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May 30, 2010




























MAY 2012




First praise to be for Allah, who is the most merciful and gracious and creater and sustainer of this universe and who made all things possible to me throughout my life.


Secondly, I would like to express my deeply thanks to my advisor Esubalew Ayalew for his constructive criticism comment and respectfulness and for his guidance to achieve accurate work.


Thirdly, I want to thank my brother Abdela Jemal and all my family for their investment on my education.


Finally, I would like to thank too my secretary W/ro Mulu Tilahun and also those who had not been mentioned their name but contribute a lot to this achievement.



























This paper is entitled to cause and consequences of unemployment in East Hararge Grawa town.   The rationale behind this paper is that unemployment has negative effect on social economic development of any country.  Its challenge is also still increase in Grawa town



As general objective of the study try to examine the cause and consequences of unemployment in Gerawa town.  The study also use descriptive method of analysis and the study use various secondary data collect from MEDaC, ILO , CSA and from any other sources related book and from Grawa town Administrations and statistical bureau.


It helpful to think of unemployment in Grawa town having various types of causes.  Even if there may be overlaps and it s however, difficult to mention all of them majority of them far from education system, over growing rural urban migration and non work status of the society in agricultures.


One of the bases that human life needs to fulfill its basic requirement in his/her access to work.  Work is also source of knowledge and health which as result requires man to work.  Those persons that do not have access tO both formal and informal sector employment of the economy engaged in bad way of life.  In general unemployment has a wide spread social, economical and political consequences that will be discussed later.









MEDaC= Ministry of economic development and cooperations


ILO=  Internaitonal labor organization


CSA= Central statistical authority.


MOFED= Minister of finance and educational development.








































List of Tables


Table 3.1 Currently unemployed population, aged fifteen(15) years and

                over by age group and sex, Grawa town administration,


Table 3.1.2 Unemployed populations by sex and education attainment


Figure 3.1 Unemployment rate by literacy status during the four survey


Table 3.1.3 Distribution of unemployment by marital status


Table 3.1.4 Unemployed populations by sex and work experience (Grawa


Table 3.2    Percentage distribution of migration by types of migration in


Table 3.2.1 Number of offenders by sex 2008-2011/12 -------------------------------  35





















Table of content

Title                                                                                                   Page

















1.6.1 Method of data collection and source of data----------------------- 5











  2.2.3 Cyclical /Demand Deficient unemployment/ -------------------- 12





2.5.1 Classical school theory of the unemployment --------------------- 16

2.5.2 Keynesian school theory of unemployment ------------------------ 16




2.6.1 Relationship between unemployment with different

         factor linkage between unemployment poverty and






2.6.2 Linkage between education and migration and



2.6.4 Urban poverty and population Dynamics-------------------- 22




3.1 Structure and characteristics of unemployment in Grawa town

 age and sex distribution of unemployment ----------------------- 23


3.1.2 Unemployment rate by literacy status and educational


3.1.3 Unemployment by way of job search ------------------------- 27

     3.2 Distribution of unemployment by marital status ---------------- 27

3.2.1 Unemployment by work experience -------------------------- 28




3.3 non work status of the society in Agriculture ----------------- 32










4.2.2   Developing the urban and rural informal sector ------------------ 37



4.2.5   Active participation of non-government organization------------- 38
















1.   Introduction


1.1 Background of the study


Unemployment had been a serious problem of international economy from the period of great depression when high level of unemployment existed in the world.


Structural unemployment in Europe, Job in security in the united state and restructuring problem in soviet union mere some of the international economic problem concerned unemployment. (Ramonet, 1998).


Though in different magnitude, unemployment still exists in the world.  The seriousness of the problem may vary from one country to another.  But it is a concern of both the developed and underdeveloped nations.


High population growth, increasing rural-urban migration and low level of economic growth present  high unemployment level. The prospect of unemployment in developing countries, especially in sub-saharan Africa has worsened because of high population growth and low level of economic growth and also other reasons. (CSA, 2005)


There are also external factors to mention few, shortage of foreign exchange, balance of payment problem and unfavorable term of trade that aggravated un employment (Tecle, 2002).


In this regard, Ethiopia is it is one of these countries highly exposed to complex social and economic problems like high unemployment.  Unemployment rate has been constantly increasing form 7.15% in 1994 to 32.2% in 2005.

And also unemployment rate in Grawa town 7.22% in 2000 and 8.6% in 2005 (Grawa town administration report, 2007).


The grawa town as one of the town in Ethiopia has been affected by the challenging problem of unemployment.  Internal migration that enlarged the Grawa town population, There are around 29,000 in habitants today, regarded as the major contributor to the creation of large number of unemployed labor force in different years 850 in 2002, 1050  in 2005 jobless labor forces were registered in the town Grawa (Grawa town administration, report, 2010).


The overall incident that is why the town now days it confined with a large number of unemployed and since there is no unemployment benefits, unlike it is the case of on developed countries, there unemployed are enjoying a life which is very much tragic even if labor force is one of the factors of production, Ethiopia did not exploit it efficiently. 



1.2        Statement of the problem

Unemployment was one of the major prevailing social and economic problems in almost all countries of the world which every country should fight against.  Africa particularly Ethiopia is confronted with this problem that has been extremely challenging.  


Unemployment contributes to under development because it represents under-utilization of the productive potential country (Jcobson, 1979).


One of the major consequence of the rapid urbanization process has been the bargaining supply of job seekers in both the modern (formal) and informal sectors of the urban economy.  In many developing countries, the supply of workers far exceeds the demand, the result being extremely high rate of the unemployment and under employment in urban area (Todaro, 2006).


Ethiopia was characterized by high growth in population and almost a subsistence economy.  Unbalanced growth between the population and the economy has an effect on employment and growing labor forces that tended to increase unemployment.   Because of this high population growth resulted from internal migration, unemployment problem is becoming more acute in the country and reaching its alarming stage in Gerawa town.


However, studies on the cases and consequences of this challenging problem in the Gerawa town are not yet made, this is the Gerawa that initiated me to make study on the specified subject.


Therefore the question is:-

What are the main cause of unemployment?

What will be the consequence of high unemployment?

This question is or problem that initiated me to study on the specific subject.


1.3 Objective of the study

1.3.1 The general objective of the study was to examine the cause and

          consequences of unemployment in East Hararghe Gerawa town.

1.3.2 Specific Objectives were to;

- Examine the characteristics and structure of unemployment in Gerawa


     - Analyze the cause of unemployment such as educational system, rural-

       urban migration and other related issues.

     - Analyze some social, economic and political consequences of


      - Conclude with summaries and suggestions/recommendation based on

        the basic discussions made in the study.


1.4 Significance of the study

The social and economic consequences that could arise in association with the high and growing unemployment are cited and was added further in the study and it is tried to put the situation in brief.  Hence, the study is believed to be relevant in that it could motivate government, non-government organizations and community of large to take measures to help the unemployed for the time being and to establish sustainable employment schemes in the future and it could be helpful somehow to initiate policy makers design policy concerns, which are necessary to tackle the problem.


Moreover, it benefits the unemployed to understand their situation and to take measures to be being employed and play role in eliminating this complex problem of unemployment in Grawa town.






1.5 Scope of the study

Concerning the Scope/coverage of the study particularly emphasis was given to Gerawa town due to fact that the problem was making serious here in Gerawa town due to the lack of financial resources and time, it would  not cover the area.


1.6 Methodology/research methodology

1.6.1 Method of data collection and source of data

Several publications were referred and was in the preparation of this study and most of the information in it is more dependents on the data/ideas provided in different years.  Thus, it would be collected using appropriate method as much as possible.  The secondary data would have been gathered through careful review of  related document.


1.6.2 Method of data analysis

The data that gathers from respective source was organized and classified according to their similarities.  The analysis was descriptive method and figurative discussion and also the data was analyzed by using frequency tables and percentages, and graphical method.  This study wholly entails the data through method of analysis together with figurative discussions that draw logical remarks.


1.7 Organization of the paper

The research paper was  structured to have four chapter arranged sequentially.  The first chapter consists of the introduction and methodology which are pertinent for the study.  Second chapter deals with theoretical and empirical literature discussions.  The third chapter focus on the deal with analization and discussion .  Finally the last chapter was present the conclusions and recommendations that must be made on the basis of the main finding of the research.


1.8 Limitation of the study

One that was the most limiting factor for the study is that the data requirements were not fully satisfied due to the lack of time series data on unemployment which may make the study partial in coverage and unreliable in some circumstances.  These inadequacies of data problem of access to information, and shortage of time have effect on quality and coverage of the study.   Hence, it is and obligation to concentrate on available data only and give conclusions and suggestions based on it.




2.   Literature Review


2.1 Definition and Concept

Many economists, different institutions and authorities have said much on the issue of unemployment.  To mention few, “unemployed are those who have no jobs while they are actively searching for job and are willing to be employed at the going wage rate” ( Smith, 1991.)


There are three important aspects to this definition

First a person has to be qualified for job.  A person is not involuntarily unemployed if one seeks jobs that one is produced from obtaining because of a lack of training experience, and education .


Second a person is not considered unemployed if he/she is not seeking a job and willing to work at the market wage rate.  Some may decide to with draw their labor services because the prefer leisure to work at the market.


According to what Todaro (1994) wrote, we must take into account, in addition to openly unemployed, the larger numbers of workers who may be visibly active but in economic sense are grossly underutilized.  He said that Edwards has identified the following forms of labor under utilization or unemployment.

a)    Open unemployment: both voluntary [who exclude themselves from some jobs implying some other means of support than employment] and involuntary [where workers are willing to work but unable to find jobs].

b)   Under employed: those working less than they would like to do.

c)    The visibility active but underutilized: Those who would not be under employed or unemployed but who infact have found alternative means of making time including.  


I.  Disguised unemployment: many people seem occupied on farms or employed in government on a full-time basis though the services they render may actually require much less than full time.

II.  Hidden unemployment: Those who are engaged in second choice non-employment perhaps notably education and household chores, primarily because job opportunities are not available at the level of education attained or for women, given social mores.

III.  The prematurely retired: This is evident and apparently growing in civic service because in many countries retirement ages are failing.


d)   The impaired: Those who may work fulltime but whose intensity of effort

is seriously impaired through malnutrition or lack of common preventive medicine.

e)    The unproductive: Those who can provide the human resource necessarily for productive work but who struggle long with inadequate complementary resources..

Un employment is defined by the 13th international conferences of labor statisticians (Geneva, 1982) and Godfrey (1985) that the “unemployed” comprises all persons above the specified age who during the reference period were:

a)    Without work: i.e were not in paid or self-employment

b)   Currently available for work: i.e were available for paid employment or self-employment.

c)    Seeking working: i.e had taken specific steps in specified reference period to seek paid or self-employment  







2.2 Types of unemployment

 Smith has identified among four types of unemployment

2.2.1 Frictional unemployment

Rises because labor markets are inherently dynamic, because information flows are imperfect, and it takes time to unemployed workers and employees to find each other.


Suppose a competitive labor market is in equilibrium.

The following figure shows labor market where demand curve is do and supply curves ‘S’ employment ‘E’ and wage are ‘wo’ even in market equilibrium or full employment situation, there will still be some frictional unemployment because some people will be between jobs.

Fig 1. Simple model of labor market


Wage                                            So





                                       D1       Do                 

                            E1   E0                    Employment


Some people will quit their job, to search the other employment.    Moreover, random fluctuations in demand across will cause some firms to lay off workers at the same time the other firm will be seeking to hire new employees, because information about the characteristics of those searching for work and the nature of job cannot instantly be know or evaluated, it takes time for job matches to be made between employeer and employers.


The level of frictional unemployment in an economy is determined by the flows of individuals in to and out of the labor market and the speed by the prevailing economic institutions and institutional changes.


2.2.2 Structural unemployment

Structural unemployment arise because due to changes in the pattern of labor demand cause mismatch between the skills demanded and supplied in given area or cause an imbalance between the supply and demand for workers across areas.  If wages are completely flexible and if costs of occupational or geographical mobiliteis were low, market adjustment would quickly eliminate this types of unemployment.


A two-sector labor market model as the following figure shows can be used to illustrate this point.


Suppose that market ‘A’ is the market for semi-skilled workers in the shoe industry and that market ‘B’ is the market for skilled computer programmers and suppose that initially both markets are in equilibrium.



Figure 2. Structural unemployment due to inflexible wages and costs of



wage                                            SOA






               EIA       EOA       



wage                                            SOB



 WOB                                      DIB’



                       EOB       EIB       


Given demand and supply in both market, they have their respective equilibrium levels.  Because of difference in training costs and non-specularity conditions of unemployment, the wage need not be equal into two sectors.   Now the demand for semi-skilled shoe workers fall to DIA, due to foreign import competiton, while the demand for computer programmers rises to DIB as result of increased use of computers. 


If real wage are flexible downwards in market ‘A’ because of a union contract provisions, social norms on government legislation, employment of semi-skilled shoe employees will fall to ‘EIA’ but employment and wage of computer programmers will rise to EIB and WIB respectively.  Then unemployment of EOA-EIA workers would be created in the short run.


If shoe industry employees could costless becomes computers programmers, these unemployed workers would move to market ‘B’ and since wages are assumed flexible there, eventually all of the unemployment would be eliminated. Structural unemployment arises however, when costs of adjustment are sufficiently high to produce such movement.  The cost of displaced individuals, may be expensive and it may be difficult for them to borrow funds for job training given the limited time.  Geographical imbalance can be analyzed in the same frame work, suppose that market “A” refers to as now belt city and market “B” refers to sun belt city, both employing the same types of labor.  When demand falls in market “A” and unemployment increase because of wages are not completely flexible, these unemployed worker continue to wait for jobs in their city for at least there reasons.

1.   Information flows are imperfect so that workers may be unaware of the availability jobs some where away.

2.    The direct money costs if such a move, including moving costs and the transaction costs in buying and seeking a home, are high

3.   The psychological costs of moving long distance are sufficiently high that many workers who becomes unemployed, due either to plant to shut down or to permanent lay off, express an interest in searching for jobs outside their immediate geographical area.  Structural unemployment arises then been use of changing patterns of labor demand that occur in the face of rigid wages and high costs of occupational or geographical mobility and technological change.


2.2.3 Cyclical/Demand-Deficient unemployment

Demand deficient unemployment occurs when the aggregate demand for labor declines in the face of down ward inflexibility in real wage.  Returning to figure 1, suppose that temporary decline is aggregate demand leads to a shift in labor demand curve to D1 if real wages are in flexible down wards, employment will fall to E1, and (E0-E1) additional workers will become unemployed.  This employment decline occurs when forms temporarily lay off workers and reduce the rate at which they replace those who quit or retire.  That is, flows in to unemployment increase while flows into


          2.2.4 Seasonal unemployment

Seasonal unemployment is similar to demand deficient unemployment is that it is induced by fluctuations in the demand for labor.  Here, however, the fluctuation can be regularly anticipated and follow a systematic pattern over the course of year.



2.3 Related Empirical studies

According to Todaro(1994), to day many developing countries are ploughed by historically unique combination of massive rural-urban population movements, stagnating economy and growing unemployment substantial unemployment in LDC’s economics is probably one of the most striking symptoms of their in adequate development.  In a wide spectrum of poor counties open unemployment especially in urban areas affect the labour force.


Some empirical data by Todaro (1994) confirms the above facts that the unemployment is high in developing countries. 


                    Table 2.1 Unemployment rate in developing continents

Continents year
Unemployment rate
All Developing
Latin America


                   Source: Todaro, 1994


As Todaro (1994) suggested, the rural-urban migration is also other cause for the ongoing problem of unemployment in LDCs.  It is in this context of slowly growing urban employment opportunities accompanied by disproportionally high rate of rural-urban migration that the chronic urban unemployment and underemployment problem has emerged in developing countries particularly in Africa.


Though the above suggestion on the cause of unemployment by the different authors are more or less acceptable, educational system, non work status of the society in adequate attention to agricultural and growing rural-urban migration are some from the major causes of the problem in less developing countries. This unemployment problem is not mater of absolute lack of useful things that might be done but also a shortage of modern jobs in elation to the number of jobseekers.


The different economists and policy makers recommended different strategies and policies to eliminate the problem or improving employment in developing countries. O.Ed ward (1984) recommended that product mix, appropriate technologies, use of capital and rural-urban balance of job opportunities are among the major strategies to eliminate the massive unemployment and improving employment opportunities in less developing countries.


G.M.Ishumi (1990) argued that the growing urban unemployment in Kenya is closely connected with.  The high rate of urbanization and population growing in recent years.


As P.Ghai(1990) discussed, like inother developing countries unemployment in Kenya take on variety of forms.  The dynamics of unemployment problem is caused by soaring population growth, disappointing rate employment influx of people from the country side into urban areas, which are familiar enough are shared in some degree by most Africa countries though it is assumed alarming proportion in Kenya.  


From the table 2.2, the unemployed person and unemployment rate in Kenya in the year 1994 was relatively higher is an the rest of the east African countries.  This conforms that unemployment has been a series probem in Kenya.  Table 2.2 unemployed persons and unemployment rate in Kenya in The year ‘1994’


Un employment rate%

Source ILO, 2003


G.M Ishumi (1990) argued that the growing urban unemployment in Kenya is closely connected with the high rate of urbanization and population growth in recent years.


2.4 The state of unemployment in Ethiopia

Unemployment in Ethiopia is viewed by many intellectuals as very high and more adverse in urban centers of the nations particularly in Gerawa town.


One publication of MEDaC(1999) confers this idea.  In general, open unemployment in Ethiopia seems to be phenomenon being prevent in the Gerawa town with the majority of unemployed people young with modest levels of formal education.  Following table confirms this idea.


Table 2.3 youth unemployed

Share youth unemployed total unemployed

Source: ILO, 2003


The economy of Ethiopia has proven unable to accommodate the rapid growth of labor force.  Thus, unemployment became a serious problem in town aras.


As many suggested, the primary reason is that the growth of the economy and its capacity to create jobs have not keep peace with the population growth.  In fact only about 25,000 formal wage sector jobs are being annually created while 6000,000- 800,000 individual annually are entering the labor market [ILO, 1993].  Though the above suggestins on the issues of unemployment in Ethiopia are acceptable, there are other issues that have to be discussed concerned the causes of unemployment such as educational system, over growth in rural-urban migration and non-work status of the society in agriculture and its consequences such as political, economical and social cost.


2.5 The theories of unemployment

2.5.1 Classical school theory of the unemployment

The essential feature of the theory is that the labor market forces of supply and demand respond to changes in real wages.  Thus, unemployment is the consequences of real wages being an remaining too high to allow the labor market to deer, government wage regulation and especially powerful trade unions are identify as significant causal factors.  Thus, unemployment in the classical system hanges or not creating markets.  The policy implication flowing firm classical analysis of unemployment is that in order to reduce unemployment it needs reduces government regulation and reduce trade union power and make the labor (Smith).


2.5.2 Keynesian school theory of unemployment

This school of thought focuses, on fiscal policy regulation like tax cut by creating the relationship between the government expenditure and unemployment.  Keynes argued that to expand national income and then expand employment by reducing taxes, “The tax cus was intended to stimulate expenditure on consumption and investment and thus lead to higher income and employment|. (Mankiw, 2002).


The causes of the tax was followed by an economic boom which in the unemployment rate fall.  According to supply spiders, which workers are allowed to keep a higher fractions of their earnings they supply substantially more labor (Mankiw, 2000).


2.5.3 New Keynesians theory of unemployment

The new Keynesians also argued that most sometimes do not clear even when individually and looking out for their own interest.  Because of both information problem and costs of changing prices lead to some price rigidties and as result, create  a possibility of fluctuations of employment.   For example in the labor market firms that cut wages not only reduce the cost labor but also likely to wind up with poor quality labor force.  Thus they will be reluctant to cut wages.  If it is cost for firms to change the prices they change and the wage they pay the change will be infrequent, but if all firms adjusts prices and wages infrequently, the economy wide level wages and prices may not be flexible enough to avoid occasional periods of even high unemployment (Darbash; 1981).


2.5.4  New classical school theory of unemployment

The new classical school argue based on the assumption of market clearing. “There are no reason why firms or workers would not adjust wages or prices if that would make them better off”.  Accordingly prices and wages adjust in order to equate supply and demand in other words, market clear.  The implication of this assumption is: that there is no possibility for involuntary unemployment.  Any unemployed person who really wants job will offer from some employer.  Flexible adjustment of wages and price leaves all individuals on work at the going wage and firms can produce and sell as much as they want to the going price. (New classical theory).


2.6 Migration and development

As Todaro (2006) state that rural-urban migration was once viewed favorably in the economic development literature.  Internal migration was thought to be natural process in which surplus labor was gradually with drawn from the rural sector to provide needed man power for urban industrial growth.  The process was demand socially beneficial because human resources were being shifted from locations.  Where their social marginal product was often assume to be zero to places where this marginal product was not only positive but also rapidly growing as result of capital accumulation and technological progress(Ibid).  In contrast to this view point it is now abundantly clear from recent least developed countries experience that rates for rural-urban migratin continue to exceeds rates of rural job creation and to surplus greatly the absorption capacity of both industry and urban social services no longer is migration viewed by economists as beneficent process necessary to solve problem of growing urban labor demand(Ibid).  In Africa the magnitude of rural-urban migrations has greatly exceeds the capacity of the modern industrial sector to absorb the migrants so that it can only employee productively small proportion of industrialization process itself.  A process that has typically field to produce growth of job opportunities at any things near the rate of out growth.  (Nodegwa and Powelson: 1973)


However, inspite of these rising level of over unemployment and even high level of under employment, the rate of rural-urban migration shows no sign of declaration.  To the extent that many newly arriving migrants are likely to joint.  The growing pools of unemployed and to the extent that an increasingly large proportion of these migrant represent the more educated segment of the society whose productive potential in largely being dissipated.   


The process of continued rural-urban migration at present levels can no longer be said to represent describe economic phenomenon(Ibid).


Unemployment is the state of persons who is out of work and actively looking for job.  The term does not refers to people who are not seeking work because of age, illness or mental or physical disability.  Nor does it refers to people who are attending school or keeping houses.  Such people and classified as out of the labor force rather that unemployed (world book (2001).


Unemployment may include serious problem for both individual and society as a whole.  For the individual it means loss of income and increase of prolonged unemployment, may result in loss of self respect.  For society, it result in lost production and, in some cases, criminal or other antisocial behavior until the 1900’s most people considered laziness the main causes of unemployment , but to day, they realize that men and women may be out of work through no fault of their own(Ibid).


2.6.1 Relationship between unemployment with different factor linkage

         between unemployment poverty and income distribution.   


Those with out regular employment or with only scattered part time employment are usually also among the very poor.  Those with regular paid employment in the public or private sector are typically among the middle to upper income groups.  But it would be wrong to assume that everyone who does not have a job is necessarily poor while who’s who work fulltime are relatively will off.  This is because there may be many unemployed urban worker who are voluntarily unemployed in the sense that they are searching for specific type of job perhaps because of high expectations based on their presumed educational or skill qualifications.  They refuse to accept jobs which they feel have outside sourse of financial support (example) relatives friends or local money leaders such people are unemployed be definition, but they may not be poor (Todaro; 1994).  Similarly, there are many individual who may work full time interms of hours per day not may nevertheless earn every little income.   Many employed workers in these called urban informal sector (e.g trader, petty service providers, workers in repair shops etc) may be so classified such people are be definition   fully employed but often they are still very poor(Ibid).  In spite of the above reservations about a too literal linkage between unemployment and poverty, it remains true that one of the major mechanisms for reducing poverty and in equality in less developed nations in the provision of adequately paid, productivity employment opportunities for the very poor.  The creation of more employment opportunities should not be regarded as the sole solution to the poverty problem(Ibid).  


2.6.2  Linkage between education and migration and unemployment

Education appears to be an important factor both for migration and an employment level.  Today, the problem of unemployment has emerged as the most striking symptom of lack of development in almost all developing countries and the problem had reportedly concentrated among the educated youth. (Alemayhu Ga and Berhanu N 1990).


In part, this counteraction of un employment among the younger age groups reflect the disproportionate number of younger persons with in a population which is turn a result of this rapid population growth and hence the labor force.


Another explanation for the high proportion of young person among the unemployed is the rapid expansion of education which promotes a large number of school levels to aspire to urban wage, earning jobs for in excess of the number of opportunities available(Ibid).


As urban labor supply continues to out pace demand, tow forces are set in motions on the demand, side, jobs which were for merly filled by, say those with primary schooling now require a secondary school certificate.  On the supply side, jobs aspirants now need to get same extra years of further education in order to “qualify” for jobs which only a few years earliest were being filled by those less education (Todaro 1994).


One migration types rural-urban migration in Ethiopia in significant type of movement for spatial distribution of population the attraction to urban areas, monthly to one primate city (Addis Ababa, is largely economic and due to rural-urban income and quality of life differentiates (Befekadu, and Berhanu 1999/2000).


2.6.3 Employment and labor force issues

The main story regarding the labor market is the rapid growth of the work force, as result of high population growth.  Combined with fewer farming opportunities for the next generation, and relatively slow creation of new jobs in the modern sector this is resulting in growing unemployment and under employment pressure.   Economic activity rates in urban areas are relatively low, and have been declining somewhat (from 66% in 1999 to 58% in 2003), although this is to some extent reflection of growing school enrolments that keep youth out of the labor force longer (MOFED, 2005/06).


The incidence of unemployment was relatively lower for those with non formal education (9%) and holders of diploma and above (12%) unemployment, on the other hand is very high, especially among youth surveys of the last 5 years (1999-2004) in Ethiopia show that slight decline in urban unemployment among males and slight increase among females, and also the duration of unemployment has shortened.  As in most countries un employment is highest among youth (who have less marketable skills and experiences but who also tend to live with their families, and often not subject to the same immediate pressures of find work that apply to slightly order married men and women).  It is also generally higher among women than men of wage employment the public sector still account for about 40% (source MOFED, 2005/06) wages and low, and for less educated wages, in urban employment are just about at the poverty line.


Wages rise dramatically with education levels while schooling clearly pays, in the future it is likely that completing primarily and secondary education will be less of guarantee of finding employment than it was rise past, as the labor market becomes more saturated.


None the less with the expansion of educations, the average skill level of the work force is increasing and this should pay off in productivity gains(Ibid).   There are big urban-rural formal-informal and gender gaps in employment and wages labor mobility is limited especially between rural area and towns, although there in increasing evidence of step migration, from smaller to larger town.   As in most countries, immigrants start out near the bottom of the urban job market, but their evidence that their let improves over time(Ibid).


2.6.4 Urban poverty and population Dynamics

Currently (2004/05; 16% of the country total population or some 11.7 million people, live in urban areas.   The urban population is growing at rate of about 4.4% per year, and is estimated to reach 22 million people by 2020.  It is important to recognize the over whelming weight of Addis Ababa in the urban picture in Ethiopia; Addis Ababa is true primate city, with about 3 million people, 14 times higher than Dire Dawa, the second largest city in Ethiopia.  While final analysis will have to await the result of the 2004/05, there are some indications that there has been a modest decline in urban poverty in recent years.  Moreover recent urban growth has been unprecedented, mainly as result of rural-urban migration, resulting in growing welfare and housing problems for the new urban poor and increasing urban unemployment.  

(Source: MOFED, 2005/06)





3.   Data Analysis


3.1 Structure and Characteristics of unemployment in Grawa town

Age and sex distribution of unemployment

Table 3.1 clearly shows that the unemployed are predominantly young men and women about 77 percent of the unemployed are between the age 15-34.  Between this age female account 78 percent, where as males account 75 percent out of the total unemployed population 36 percent are female 21 percent are males between the specified ages. 


This confirms that more females are unemployed than males.  Table show that the proportion of unemployment in the first two groups rises where as it gets declined in the rest age group.  The highest unemployment out of the total unemployed population is at age group 15-20 and the unemployment rate for male and female is the highest at the 21-25 age groups.


Despite, the fact that labor is a good source of wealth, in the context of Ethiopia; the young and energetic group of the population has high unemployment.  Hence, much of the potential economic surplus that could have been produced by those young people is forgone.  However, these unemployed youth utilize social services and constitute a great demand for good and services.  The increasing need of unemployed lead to wide expansion of these services, which pushed up government expenditure with a possibility of causing of some inflationary pressure.






Table 3.1 Currently unemployed populations, aged fifteen (15) years and over

                by age group and sex, Grawa town administration, April 2009


Age group and sex
Unemployed population
Un employment rate

Source: Grawa town town Administration and statistical Bureau


3.1.1 Educational distribution of unemployment.

The system of education has failed to prepare students for job opportunities particularly those who had not gone for into the educational leader.  The fact that a good deal of the job seekers is with secondary school.  Education implies that those people are devoid of any skills required for employment in the civil services and modern sector.   A part from this as a matter of may be tradition, once students have joined the educational system, they never think of engaging in agricultural and other low grade occupations.   






Table 3.1.2 Unemployed populations by sex and educational attainment

               (in Grawa town).

All illiterate
All literate
Grade 5-8
General education (Grade 9-11
General education (Grade 12)

Source: Grawa town educational Bureau


Out of that total unemployed population in year 2009, 12% is illiterate where as 88% is literate.  In year 2010, 16 percent is illiterate where as 84 percent is literate.  From this empirical fact, there is a decline in the literate unemployed proportion as there is an increment in the proportion of illiterate unemployed. This could be due to the new created few job opportunities for the literate people.  In year 2009, out of the total literate unemployed. People, 65% was grade 5-8 as 63.1% was Grade 9-11 for male.


This gets a slight decrement in the year 2010, 34% was grade 5-8, but percent male in grade 5-8 was same in year 2009 and 2010. 


One important thing in the table the heart of the unemployment problem in which case there immense number of school learners desperately remain unemployed for year.  This is due to the educational system of the country as whole and of the Grawa town in particular.  And also due to the shortage in prevailing technical and vocational schools that enable individuals to acquire skills and influence to large extent personal attitudes to create self-employment and personal commitment to the nations development.  But, since 2010 unemployed people were cooperated and some technical and vocational schools has been established even if it has been established, there is great problem with its quality, even though students have graduate in technical and vocational school with practical learning.  Most of them can not apply what they had learn, due to its lack of quality if so technical and vocational schools has been establish with good quality, they can play great role to national development.


3.1.2 Unemployment rate by literacy status and educational level


Figure 3.1 shows that throughout the four survey periods the unemployment rate of literate persons is higher than illiterate persons.  Furthermore, the figure illustrates that unemployment of literate persons declined during the four surveys periods, while unemployment of illiterate persons decline with some fluctuations.   


Figure 3.1 Unemployment rate by literacy status during the four survey period, Grawa town


30%                25%

25%                                        20.40%           19.20%              18.30%






20%                         16.60%            19%                  17.50%                16.20%





                        April 2004      May 2009        may 201-0       March 2011


Source: Grawa town administration and statistical Bureau


Among the literate group, the highest rate of unemployment nearly one fourth is found for those who did not complete secondary, secondary completed and preparatory educational level.  The unemployment rate of persons who had completed primary education, diploma certificates and non-formal education ranges from 12 to 17 percent in march 2011.  The lowest unemployment rate is registered among those who had pre-school education and degree and above about 7.7 percent and 6.7 percent respectively.


3.1.3 Unemployment by ways of job search

As it had been stated earlier in the literature review section the unemployment that the unemployed is experiencing could be either voluntary or involuntary.  It could be realized that the most frequently used method of search for work was trying to seek work through vacancy advertisements.


The next three important steps taken to enter in to the world of work were checking at work sites, acquiring unemployment card and trying to establish own enterprises.  From this fact it can be conclude that most of the unemployed needs to be hire in paid employment as few attempts to establish own business.


3.2 Distribution of unemployment by maritial status

Marital status often plays an important role in respectively in male and female labor force participation rates at least in the central and older ages.


Persons inadequate to work may be found more among the never married man in societies where marriage is almost a rule; their activity rate is consequently lower than married one.   On the other hand, the labor force participation rate of the adult never married women is often lower because their large engagement in the house and children keeping


Distribution of unemployment by marital status (Grawa town)

Table 3.1.3


Sex and percent
Never married

Source: Grawa town administration report, 2009


The above table illustrates that the unemployed individuals under the category never married, constitutes the large share of total unemployed population that is 46.7% these who are married are 43.21% except in the never married in all the status the unemployed females out number those of males.  The never married group suffers from high rate unemployment.  This is particularly true in young age because the young unmarried people who are still in their parent there can offer long periods of unemployment.  This marital status distribution could also tell us that the head ship responsibilities in the house hold force men and women to be active participant in the labor force (Grawa town administration reports 2009).


3.2.1 Un employment by work experience

In the following table, as the percentage of total unemployed persons by work experience, in year 2008, most of the unemployed population is first time job seeker.


About 55.2% of unemployed in Grawa town never had previous work experience.  Out of the total female unemployed, those with work experience and without experience are with a proportion of 61% and 39% respectively.

Of the unemployed males and females 40.6% and 28.53% respectively had no work experience.  The implication of this higher proportion of unemployed population with no work experience could be clear that workers get limited employable skills from either formal training or their education and it is an indicator that most the workers get marketable talents/skills from their jobs that could be in the form of training or jobs.


Table 3.1.4 Unemployed populations by sex and work experience (Grawa town)

Total unemployed
Without experience
With experience
Not stated

  Source: Survey; 2007


In year 2010, the percentage of the unemployed without experience became 45.29%.  Where as the one with experience get increased to 48.9% as compared with the year 2008.  And out of the total female unemployed, 41% are without experience where as 43.97% are with experience and out of total male unemployed 44.8% are without work experience as 52.42% are with experience.


3.2.2 Causes of unemployment

Unemployment is said to occur when persons activity seeking for job could not find it.  This partly takes place when the economy fails to generate adequate and well paying job opportunities for the labor force.  It is helpful to think of unemployment in Grawa town having various types of causes.  Even if there may be overlaps and it is however, difficult to mention all of them.


Majority of them are:- educational system, growing of rural urban migration and non work status of the societies in Agriculture.


3.2.3 Educational system

Education when it is properly disseminated and applied in accordance with the development needs of the country is an effective engine of development and prosperity.  The educational curriculum in Ethiopia is more theoretical not designed to link theoretical knowledge to practical real life problem.   Since technical and vocational schools were available in limited amount, generation of formal education and training in Ethiopia has its own problem in term of both quality and quantity.  In qualitative terms too the labor force is not only badly trained but also receiving education that fails to match the quantitative requirement of the economy.


Despite the expansion of education in Ethiopia is parallels growth of population has hindered sufficient reduction of adult illiteracy this is estimated at 77% for female and 66% for males in 1999 gross enrollment rates are still very low even by CSA standards.  The Ethiopian educational system should little concern about of students after leaving school.   The mismatch between the qualification of students and the demands of employed has become a serious issue with the growing unemployment school outputs (MEDaC, 1999).  As the Ethiopian education system is biased towards academic subjects, does not prepare most labor force with required skill to enable them engage in agriculture crafts or in other sector of the economy.  The problem of unemployment of university graduates is increasing over time even if the economy is likely to improve the job opportunities for university graduates, the problem in likely to get were due to the long generation period that she/he face in searching for job.


Some unemployment of longer duration it need to be because of inefficiencies in matching vacancies with job seeker factors indicate that educational unemployment is an important problem.  This is also same for the unemployed people in Gerawa town.


3.2.4 Rural-urban migration

Rural-urban migration is considered one of the most decisive factors to contributing to unemployment via increasing the supply of labor beyond the absorption capacity.  Earlier, migration from agriculture sector was considered as a means of supplying urban labor.


On the contrary, migration today is viewed as major contributor factor to urban surplus labor force, which continues to accelerate the already serious urban unemployment problem.


Table 3.2 percentage distribution of migration by types of migration in Grawa town

Types of migration and percentage
Migration by sex
Urban –rural
Rural –urban
Rural –rural

Source: Gurawa werada administration and statistical Bureau April, 2005


As the table deal with the flow of migrant between the urban and rural sector of the Grawa town in year 2005 of the internal migration types of rural-urban migration is the main factor, which constituted 1017 or 43.9% of the total immigrant to Grawa town.  The second major form of migrating was urban-urban form of movement reflected direct moves between Grawa and other areas, it noted that the bulk of these migrant originally moved from the rural area, to the nearby urban centers and stayed therefore some time and then moved to the next higher level urban area and finally to Grawa town.  The factors that influence the decision of an individual to migrate are various and complex, may be the life quality and wage different between rural and urban area, the expectation of people for the opportunities they will face in urban are optimize both terms of availability of job opportunities and the income (way to be generated).  What could be seen in the case of Grawa town unemployment and don’t provide opportunities for most of the migrants.   Rural-urban migration is therefore one factor that aggravates unemployment in urban centers like Gurawa town. 


3.3 Non work status of the society in Agriculture

Despite the fact that production factor of Ethiopia constitutes land and largely, the attitude of the society towards working in agricultural sector is distorted.  Let along move from Grawa town to area laborers of the agricultural sector are coming to the town leaving their engagement.   (Administration report, May, 2008) Grawa town


3.3.1 Consequence of unemployment

One of the bases that human life needs to fulfill its basic requirements is his/her access to work.  Work is also a source of knowledge and wealth, which as a result requires man to work.  Those persons that have not access to both formal and informal sector employment of the economy engage in a bad way of life.  They find themselves in absolute poverty a condition of like degraded by disease, mal nutrition and dying the society human rights and rules.


In general unemployment has widespread social, economical and political consequences that will be discussed later.


3.3.2 Social consequences

“Of all wills of modern society unemployment is the worst of all.  It demoralizes the people who loss respect.  Life become contempt for the society complete the unemployed to retort to evil practices like dacoit robbery pick pocketing etc…. mass unemployment may even endanger political stability.  It therefore, wiser t sacrifice out put levels to employment” (Giant, 1986).


Health, crime and social relationship of the unemployed are some among the social consequences of un employment that will be discussed as follows.


A. Health

The relationship between ill health and unemployment is likely direct relationship.  Though unemployment is not sufficient factor to being sicked.  That is to mean when an individual becomes out of the world of work, his/her health gets disturbed.  Not only the health of the unemployed individual but also the health of community was disturbed.


Psychological well being and mental health of the unemployed point in the same direction, namely in significant number of cases there is a relationship between the experience of unemployment and a deterioration of mental health, more over unemployment could causes stress that also could lead to hopelessness and self reporting of mental disorders.  N. Ashton (1986) support this idea he said that unemployed should more stress symptoms than those who had found job.  Thus “as the unemployment rate increase by certain amount the death rate are increases at least by the same rate” (N. Ashton, 1986).


A.   Crime

Juding from the increasing rate of unemployment in the Grawa town, crime and from the youth activity in the field of investigation, there is and evidence of positive correlation between the increasing rate of rural-town migration an rising unemployment, crime and associated delinquent behavior such as pocket-picking, house breaking and armed robbery.  Thus, higher unemployment produces an increasing in the prison population, increasing crime and increasing juvenile delinquency.


Table 3.2.1 Number of offenders by sex 2008-2011/12

Number of offenders

Source: Gurawa town police commission 2011/12


From the above table, the number of males and females offenders continuously increased between the stated years.  This is likely related with the increased amount of youth rural-urban migration that leads to high level of unemployment in the Grawa town.  In all years, the number of males offenders is greater than the number of females.  This may due to the fact that unemployes males tend to move around.  Hence, encouraged to commit crime.  As unemployed females tend to stayed at home and care their families


3.3.3 Economic consequences

Though economies can never grows without some unemployment.  But, not can they grow with too much of if prolonged unemployment generally erode human capital and finally it involves psychic costs.


Some of the major economic consequence will be discussed as follows


A.   Under-utilization of human resource

Unemployment leads to under utilization of human resources.  It educated school leavers remained unemployed, it leads to wastage of recourse invested to create human capital /educated them.  Unemployed persons consume resources their sharing of resource and products diminishes/affect the saving capacity of the nation which is reflected by per capita income of individuals.


B.   House hold poverty

In Grawa town large size of house holds are very common, mainly because of the difficulty in finding adequate housing and immigration.  The consequences are difficulty in decision making process in the household, their might be difficulties in allowing different members of the household either to study or pursue education or to contribute to the household needs with their time and work and to participate in the labor market to contribute to the house hold needs with their time and work and to participate in the labour market.


3.3.4 Political consequences

The expansion of unemployment problem could create high violence among people, threat to the social fabric a threat that sooner or later will manifest it self as civil unrest and could lead the unemployed to take action that can cause damage to the individual or society.  (I.gnacio Rament (1998)


Widespread of youth unemployment in Grawa town year 2008 and 2010 did contribute towards the sets which tooks place in its.


4.   Conclusion and Recommendation

4.1 Conclusion

The job opportunities being created in Grawa town are not compatible with the number of job seekers coming out from the educational system.  The educational system is criticized that it is more theoretical and the number of vocational and training schools is limited so that it could not provide the student with employable skills.  The 2005 census shows, among the residence of the Grawa to 18.9% were migrant.  This magnitude of the rural urban migration together with the natural population increase greatly exceeded the absorptive capacity of the economy or created job opportunities.  Thus, the growth of the economy has not succeeded in absorbing new entrants into Grawa town labor force.  Whatever, the current situation, however, there is evidence that the problem of unemployment will persist at high level in the Grawa town.  The structural composition of unemployed shows the vulnerability of different classes of people to unemployment.  Regarding the age and sex criteria, most of the unemployed of Grawa town are younger generations.  Recent migrants are more exposed to unemployment than individual who have resided in Grawa town for relatively long periods.  Moreover, the composition of unemployed on marital status criteria show that larger portion of unemployed in single (never married) youth most of whom could be living with their parents.


The unemployment problem has many consequences that are harmful for unemployed, his family, his neighbor, and relatives.  Socially, the unemployed could be ignored by the societies, his psychology could be affected, his mental and for the society as whole, crime could be expanded in the Grawa town and could endanger political stability if its is massive which all these could put the town in to automatic disorder.



4.2 Recommendation

Unemployment  in Ethiopia particularly in Grawa town has reached a crisis level and is becoming more frustrating even to the security and stability of the government and society as whole.  Since, urban and rural unemployment is a reflection of the poor performance of the Ethiopian economy, special initiatives targeted at employment to bring about fundamental positive changes should be undertaken.


4.2.1 Improving the rural economy  

As Ethiopia being predominantly an agricultural rations, must be improve the development of its agricultural sector to make the rural people and there by improve the industrial and service sectors.  This is so because modernization of agricultural and rural transformation through integrated development programs that can open new employment opportunities for labor force .


    4.2.2 Developing the urban and rular informal sector

In developing countries like Ethiopia, where the development of industrial sector is limited, the potential of the informal sector should be properly developed and utilized so that it could supplement the informal sector of the economy in the creation of jobs and training opportunities for urban unemployed.  This can be done by adopting appropriate measures such as introducing business development services, appropriate skill training, technology and improved access to credit by unemployed to undertake various income generating activities and self help programs.


4.2.3 Improving the educational system

The disparity between the demand and supply of skills of unemployed labore force implies there is great need for providing support to the revision of the content and quality of the educational and training system and it is reorientation in the direction of improving or acquiring employable skills, inorder to meet the development of employment creation activities with in the different sectors of the economy, the government of Ethiopia should develop and mobilize its human resources through the improvements of its educational and training system.  More important practical educational and skill development will enable the individual to obtain employable  skills.


4.2.4 Retraining unemployment

Retraining programs are important for the unemployed to develop a sense of confidence and be able to complete in the labor market.  The causes would have the advantage of withholding some of the unemployed from labor market for limited period then of re-training them equipped with a skill that could increase both employment and job creation obviously, the skills to be given to those persons would be given atten that they should be compatible with resources availability of the nations.


4.2.5 Active participation of non-government organizations

Such organizations should take appropriate measures interms of research conducting, policy and plan formulation and implementation-coordination of the organizations and individuals highly needed to increase peoples awareness to unemployment and other economic issues inorder to influence individuals to create job by themselves.


The organizations are also required to mobilize the available resources efficiently, design and implementation compressive programs in line with the economic policies of the country for addressing the unemployment problem in Ethiopia.  This encourages enhancement of domestic and foreign investment, development of cooperative credit and other self-helf programs and in general involvement of the local community in accelerating economic progress in general and employment generation in particular.


Realization of all the above propositions needs moral, mental and argent concern of every men and women.  This would be effective by developing dynamic leadership, perfect integrity and effective system of communication, strong confidence and placing the right person for the right job at the right time.





-      Alemayehu G and Berhanu N, (1994), The Ethiopian economy performance and evaluation A.A

-      CSA (2005), report on urban-bi annual employment and unemployment survey A.A.

-      Edgar, O.Edward (1974). Employment in developing Nation, USA.

-      Grawa town administration.

-      Godfrey, M. (1986), Global unemployment: The new challenge to economic Theory, St. Martin press, New York.

-      Ishumi, A.G. M (1984), the urban jobless in East Africa,  A study of the Unemployed population in Growing urban centers with special reference to Tanzania, (Scandivian institute of Africa studies, Sweden).

-      Ignacio Ramonet (1998), The politics of hunger, Lemonade Diplomatique.

-      Jacobson (1979), Technical change of employment and technology dependence, Sweden.

-      MEDaC (1999).  Survey of Ethiopian Economy Addis Ababa

-      Ndegwa and Powelson (1990) – (1973).  Employment in Africa, some critical

-      N.G. Mankiw, 2000 Macro Economics 2nd ed.

-      P.Ghai (1970), employment, Performance, prospects and policies in Kenya, Nairobi.

-      Smiths, S.W. (1991), Labor economics, T.J.I Digital, padstow, com wall, USA.  

-      Todaro M. (1994). Economic Development long man publishing, New York

-      Todaro. M(2006). Economic Development

-      World Book(2001). World Book (Encyclopedia)


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