Question

The overall unemployment rate in Lebanon stands at 24 percent, and youth unemployment exceeds 35 percent. In the face of job crisis, Lebanon should introduce reforms in the education system to adapt to future labor market needs. At the same time, it is crucial to develop a viable information and communications technology sector and to speed up the process of finalizing the oil and gas exploration and production projects. Also essential to job creation are small- and medium-size enterprises.

Source: The Daily Star, December 24, 2014

a. On the basis of the news clip, what is the main type of unemployment that Lebanon should use

policies to control? Explain.

b. How might these policies impact Lebanon’s natural unemployment rate? Explain.

Answer 1

a. Lebanon should address the structural unemployment issue in the economy to support the current labor force with the new methods and technologies of production. Policies would be aimed at boosting the productivity of labor and hence the demand for labor force. From the given scenario it is comprehensible that the major issue prevailing is lack of competency due to structural and technological changes.

b. Policies aimed at fighting structural unemployment would cause the natural rate of unemployment rate to fall. Natural rate of unemployment would change when there arises changes in factors such as technology, productivity etc.