Unemployment: Is it really a problem?

I think the main socio-economic issue Brunei is currently facing is the problem of unemployment, defined as the number of people who are actively seeking for jobs. But is it really a problem? Latest statistics from JPKE show that in 2005 and 2006 there were more than 7000 unemployed each year with unemployment rates of 4.3% and 4% respectively. If we compare this figure with the number of live births in Brunei, which in 2005 was roughly 7,000, the numbers tally! Now, I'm not saying that for every birth of a new baby another person is unemployed, what I'm trying to say is that IDEALLY each year, at least 7,000 jobs need to be created if you want zero unemployment because that is the number that you would expect to enter into the job market in 15 years from now.

Now, in economics, there is no such thing as zero unemployment, there is a term that we call the 'natural rate' of unemployment or the 'full employment' unemployment rate. This is basically the equilibrium unemployment rate. OK, plainly, it is the rate that you would normally expect to occur in a country, which will not put an upward pressure on inflation. There are many views regarding the rate of this full employment rate? For many countries including the US, it is around 4.5%. Now, if we look at Brunei's unemployment rate now, hey! we are safe.

And it has always been that case for many years. In 1991 and 1995 for example, Brunei's unemployment rates were 4.7% and 4.9% respectively, which were a lot higher than the rate today (4%). The highest ever recorded was in 2001 when the unemployment rate soared at 5.6% and about 8,600 were unemployed. So what's all the fuss about?

I think we get nervous when we look at our neighbouring countries. In 2006, Singapore, for example, had an unemployment rate of only 3.1%, while Malaysia had 3.5% (CIA World fact book). But my question is, is it really fair to compare Brunei with these 2 countries?

I am not sure whether the problem of unemployment in Brunei is actually being slightly 'over-exaggerated'. Based on the data, which 'don't lie' according to Levitt and Dubner (2oo5), this might be the case.

My personal feeling is that Brunei is actually facing a MUCH larger problem, for now I would call it a 'mind-set' problem, which won't get solved even by the world's greatest economist. What do I mean? Well, I guess you'll have to wait for my next post!

Salaam!