Unemployment to Self-Employment and Beyond: The Journey of a Reluctant Entrepreneur

By Umasuthan Kaloo PhD

You may want to find a full-time job that pays well, take orders, and work hard.

But good jobs are hard to come byeven if youre perfectly qualified, which is why you should listen to Umasuthan Kaloo, Ph.D., a reluctant entrepreneur who has achieved success.

He encourages you to consider new possibilities in this business guidebook. Youll learn why self-employment may make sense and get a sense of the challenges and rewards to expect if you pursue it.

He also outlines the three stages of entrepreneurship: starting, growing, and exiting. In straightforward language, he explains how to:

make the right moves to start right;
continuously adjust to a changing market; and
decide whether to cash out rich or leave your business to loved ones.

The guidebook is filled with case studies showing how other entrepreneurs have been successful. Other case studies demonstrate mistakes to avoid.

Becoming your own boss is filled with challenges and risks, but youll also find its filled with rewards. Discover your options, and learn if youve got what it takes to be an entrepreneur with Unemployment to Self-Employment and Beyond.

• Language: English
• Publisher: Partridge Publishing Singapore
• Release date: Sep 6, 2016
• ISBN: 9781482880267

Umasuthan Kaloo PhD

Umasuthan Kaloo, founded a management consultancy in 1990 after working in senior positions for a leading international consultancy firm for more than twelve years. He shares the lessons from his own business owner journey and that of many friends and clients, from paid employment to self-employment and beyond, in this book.

Book preview

Copyright © 2016 by Umasuthan Kaloo, PhD.

Cover Design: Asha Kaloo

ISBN:      Hardcover      978-1-4828-8025-0

                Softcover        978-1-4828-8024-3

                eBook            978-1-4828-8026-7

All rights reserved. No part of this book may be used or reproduced by any means, graphic, electronic, or mechanical, including photocopying, recording, taping or by any information storage retrieval system without the written permission of the author except in the case of brief quotations embodied in critical articles and reviews.

Because of the dynamic nature of the Internet, any web addresses or links contained in this book may have changed since publication and may no longer be valid. The views expressed in this work are solely those of the author and do not necessarily reflect the views of the publisher, and the publisher hereby disclaims any responsibility for them.

www.partridgepublishing.com/singapore

Contents

Preface

Acknowledgements

Part 1 BACKGROUND

Chapter 1 The Problem, Causes And Solutions

Causes

Population Growth

Productivity Increases

Demographic And Cultural Changes

Declining Standards In Education

Solutions

Early Solutions

More Recent Solutions

Increase Private Investment

Invest In Infrastructure Projects

Inflate Own Ranks

Invest In Micro, Small & Medium Enterprises

Micro, Small And Medium Enterprises (Msmes)

Enterprise Size

Note 1 – Classification Of Enterprises By Size

Position In Life Cycle

Chapter Summary

Chapter 2 Challenges & Resources

Generic Challenges

Markets

Knowledge & Skills

Note 2 – Teaching Enterprises

Money

Employees

Compliance

Competition

Resources

Material Resources

Money

Employees

Other Material Resources

Behavioural Resources

Knowledge & Skills

Personality

Note 3 – Grouping By Year Of Birth

Note 4 – Five Factor Model

Environmental Resources

Markets

Institutional & Corporate Support

Making The Most Of Resources Available

Chapter Summary

Part II ENTREPRENEURS

Chapter 3 Entrepreneurs, Intrapreneurs & Reluctant Entrepreneurs

Differences Between Entrepreneurs And Non-Entrepreneurs

Intrapreneurs

Reluctant Entrepreneurs

The Making Of A Reluctant Entrepreneur

Differences Between Entrepreneurs And Reluctant Entrepreneurs

The Path Of The Reluctant Entrepreneur

The Importance Of Reluctant Entrepreneurs

Chapter Summary

Chapter 4 Qualifiers For The Role Of Reluctant Entrepreneur

The Economically Disadvantaged

School Leavers And Graduates

Retirees

Lay-Offs

Voluntary Exits

The Challenge Of Making The Right Choice

Chapter Summary

Part III CHOICES

Chapter 5 Agricultural Sector

Distinguishing Features

Perishability

Land And Water

Weather

Biological Hazards

Enterprises Grouped At Division And Sub-Division Levels

Aquaculture

Case 1 - Hatchery

Fruit And Vegetables

Floriculture

Dairy

Livestock

Case 2 – Syarikat Perniagan Haji Budin

Supporting Businesses

Chapter Summary

Chapter 6 Mining Sector

Enterprises Grouped At Division And Sub-Division Levels

Exploration

Extraction

Processing

Supporting Businesses

Chapter Summary

Chapter 7 Manufacturing Sector

Distinguishing Features

Separation Of Production And Consumption

Standards

Note 5 - Quality Standards

Scale Of Production

Flexibility

Accommodation

Energy

Enterprises Grouped At Division And Sub-Division Levels

Food & Beverages

Case 3 - Start-Up Opportunities In Small Niche Markets

Apparel

Furniture

Electric / Electronic

Construction

Chapter Summary

Chapter 8 Services Sector

Distinguishing Features

Intangibility

Simultaneity

Non-Homogeneity

Case 4 – Dasra

Enterprises Grouped At Division And Sub-Division Levels

Entertainment

Case 5: Street Musician

Retail

E-Commerce

Case 6 - Fizzy Goblet

Multi-Level Marketing

Fixing

Education

Tuition

Skills Training

Computer Technology In Education

Other Support Services

Case 7 - Jm Education Counselling Centre

Healthcare

Business Opportunities In Healthcare

Preventive

Curative

Palliative

Funeral Services

Other Opportunities

Hospitality & Tourism

Accommodation & Meals

Travel

Tours

Management Consultancy

Case 8 - Purple Ventures Management Consultants Llp

Logistics

Professions & Trades

Chapter Summary

Chapter 9 Knowledge Sector

Research And Development

Case 10 - Sri Elastomers

Computer Technology

Education

Design & Installation

Business Process Outsourcing

Apps

Training

Maintenance & Repair

Biotechnology

Applications In Agriculture

Applications In Mining

Applications In Manufacturing

Applications In Services

Nanotechnology

Applications In Healthcare

Applications In Manufacturing

Water

Applications In Agriculture

Opportunities For Reluctant Entrepreneurs

Chapter Summary

Part IV THE JOURNEY

Chapter 10 Start

First Decision

Moderating Influences

Markets

Location

First Sale

Repeat Sales

Competition

Compliance

Business Models

‘Me-Too’ Start

Buying An Existing Business

Buying A Franchise

Independent Associate

Ownership

Sole Proprietorship

Partnership

Limited Liability Company

Organization Structure

Minimising Risk

Chapter Summary

Chapter 11 Growth

Phase 1

Phase 2

Phase 3

The Special Case Of Family Owned Msmes

Chapter Summary

Chapter 12 Exit

Cash-Out Options

Outright Sale

Partial Sale

Legacy Options

Sell To Kin

Sell To Managers

Sell To Employees

Chapter Summary

Conclusion

To my grandchildren,

Anya, Anisha, Rohan, Ashwin, Amara,

Logan, Kiran, Maya and Arun

Winners work harder

Preface

This book is aimed at individuals who have failed to secure paid employment of their choice. This could have happened for any of a number of reasons. Although relatively few may take it up, one option open to all of them is self-employment.

Self-employment is not an easy option. This option is filled with challenges and obstacles, but for those who have the right resources, a willingness to place some of these resources at risk to achieve their goals, and the will and commitment to succeed, it holds the promise of great rewards, both personal and material.

Self-employment is the mark of the entrepreneur. It is not in the nature of non-entrepreneurs to be self-employed. Non-entrepreneurs prefer paid employment, happy to be told what to do by their seniors. They may advise but as paid employees they are not the final decision makers nor do they feel accountable when things do not go to plan. Equally important is that as paid employees, their savings and other assets are not placed at risk. They may place their employers’ resources at risk, and history shows that many do, but never their own. Because their own resources are not at risk, when the going gets tough, paid employees are free to move from one employer to another.

When and if non-entrepreneurs take up the option of self-employment, their situations change. For example, they find that they are the final decision makers and when things go wrong they have to be accountable. They also find that their assets and savings are placed at risk, and for this reason when the going gets tough it is nearly impossible for them to run to another job. They will also be advised by well-meaning friends and relatives that the change that they are planning is a dangerous one and that many have failed before. For these and other related reasons when non-entrepreneurs take up the option of self-employment they do so reluctantly. What they are doing is to take their first steps on the path of the Reluctant Entrepreneur.

For non-entrepreneurs to venture into the path of the Reluctant Entrepreneur, they must be pushed to do so. Sustained unemployment and the hardships and the social exclusion it creates can act as a push of sufficient strength to force some, certainly not all, non-entrepreneurs to take this path. The first milestone on this path appears when the non-entrepreneurs free themselves from the shackles of wanting paid employment and become self-employed. With time, the right choice of business opportunity to venture into, and the commitment and will to succeed, their new start-ups will grow in size, creating hundreds and sometimes thousands of new job opportunities for the ever growing ranks of employment seekers. The emergence of Reluctant Entrepreneurs is thus of great importance not only to recover the self-respect and place in society of individuals who have been denied employment of their choice, but also to build the economic and social well-being of their communities.

Graphic%201.jpg

The Journey of a Reluctant Entrepreneur

The purpose of this book is to open the eyes of non-entrepreneurs who, for one reason or other are unable to secure paid employment of their choice, to the opportunities which await them if they take the path of the Reluctant Entrepreneur. Their journey itself will have its ups and downs, and there can be failures and successes. But whatever is the outcome of their journey, it will be challenging, rewarding and satisfying all at the same time.

This book is presented in four parts.

Part One starts with a definition of unemployment. Unemployment as defined here is a state of mind where individuals see themselves either as denied paid employment or currently employed in jobs which do not meet their intellectual and emotional needs. Within the scope of this definition, some individuals who live on welfare may not see themselves as unemployed, and some who are currently employed may see themselves as unemployed. When individuals perceive themselves as unemployed, it is often reason enough for them to engage in anti-social behaviour. For this reason, a number of solutions to the problem of wide-spread unemployment have been proposed and implemented at national and international levels. Unfortunately, many of these solutions, while successful in the short term, are not sustainable. The one exception has been the effort to increase the population of Micro, Small and Medium Enterprises (MSMEs). The only limitation to this excellent solution is that there are not enough individuals with the right mix of personal and material resources to start and grow MSMEs. Part One continues with a description of the challenges which this class of enterprises presents and the kind of resources needed to overcome them.

Part Two identifies individuals who possess this mix of resources. Such individuals typically fall into the class of entrepreneurs. Entrepreneurship is a quality which is present in all of us, but it varies in strength from fully awake in some (entrepreneurs) to dormant in others (non-entrepreneurs). Individuals can make a transition from the dormant state to the active state when faced with social and economic pressures of sufficient magnitude. This can happen when individuals are unemployed for long periods of time, or when they are very unhappy in their current jobs. We refer to individuals who embark on this journey of transition as Reluctant Entrepreneurs. Part Two closes with the kinds of individuals who are most likely to take to the path of Reluctant Entrepreneurs.

Part Three offers an approach for Reluctant Entrepreneurs to choose one business opportunity when faced with a choice of thousands, each of which could be successful for some but not for others. The process of making this choice is to start with the five major industry sectors of Agriculture, Mining, Manufacturing, Services and Knowledge, and work down their taxonomic divisions and sub-divisions, at each stage eliminating groups of business opportunities whose resource demands cannot be met from the mix of resources available to the Reluctant Entrepreneur. This process rapidly narrows the field of choice open to each Reluctant Entrepreneur from thousands to the few which are most likely to be successful in their hands.

Part Four traces the journey of Reluctant Entrepreneurs from the point of choosing a business opportunity to venture into. There are three major stages in this journey. These are Start, Growth and Exit. At each stage, the Reluctant Entrepreneurs are faced with the challenge of how best to use the resources available to them to achieve the goals they set for themselves. These goals vary from individual to individual and over time as they transform from non-entrepreneurs to entrepreneurs. The goals can range from becoming wealthy and living a life of luxury to an altruistic wish to help others. Whether they achieve their goals depends to a large degree on whether they make the right choices at each stage of their journey.

This book is illustrated with a selection of case studies of individuals who, finding themselves denied employment of their choice, took their first bold step into self-employment. The subjects of these case studies have not been selected for their rags to riches stories nor because they have attained the dizzying heights of the world’s super-rich. They have been selected because they show the very wide range of business opportunities open to those who dare. The common denominators emerging from these case studies are the passion they display for the goods or services they offer to their markets, and their unwavering commitment to quality.

Acknowledgements

Following the publication of an earlier book which was based on the paid study of a large sample of owner-managers of small enterprises, one key finding was that small enterprises are not ‘little big enterprises’ and are not to be managed as such. Another key finding was that the majority of these owner-managers, although they could be described as entrepreneurs because they founded and owned business enterprises, did not start off as entrepreneurs. This was my own situation too, and in informal discussions with others, the same situation seemed to apply to the majority of individuals who might be viewed as entrepreneurs. Family, friends and former colleagues, many of whom have had years of ownership and management exposure to business enterprises of all sizes and covering different industry sectors and sub-sectors, made valuable contributions. Chief among them are,

Mrs Margaret Ann Kaloo, founder and CEO of a group of International schools

Mr David Dass, Senior Partner in one of Malaysia’s leading law firms, now a consultant

Mr Devan Kaloo, Global Head of Equities of a UK based firm of international asset managers

Ms Asha Kaloo, Operations Director of an established Company and owner of a new Start-up

Mr Casey Cheah, Factory Manager, Management Consultant and now Stockbroker

Mr Rajan Kaloo, Computer wizard and part owner of a successful medium sized company

The next step was to find evidence to support these ideas and concepts. Even anecdotal evidence covering a small sample is difficult to come by as owners and managers in business tend to have very busy schedules and have little time to spend with people who are not directly related to the survival or growth of their enterprises. I am therefore very grateful for the time and resources the following enterprise owners or senior managers made available to me. I am also grateful to Mr Devan Kaloo and Mr Soman Shankar, for the introductions to a number of these owners and their senior managers. The contributions of these owners and senior managers include the illustrations which are used in their respective case studies. The contributors are,

Mr M. Thanabal, ECK Hatchery

Mr Kamaruzaman Sudin, Syarikat Perniagan Haji Budin

Mr John Paul Hamilton, DASRA

Ms Laksheeta Govil, Fizzy Goblet

Mrs Jean Monteiro, JM Education Counselling Centre

Mr Ateet Sanghavi, Purple Ventures Management Consultants LLP

Mr Anthony Gomez, Gomez & Associates, Advocates and Solicitors

Mr Gopinath Sekhar, SRI Elastomers

Part 1

BACKGROUND

Unemployment can take many forms. The conventional meaning attached to unemployment is that it is where individuals find themselves denied paid employment. Hence most national and international publications present statistics describing the percentage of men who are unemployed, women who are unemployed, graduates who are unemployed, former bank workers and automobile industry workers who are unemployed or returning servicemen who are unemployed. But the same statistics do not show that in fact jobs are available for many of those who see themselves as unemployed. Unfortunately the jobs which are available do not match the aspirations for income and prestige of this population of those who perceive themselves as denied employment. This situation also raises the question of where the thousands of able-bodied men and women who choose to live off state welfare would fit in.

In addition to those who see themselves denied the right kind of employment, there are also thousands of others who have been successful in securing paid employment but they are unhappy in their jobs for one reason or other and are as active in searching for jobs as those who see themselves denied employment. They also qualify to join the ranks of the unemployed.

What this expanded definition of unemployment does is to increase the number of the unemployed way beyond the published statistics which are already very significant. However unemployment is defined, besides being an obvious problem of manpower underutilisation and therefore an economic problem, it is also a more serious social problem.

At the level of the individual, prolonged unemployment causes loss of self-esteem, rage, depression and social isolation. At the level of societies wide-spread chronic unemployment often lies at the root of an increasing incidence of crime, corruption, and the breakdown of law and order as those who are the victims give vent to their anger to protest their situation. This has already happened in a number of countries. This is sufficient reason for national and international agencies to take a serious view of unemployment and allocate significant amounts of their resources to reduce the severity of the problem.

In Part I we explore the causes of this problem and discuss the more popularly adopted options to address this problem. These are covered in two chapters. Chapter 1 explores the underlying causes of widespread unemployment, the reasons why this is a problem of global proportions, why this was not a problem of similar proportions in the past, and the several solutions which have been put in place by concerned governments and international organizations. In Chapter 2 we pick out the most promising of these solutions, examine the challenges that it will present, and the resources needed to implement this set of solutions.

Chapter 1

THE PROBLEM, CAUSES AND SOLUTIONS

Today no country seems to be spared the threat of chronic unemployment. Japan, the land of jobs for life, is faced with massive lay-offs in century-old companies and large numbers of new entrants to the job market, including graduates of prestigious universities, are unemployed. In other economies of the world, financial problems have taken centre stage, but in trying to find solutions to these problems their governments have aggravated their problem of unemployment. These governments, in seeking to sort out the problems of large, weak and mismanaged companies through bailouts conditional on greater efficiency and lean operations, have caused the retrenchment of tens of thousands of people inflating their already bloated ranks of the unemployed. This has led to demonstrations and unrest on the streets. Although rising costs, inflation and depreciation of currency, the future dangers of rising national debt, and corruption which has become endemic even in high places, have all added fire to these demonstrations and unrest on the streets, underlying all these issues is the issue of unemployment.

Chronic unemployment when compounded with a disparity between the ‘haves’ and the ‘have-nots’ can disrupt civil order, even in countries managed by authoritarian governments. It is worth remembering that the phenomenon of the Arab Spring kicked off with the desperate act of one young man trying to cope with his own problem of unemployment – it spread across country borders like wild-fire, with widespread unemployment fuelling the spread, leading to the fall of governments which had been in power for decades.

Today the signs are that chronic unemployment is here to stay and grow and its negative impact is already beginning to rear its ugly head in many developed and developing countries.

Causes

The most often quoted causes of chronic unemployment are population growth, science and technology led increases in productivity, changes in demographic profiles and culture, and declining standards in education. These are causes which are deep-rooted in the social and economic development of nations, and have taken decades to evolve. They cannot be reversed or eliminated without great effort and perseverance on the part of millions of people. This is not likely to happen. Consequently chronic unemployment is here to stay and initiatives other than direct control are needed to cope with this problem.

Population Growth

Population growth is often quoted as the biggest single cause.

In all of history up to the mid-twentieth century, the world population grew steadily to a figure of two billion. Then within a period of less than half a century the population exploded to over seven billion. In part this increase has been due to improved healthcare which has led to reduced infant mortality rates and increased life expectancies. It is commonly forecast that by 2050, the world population will more than double from its current levels to fifteen billion.

From the point of view of creating employment, the problem of population growth is not in numbers alone. The bigger problem lies in the uneven distribution and the uneven quality of this growth. For example, in a number of developed economies while birth rates shot up in the years following World War II, this was followed by falling birth rates, ultimately to negative levels in some of the countries with the highest per capita income. Standards of education and training remained high and the capacity of the smaller population to remain competitive remained high. But in developing countries and among the poorer sections of the developed countries, birth rates remain high, up to two per cent per year compounded in some cases. At the same time standards of education and training fell, diluted in part by the stretching of resources over larger numbers of people. It would seem that the fastest rates of population growth happen in areas which are the more disadvantaged economically and which therefore display a downward spiral in terms of capacity to support their growing populations.

The impact of these imbalances is that in both the developed and developing economies proportionately larger numbers of unemployed people come from backgrounds with less access to quality education and training, thereby reducing their employability. Additionally job-seekers with these backgrounds are more likely to face discrimination in job selection and placement processes. This creates a vicious cycle where the children of parents who are less employable are themselves less employable through no fault of their own and it makes the problem of chronic unemployment more serious than it would have been if it was evenly distributed.

Overall it would seem that until major changes take place, population growth at the rates we are experiencing in a number of developing economies and societies will only serve to increase unemployment. This is likely to suck them into a spiral of reducing quality of life making them prime targets for recruitment by self-serving fanatics and career criminals.

Productivity Increases

Productivity increases seem to be next in line in the popular list of the causes of unemployment. Productivity increases are made possible by the application of advances in science and technology. Productivity increases reduce employment opportunities. The evidence is everywhere. For example, 100-acre farms today need only one man to till, plant, harvest and store; large retail stores serving thousands of customers per day can function effectively with a small number of check-out girls, technicians, shelf stackers and security guards; large manufacturers producing tens of thousands of units of consumer goods operate with a fraction of the number of employees required less than ten years ago; automated teller machines have replaced large numbers of front office staff in commercial banks while handling an ever increasing volume of transactions; the internet is being increasingly used to deliver teaching material to students and even interact with them in real time extending the reach of academics and enabling higher student to teacher ratios; on-line booking of airline and entertainment tickets have eliminated many jobs; and real-time image transmission has made it possible for virtual teams of healthcare specialists to come together from great distances for the benefit of a single patient without the wastage and hassle of travel time.

In addition to technology applications reducing the number of jobs, technology applications can also affect employment in other ways. For example the widespread use of technology in all kinds of production and service applications raises the bar for entry to the new generation of job-seekers. People who are unable to meet the new minimum demands of knowledge and skills find themselves disqualified from many jobs and the unemployed at the bottom of the pyramid increase in numbers.

It is true that technology enabled productivity increases have significantly reduced the number of job opportunities in many sectors. What may be overlooked is that the same technology advances have created an equal or greater number of new jobs in other sectors. For example in the productive sectors of agriculture, manufacturing and mining, technology-enabled productivity increases have added to the wealth of the country and have made it possible to fund large numbers of new jobs in education, health care, entertainment, travel and financial services; the increased demand for mechanization, automation and computerization has created millions of new jobs in manufacturing hardware, creating innovative software, retailing these products, and in the maintenance and frequent upgrading of both hardware and software. Another outcome of technology-enabled productivity increases has enabled a cross-border re-distribution of jobs, creating more jobs in the less developed economies, while eliminating similar jobs in the more developed countries. This has been achieved for example through the emergence of call centres in developing economies to serve the needs of business units in the developed economies. Call centres today serve a huge variety of enterprises in the services sector ranging from insurance and membership services to medical and healthcare services.

Giving equal weight to the impact of technology advances in creating new jobs and making redundant many older jobs, it is difficult to accept that technology enabled productivity causes a net loss of unemployment. However what has happened is that technology advances have made larger numbers of people in the lower layers of the Knowledge and Skills pyramid, unemployable. The decline in standards of education, which is to be discussed later, has further exacerbated this situation. It would seem that in fairness to the efforts of those who use science and technology to improve the productivity of resources, increasing levels of unemployment is the outcome of the failure of sections of the population to keep up with the changing demands of industry. Unfortunately the common perception is that the applications of technology which enabled significant increases in the utilisation of resources, many of them scarce and non-renewable, are responsible for the loss of jobs overall.

Demographic and Cultural Changes

Demographic profiles and culture are linked when it comes to unemployment.

The increase in demand for employment at the grey end of the age-scale is created not only by people living longer and able to continue working, but also by their need to make ends meet in the face of rising costs. They are able to continue working because developments in healthcare endow them with the mental and physical capacity to carry on working beyond conventional retirement age. They need to continue working for wages for one or both of two reasons.

One reason is that their savings accumulated over their earlier 35 to 45 years of employment turn out to be inadequate to fund them for the next 20 to 30 years of their life especially in the face of the spiralling costs of the very healthcare which gives them their added years. This could be in spite of their best efforts to invest in pension schemes which on the face of it provided retirement security but in fact either did not allow for the levels of inflation experienced or went bust for reasons of management greed or incompetence.

The second contributing reason is the change in the social norms of communities where younger generations no longer see it as their responsibility to care for older generations. Part of the reason for this is the increased mobility of people across country borders to seek a better life. This effectively reduces the extended family size which used to be a feature of communities in the early days. This change in attitudes started in countries which are favoured by immigrants, spread to the older countries with younger generations moving out to seek their fortunes elsewhere, and is now increasingly a feature of Asian communities, the last bastion of filial responsibilities. The combined impact of people living longer, able to engage in productive work longer, and the increased need to be independent is to add large numbers of retirees to the ranks of job-seekers.

At the other end of the age scale, changing values such as a marked preference for white collar jobs as against blue collar jobs, has created a generation of new entrants to the workforce who consider thousands of jobs which are out there as not ‘sexy’ or ‘cool’. This puts off many of this generation, who would rather wait for a desk job in a climate controlled environment which offers maximum opportunities for social networking.

Employment seekers at both ends of the working age spectrum add to the unemployment statistics because they are either unable or unwilling to take up the many job opportunities on offer.

Declining Standards in Education

The education system is held up as a cause of unemployment because it seems to spew forth more and more unemployables. This is possibly the outcome of policies drawn up by politicians who need to be seen as doing the right thing to ensure their place in history and survival in the next election. One of these is to promote the populist thinking that tertiary education is the undeniable democratic right of all. The second is to use tertiary education as a tool of affirmative action to correct perceived social and economic imbalances. These are possibly noble initiatives. But what seems to be overlooked in the process is that this right has to be earned. The need for merit seems to have been lost and the downside is that young adults who previously would not have qualified for admission to the established institutions of higher learning now need to be squeezed in. Subsequently, to avoid large scale failures, standards have to be lowered. When the politically-created demand exceeds the capacity of the established institutions, commercially minded private institutions are quick to take up the slack. In both cases they have to lower their educational standards to avoid the failure of those who should not have been given admission in the first place. This adds to the ranks of graduates who lack the basic knowledge and skills for jobs which their degrees and diplomas say they are qualified for, and adds to the ranks of unemployed because they are unemployable.

The education system as it has evolved in many countries also seems to have lost sight of the need for a balance between academic training and vocational training. Individuals who are academically trained are generally held in higher regard in social circles than those who are vocationally trained. The situation is made worse when the graduates of academic institutions are paid higher than the graduates of vocational institutions. This not only persuades more students to seek academic qualifications as their first choice but it has also persuaded top decision makers to upgrade institutions offering vocational training to institutions offering academic programs. In the process the balance between academically trained job-seekers and vocationally trained job-seekers seems to have been irrevocably lost, creating large numbers of unemployables at both ends of the educational spectrum.

Solutions

Governments and decision makers have been fully aware of the disruption large scale unemployment can cause to the orderly social and economic development of nations. Hence, over the years individuals and groups in power have introduced several solutions to the problem, which have been more successful in some cases and less so in other cases.

In the past the more effective large scale solutions focused on denying access to education, using race, religion and gender as criteria for granting access. In more recent times although there are still pockets of the carry-over of this early solution, the socio-economic levelling impact of two world wars and the growing cry for equal rights across the world have persuaded decision makers to focus on more socially acceptable solutions. The past and recent solutions are described below.

Early Solutions

There was a time in the not so distant past when unemployment was not a big issue and the balance between the supply and demand for jobs was reasonably well maintained. This was done mostly by grouping individuals by caste, race, gender, religion and colour of skin and putting in place a system of checks and balances to decide how parentage and little else determined the job opportunities open to an individual. The most powerful tool available to those who managed this system of checks and balances was education. By limiting education, from the basics of reading and writing to the offerings of institutions of higher learning to sections of the populace grouped by parentage and gender, it was possible to organize entire societies into a pyramid. In this pyramid the masses at the base could only qualify for low-income jobs, and only the chosen few of the right gender among the ruling classes and the very wealthy, could qualify for the high-paying jobs. By manipulating access to education in this manner a social order was created where those who occupied positions in the upper strata, although fewer in number, took the bigger share of everything, and those who occupied the lower strata, though larger in number, were left with the smaller share.

The system was elegant in its simplicity and ruthless in its enforcement, and it took centuries of managing expectations and severe punishment for crossing the line to develop and sustain it. Unfair perhaps, but from the point of view of providing full employment the system worked. Regrettably there are still groups within some countries quoting ideological and religious reasons to practise racial and gender discrimination in education. An impact of this discrimination is to deny employment to some although this is never a stated objective.

In managing unemployment in this manner, a number of environmental factors helped too. For example population growth in the early days was modest, kept at bay to some degree by frequent outbreaks of disease and the occasional natural disaster of huge proportions. These outbreaks of deadly disease and natural disasters which had a role in the past to restore balance by wiping out large swathes of the population seem to have lost their impact over the years. This has been partly due to man’s advances in science and technology which made it possible to control many deadly diseases and reduce the impact of many natural disasters. Even so, nature is not to be denied her dues and natural disasters continue to take thousands of lives annually.

There was also the ever present option of starting a war with a neighbour, both cross-border and cross-street, without the need for time-consuming intervention by peace-makers and the approval of world bodies. This served to reduce the imbalance between the supply and demand for jobs partly by reducing the number of live able-bodied men, and partly by increasing the number of jobs which emerged to meet the needs of the war effort. This situation held for hundreds of years and in isolated cases still holds. Bur over the first few decades of the last century, things changed.

Following the flattening effects of two world wars in the last century, which involved almost every nation in the world, the first cracks in the facade of supremacy by caste, gender, race, religion or colour, appeared. The silent majority at the bottom of the pyramid found their voices and their strength in numbers. Although the discrimination of the early years remained in many parts of the world, including whole countries and societies, in a number of countries entry to institutions of learning at all levels became open to anyone who qualified, regardless of their parentage and gender. The link between parentage/gender and jobs was largely removed and the doors were opened to the pursuit of jobs which best met the aspirations and ability of individuals. Jobs by merit became the order of the day in these forward thinking countries and societies, which also happened to be economically stronger. Whether jobs on merit or economic strength came first is open to debate but the correlation is there.

Opening up the access to education contributed towards an increase in the number of people who qualified for the better paying jobs higher up in the pyramid. Predictably, the flow of new job-seekers was mostly from the bottom of the pyramid to the top and not the other way around. As a result, balance was threatened in the economically stronger countries. To re-establish balance the economically stronger countries opened their doors to job-seekers from the economically weaker countries to fill in the empty spaces in the bottom tiers of the pyramid.

In doing so the stronger economies may have missed a golden opportunity to improve the lot of a sector of their own society who have been condemned to the base of their economic pyramid. Often referred to as the underclass of modern societies, they include the victims of circumstances, environment and birth, which have combined to stunt their aspirations for a better life and deny them the opportunity to qualify for even the lowest levels of paid employment. As children they will have grown up in the over-crowded and unhealthy surroundings of ghettos and slums of large cities, or been abandoned by family and friends at critical stages in their lives condemning them to a hand to mouth existence or a life of petty crime. Rather than seek to redeem their own underclass when economic progress created jobs at the bottom of pyramid they resorted to the easier route of importing such labour from weaker economies. This not only laid the foundations of adding to the existing underclass but also to a hollowing out of the job pyramid in the weaker economies causing new unbalances in their supply and demand of jobs. History dating back to the early days of the American slave trade shows that patchwork-solutions, using cross border movements of manpower to re-establish balance between the demand and supply of jobs, in the longer term creates new problems for both the host and donor countries.

In the past few decades, several other forces have contributed to further upsetting the earlier well-managed balance between the demand and supply of jobs, thereby leading to the growing problem of unemployment the world faces today.

More Recent Solutions

In recent years changes in social values and accepted practices have made it difficult for decision makers in the public sector to replicate past solutions. They have instead elected to regain balance by focusing on a number of ways to increase the supply of jobs. These new-generation solutions include offering incentives to increase private sector investments, using public funds to invest in large infrastructure projects, inflating their own ranks, and investing heavily in the growth of micro, small and medium enterprises (MSMEs).

Increase Private Investment

Initiatives to attract and retain foreign and domestic investments have proved to be very popular with governments in both developed and developing economies. To a very large extent these efforts have been very fruitful and large numbers of new jobs have been created. Unfortunately this is a zero sum game and investments in one country are at the cost of investments in another country. Even for the receiving country there are concerns of cost and sustainability made all the more serious by the differences in the expectations of the investors and the beneficiaries of these investments.

In attracting investors to set up employment creating enterprises in a country, governments are motivated to create more jobs to keep crowds off the streets and themselves in power. On the other hand foreign investors, who are the primary targets of most investment-seeking countries, are motivated to move all or part of their operations across borders to reduce costs. Investors reduce costs by negotiating the best deals to be provided at public expense for example gaining access to land leased or bought at rock bottom prices, and negotiating the best tax incentives. In giving in to the demands and expectations of these investors, governments are doing no more than buying investment. The question frequently asked is whether the total price paid provides fair returns in terms of the value of jobs created.

The second concern is one of sustainability. Investors, both foreign and domestic, are often likened to global gypsies seeking the ‘biggest bang for their buck’. They therefore commit to one enterprise or to one country purely for commercial reasons – which enterprise or which location will yield the best returns. This is a situation which is not sustainable in the long term. With global advances in technology, and possibly corresponding changes in the demands of markets, a choice of enterprise or location which is the most attractive today may no longer be the most attractive tomorrow. When there is a more attractive location elsewhere, gypsies move. So do investors.

Invest in Infrastructure Projects

Public spending on infrastructure projects is always welcome because facilitating the efficient movement of goods and services lies at the heart of industrial development. During periods of economic downturns, these projects also serve the very useful purpose of putting more money into the system to keep the lifeblood of the economy flowing. However when infrastructure projects