Poverty may be defined using many different words but basically, it refers to the lack of access to food, water, shelter, clothing, health, education and other important social services. Poverty may further be classified as absolute or relative or rural or urban, primary or secondary and so on, but one point on which we can all agree is that poverty is brought about by lack of adequate income. Lack of employment implies lack of adequate income and leads to financial crisis and decreases the overall purchasing capacity of an individual or community. Lack of employment opportunities and the consequential income disparity brings about mass poverty in most of the developing and under developed nations of the world. According to the World Bank definition, poverty refers to a financial state where people are incapable of maintaining the minimum standard of living.
Poverty as a social problem is a deeply rooted wound that penetrates every facet of culture and society. It includes sustained low amounts of income for members of society. The World Bank has over the years set $1 a day estimate for the international poverty line though recent revision of the estimates (in order to take inflation into account) set the line between $1.25and higher. At a poverty line of $1.25 a day, the revised estimates show that 1.4 billion people live at this poverty line or below. This makes unemployment and poverty the two major challenges that are facing the world economy at present. Martha Alter Chen, Joann Vanek, and Marilyn Carr, in their book titled 'Mainstreaming Informal Employment and Gender in Poverty Reduction' (2008) highlight the lack of attention to employment, and especially mainstream employment in poverty-reduction strategies and point to the links between being informally employed, being a woman or a man and being poor. They do this within the context of major changes in the nature of the work related to economic restructuring and liberalization and spell out the effects on various classes of informal manufacturers and workers, both men and women. The book largely cites data and proof from the global research policy network called Women in Informal Employment: Globalizing and Organizing (WIEGO) as well as the information and experience of the grassroots groups in the network. With numerous examples, it gives a convincing case for an increased emphasis on informal employment and sex in poverty-reduction measures.
The connection between economic growth and poverty has been debatable. The issue of jobless economic growth that increases income inequalities and generates too few jobs for low income groups poses a serious threat to the well-being of many nations. In any country, rich or poor, government policies ought to consider not only aggregate economic impact but also the distribution of employment.
On a world scale, there are many causes of poverty, most of them historical. These include: colonialism, slavery, war and conquest and natural calamities such as earthquakes and floods. On the other hand, the factors of poverty can be said to be those things that contribute to the perpetuation or continuation of poverty. These include dishonesty, ignorance, disease, apathy, and dependency. By ignorance, I refer to the lack of knowledge or information and not lack of intelligence or being stupid. When people get training they are empowered with knowledge and skills and are able to acquire jobs. Unlike education which in general has its own history of causes for choosing what is included, information included in training is aimed at imparting skills and increasing capacity, not for general enlightenment. In general I can say that education is vital for a community's well being. An ignorant community lacks knowledge for basic sanitary principles which leads to high rate of disease which leads to high rate of unemployment due to absenteeism because sick people cannot work and hence less wealth is created. Apart from this, discomfort and death that results from sickness is also a major contributing factor to poverty in a community. Good health not only helps the individuals but also contributes to the reduction of poverty in the community. We may not be able to reverse the causes of poverty because we can not go back and change history, but we can definitely do something about the factors of poverty. Apathy is the state whereby people do not care, or when they feel too helpless to try to alter situations, to right a wrong, to correct an error or to make conditions better. When people get apathetic, they do not care and they remain poor and unemployed. When funds and resources intended for public use are diverted and used for personal gain or for other inappropriate ways, the community as a whole is deprived of means of promoting and uplifting their standards of living, or creating employment.
Dishonesty and corruption has lead to high rates of unemployment especially in third-world countries (the Cato Journal Vol.16 No.1) . Dependency results from being on the receiving end of charity. Natural disasters like the recent earthquake in Haiti make many third world countries on the receiving end of charity, making it essential for survival. In the long run, that charity can contribute to the possible demise of the recipient, and certainly to continued poverty. These factors of poverty are not independent. Actually they contribute to each other. Disease contributes to ignorance and apathy. Dishonesty contributes to ignorance and apathy and all together bring about low wealth creation which in turn leads to less job opportunities and high rate of unemployment.
There are many causes of poverty but joblessness is one of the greatest single causes of poverty in the world. Unemployed people do not have an income. They do not afford good medical care, good education or training. In most third world countries, lack of demand of labor is one of the main reasons for unemployment. In these countries a substantial portion of the total workforce works as surplus labor, more so in the agricultural sector. As a result of this, the marginal productivity of the workforce may be zero or even negative. This excess pool of workforce is the first to lose their jobs during the period of economic or social crisis. Unemployment and poverty are mostly common in the third world countries. However, global economic recessions have led to a situation whereby developed economies are currently facing these challenges. The US subprime crisis and its wide spread impacts have played an important part in aggravating the situation. In India, the problem of unemployment and poverty have for a long time been major hindrances to economic development. Unemployment has crippled the Indian economy over the years. Even during the period of good harvest, the Indian farmers are not employed for the whole year. In order to reduce poverty, it is paramount to improve national economies.
According to the International Development Research Center publication: Science for Humanity, majority of the working population in developing countries is in the informal sector and the greater portion of the economy is actually in this sector. The informal sector comprises of those people who work on the streets or in the open air. City streets and village lanes in most developing countries - and in many developed countries - are lined with barbers, cobblers, garbage collectors and vendors of vegetables, fruit, meat, fish, snack-foods and other items like clothing, locks and keys, soaps, cosmetics and electronic goods. In many countries, head-loaders, cart pullers, bicycle peddlers, rickshaw pullers, bullock or horse cart drivers jostle to make their way down narrow alleys or through the maze of cars, trucks, vans and buses on city streets. In rural areas, the vast majority of people earn their living working on farms, tending to livestock, making handicrafts or gathering and processing minor forest products.
There are other less conspicuous informal workers who work in factories or small workshops that mend bicycles and motorcycles; recycle scrap metal; make furniture and metal parts; tan leather and stitch shoes; weave, dye and print cloth; polish precious stones and gems; make and embroider and sell cloth, paper and metal waste; and more. The least visible informal group of workers, the majority of them women, sell or produce goods from their homes: stitching garments, weaving cloth, embroidering textile goods, making artifacts, making shoes, processing food products or assembling electronic and automobile parts.
The largest occupational groups within the informal economy in most developing countries include casual day laborers in agriculture and construction, small farmers, forest gatherers, street hawkers, domestic workers, workers in Export Processing Zone (EPZ) factories or small unregistered workshops, and industrial outworkers who work from their homes who are usually referred to as home workers. Other groups of informal employment that are common in both developed and developing countries include casual workers in restaurants and hotels; sub-contracted janitors, security guards and gardeners; and temporary office helpers or off-site data processors.
Conditions of work and the level of earnings differ markedly among those who collect scrap metal or paper on the streets, those who are sub-contracted to produce textile from their homes, those who sell goods on the streets and those who work as temporary data entry clerks. And, even among home-based workers, there is a difference between those who work on their own account and those who work on a piece-rate basis for a contractor or a firm.
The informal economy in almost all countries is highly influenced by location of work, sector of the economy and employment status and also by social status and sex. In spite of its diversity, the informal sector can be classified by employment status as the self-employed who work in small unregistered enterprises and wage employees who work in unsafe and unprotected jobs. Also, most of those who work in the informal sector lack economic security and legal protection.
In India, a legislature that recognizes work as a fundamental right and guarantees one hundred days of employment a year to people in rural areas has been put in place. This has brought hope for India's poor, who have been left even more vulnerable by the aftershocks of the global economic crisis. Economic reforms, changes in the industrial policy and better utilization of available resources are expected to increase employment and hence reduce poverty. The economic reform measures need to have major impacts on the employment generating potential of the economy. This is in line with the government's long term measures for poverty alleviation. Creation of job opportunities and equality in income distribution are the two main factors that are of most importance to tackle the two-faceted problem of unemployment and poverty (Poverty and Income Distribution, Edward N. Wolff - Wiley-Blackwell (2008)). The vast majority of the poor work, but few are able to work their way out of poverty. This is because most of them are engaged in the informal economy, where they are likely to face lower incomes, greater financial risks, lower standards of human development and greater social exclusion compared to better-off workers, especially those who work in the formal economy.
In conclusion, increasing the volume of employment directly leads to reduction of poverty. However, many of the people who live under the poverty line are actually employed. The quality of employment is crucial in reduction of poverty and uplifting the standard of living of the poor.