Problem

Urban unemployment

Other Names:
Urban underemployment
Flooding of the urban labour market
Nature:
Owing to the combination of a number of unprecedentedly powerful factors (heavy density of settlement in agricultural areas, wide and probable growing difference between rural and urban levels of income, very rapid growth in the number and proportion of young people who have been to school), the rural-urban drift has proceeded in most countries at a very fast pace. This movement has resulted in a very serious disequilibrium in the job supply/demand situation in the urban areas, an imbalance which is reflected in a swelling of the tertiary sector, considerable underemployment in a number of sectors and, in particular, urban unemployment which has reached extremely high rates in a large number of developing countries.

The rapid growth of the urban population in developing countries is largely due to rural migrations which, given their social and economic origin, are less predictable than are the other two growth factors, fertility and mortality rates. Some migratory movements are encouraged by the reality of growing urban industries, but it is mainly the erratic migrations from destitute rural areas, motivated by despair rather than by definite objectives, which furnish the greater part of the displaced peasants flooding the urban labour market in the cities of Asia and Latin America. Long years of unemployment gradually undermine their moral and physical strength and further reduce their chance for future economic and social advancement.

Incidence:
Since World War II there has been a net emigration of over 150 million persons to urban areas. The scale of this movement, to which is added a considerable natural increase in the population of towns (due to a high birth rate and a reduced death rate resulting from the age composition of the population), has led to an extremely rapid growth of the urban population during this period, which increased at an average rate of over 4.5% a year. The 750 million jobless in the Third World in 1975 is expected to increase to 1,320 million by the year 2000. Meanwhile, the number of new jobs needed is expected to be 630 million in Asia, 250 million in black Africa, 190 million in Latin America (as compared with 360 million jobs needed in Western countries). Figures for 1975 show that whereas unemployment as a whole in the developing countries was 5% of the total labour force, rural unemployment was 3.6% and in the towns 8% of the potential workforce was jobless.

Although incomplete, the available estimates for Latin America reveal very high rates of urban underemployment, ranging from 20% and upwards in most countries. Estimates of urban underemployment in other regions are even scantier, although it is clear that urban underemployment exists everywhere. A broader but perhaps more significant indicator of the extent of urban underemployment than such non-comparable statistics is to be seen in the swelling of tertiary employment activities that characterize the great majority of developing countries.

Claim:
The assumption that the influx of population to the urban areas is the response to an increased demand for labour is not valid for the third world. Unlike the situation in the rich countries where the growth of the service sector is an indicator of a high degree of economic development, in the poor countries it is more often the symptom of continued poverty and stagnation. There, while urban labour potential increases, many workers fail to find employment not only in industry which is lacking or underdeveloped but also in the organized service sector. Forming rather what may be termed a 'sub-' or 'pseudotertiary' sector, this substantial part of the third world labour force makes up the petty retail trade of hawkers and peddlers, as well as the low-productivity field of poorly paid personal and domestic services engaged by the upper social strata. They are the hand-to-mouth sector.
Broader Problems:
Unemployment
Urban poverty
Reduced By:
Informal sector
Problem Type:
D: Detailed problems
Date of last update
01.01.2000 – 00:00 CET