Unemployment and the Recomposition of Labor Reserves

Abstract

To understand unemployment in less developed countries, five forms of labor reserves should be distinguished: latent—not job-seeking but potentially available for the work force; stagnant—social dropouts; floating—moving in and out of the work force; active—job seekers; and employed—stop-gap reserves of enterprises. In the course of economic evolution people shift from one category to others. This continuous recomposition is heavily influenced by the economic strategies pursued. Entrenched landlordism and agro-export production end up bringing about an unintended increase in the active and stagnant labor reserve, which destabilizes the political order. Neopopulist autonomy slows down the recomposition process without stopping it. Import-substituting industrialization accelerates the formation of an active reserve without prospects of absorbing it. Export-led industrialization could provide such prospects but is feasible only for a few countries. While future perspectives for employment in less developed countries thus appear very bleak, the World Bank implies that most observed unemployment is voluntary. The underlying assumptions of this view are highly questionable because they neglect the social anatomy of the labor reserve and rely instead on abstract economic concepts.