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Our View: Drastic measures needed to manage our human capital

File photo of the unemployment office

By Constantinos Constantinou

UNEMPLOYMENT in Cyprus has reached numbers beyond management with a total unemployment rate of 17.3 per cent. Nevertheless what should be carefully assessed and properly controlled by policy and decision makers on the island should be the unemployment rate in people under the age of 25 which is double that of the total population unemployment rising in June 2013 to 37.8 per cent.

There are several reasons for concern as the current trend suggests these numbers will increase further.

First of all the obvious concern should be the inability of young people to acquire the necessary monetary resources to cover their personal needs as well as the money paid on unemployment benefits.

The second concern that should rise to the top of the political agenda immediately is the de-skilling of young, educated, and energetic individuals who have the background to offer maximisation of productivity to their area of expertise as well as improve innovation through the introduction of new approaches acquired throughout their studies and training usually abroad.

To downgrade (a job or occupation) from a skilled to a semiskilled or unskilled position
De-skilling describes the ‘end-product’ of the process by which skilled individuals (termed as people with tertiary education) downgrade from skilled to semi-skilled or even unskilled. Extended unemployment is able to bring about de-skilling to anybody whether he/she belongs to the first age group of up to 25 years old or the second occupational age group of 26 – 65.

Nevertheless imagine an individual who completes undergraduate or postgraduate studies equipped and willing to apply theory in practise, not being able to find work for 1-3 years. With unemployment rates in the last three years being above 20 per cent (2010 22.4 per cent, 31.8 in 2012 and 37.8 in 2013) most likely a great percent of graduates within this period will not be able to find employment.

Even if vacancies are available a young inexperienced individual will have to face other applicants who in many cases are people who lost their jobs through budget cuts and possess both the qualifications as well as the necessary experience.

Therefore these graduates enter a vicious circle where they are left unable to find proper employment in their area of study and are then turned to other similar or completely irrelevant occupations where more employment opportunities might be available.

Consequently many graduates who do manage to get employed, they do so in sectors irrelevant to their field of study, being ‘pushed’ by everyday needs and the eminent need for remuneration.

There are several examples of skilled individuals working in different areas from their expertise; IT specialists become accountants/auditors, marketing consultants turn onto secretarial or other irrelevant desk jobs, business consultants turn to insurance agents or sales ‘advisors’ and many more similar examples of skills reconversion. This practise though needs additional time and money spent on re-training, consequently leading to misallocation of resources as it waste time and financial resources from the employer’s part, as well as the time and monetary investment on education by the individual and the public sector (through educational grants etc) spent during initial training. Misallocation of resources and improper management of human capital in Cyprus therefore needs drastic and innovative measures that will tackle both deskilling as well as unemployment.

On the contrary, instead of financing plans and setting in place mechanisms for the proper monitoring and allocation of its ‘homemade’ human capital, made up of available but unemployed skilled workers due to be retrained or deskilled, the government promotes the functioning of more approved degrees in the newly formed Cypriot universities (e.g. degrees on oil and gas management etc) and promotes the opening of a public medical school in a country which has one of the the highest doctors density in the EU.

Even measures taken to tackle unemployment, like for example the incentives given to organisations in the private sector to employ young skilled individuals are set in place without proper filtering of applicants and without long term planning.

Skilled unemployed individuals that apply for this scheme are allocated to job posts regardless of their acquired skills only to find employment to cover their personal expenditures and acquire working experience. The positive result of this malfunctioning resource management is for the organisation not to be able to get the most out of the human capital input (need for re-training) and the individual not to be able to apply theory and training acquired in practise.

The government should therefore set in place proper mechanisms for the management of its valuable skilled workers/graduates through the introduction of proper educational advisors at the end of secondary education, free training/update to unemployed graduates according to area of expertise, protected (context specific) professions, public ‘head hunting’ agency or even in the worst case scenario to achieve bilateral agreements with EU countries for the employment of young individuals in specific occupational sectors.

Inability of the government to achieve proper resource management will possible lead to either the de-skilling of young individuals or in the loss of human capital abroad through skilled migration, where individuals might face job discrimination and in the worst scenario migrant workers might permanently relocate to other countries with major losses for Cyprus in the long run in terms of innovation and development.

Constantinos Constantinou is a PhD Candidate at the University of Keele in the UK

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