means I won't be merely looking at the economic side of unemployment, but also at the social aspects of it. In economic terms unemployment tends to have one economic facet, while the social side of it varies greatly from country to country.

In one of his books, Geert Hofstede discusses how he, as a Dutch engineer, interviewed at an American company. He had his Dutch ways and despite being a very skilled engineer played the humility card. Americans would be asking questions and expecting assertiveness, but he played it safe. The Americans told him “we need a first class man” after the interview, and he failed because he lacked assertiveness.

unempoy001_400The idea behind employment, from an economic standpoint, is that it is a sales transaction. The employee sells his labor in exchange for a number of hours of services provided to the company. Expectations vary greatly from company to company, from region to region, from country to country. The problem with employment is the different definitions and interpretations of what the sales transaction means.

Let's look at things from an economic standpoint. A service needs to be provided by a human being. So the company, or government, hires the human being. The human being sells his 40 hours or so of labor in exchange for cash, in the form of a daily, weekly, bi-monthly, monthly or yearly salary. The demand for human labor varies greatly from company to company. Companies go through trial and error to figure out what the ideal labor composition of their labor force will be. Some companies need productive employees, while others need available employees. Some companies do not seek profit, others are profit-driven. Some companies like to clearly define employee missions, others like employees to be flexible in the services provided. Some companies trust employees in their mission, others are skeptical and tend to spy on their employees. Some companies do not believe external factors such as family life influence the ability to perform a task, while others believe that it does.

Let's look at unemployment from an economic perspective. Everyone knows the Gini coefficient which measures wealth distribution. I have an even better coefficient. The coefficient is simple: GDP divided by number of companies/institutions. The higher the number, the more wealth is concentrated within a few companies. This means that a few companies have the monopoly over hiring procedures. If the number is high, unemployment is likely to be high. If the number is low, unemployment is likely to be low. This is because, from an economic standpoint, too many employees are chasing too few businesses. It has nothing to do with skills mismatch, and has everything to do with the number of potential employees chasing the number of available employers.

Now to the sociologic and anthopologic perspective. Sales varies greatly from culture to culture, so does selling labor. This has a lot to do with the cultural perspectives on sale. In some countries, you get briefed on the context of the sales transaction. In other countries, there is little or no context behind sales transactions. In some countries, people like to start small and grow. In other countries, people like to start big and, to their disappointment, grow smaller with time. In some countries people have clear goals and paths to growth. In other countries people don't really have clear goals and orientations to growth. In some countries, CEOs value cult of personality over company growth. In other countries only growth matters.

Let me break this down for you. In some countries, there's a large narrative behind the recruitment of employees. Companies will identify the need of an employee for a very specific reason, will advertise positions with very specific work conditions, perks and benefits, will tell employees exactly why they are hired and what kind of work they should do. In other countries, hiring is more based on impulse or tradition, there are no clearly defined tasks for the employee and the transaction will be dealt with a lot of improvisation.

In some countries and companies, the idea when you start a business is to start small and to hire employees as the business is growing. You start with one product and gradually move to different products. You start with one employee and gradually hire more employees. In other countries or companies, you get huge loans and start big. You hire 30, 40, 50 employees with dubious contracts and work conditions and then your business gradually shrinks, and you end up with 2 or 3 loyal employees. In all countries people dream big, but in some countries people start small and define their growth goals, while in others people start by dreaming big.

 Some countries and companies very clearly define what their growth trajectory will be like, and improvise as they grow. In other companies, goals for growth are ambiguous and impulse based. In some countries, if you set up goals for growth, you should follow them religiously without taking context into account. In other countries, you adjust your goals to the context of the moment. In other countries, people prefer not setting goals, because setting goals means you would have to follow them.

One way to measure unemployment from an anthropologic perspective is (days spent working divided by number of jobs held) divided by workforce.

Now to the psychologic aspects of unemployment. Employment is one of the most complicated sales transactions. Unlike most sales transactions which involve a short amount of time spent on the transaction, employment is a permanent or semi-permanent transaction. This contradicts biologic and psychologic factors where some people are comfortable with routines and others are not. Some people are comfortable with receiving orders and others are not. Some people are comfortable socializing with colleagues and others are not. This leads to a great deal of office politics, where the ability to perform a task unfortunately does not trump the ability of an employee to adjust to the company, even though pure economics would suggest otherwise. Some can offer a very good deal in terms of selling their labor. For example, I speak French, English, Spanish and a great deal of other languages and am a versatile person, yet usually sell my labor for less than 1,000 dollars a month. That's a bargain for most companies, but because of office politics and the psychologic aspects of work, people at the company did not want me to grow and eventually prevented me from moving forward on the job. Psychologic factors play a role in determining what employees will stay and what employees will leave, often with little or no consideration for their skills or talents. In some case being part of the family is what matters, in other cases random criteria applies to who gets promoted and who gets fired.    

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