Employability, the Labor Force, and the Economy

By NICOLAS A. POLOGEORGIS Updated April 04, 2022

Reviewed by MICHAEL J BOYLE

Narrowly defined, the term employability is a product consisting of a specific set of skills, such as soft, hard, technical, and transferable. Additionally, employability is considered as both a product (a set of skills that “enables”) and as a process that “empowers” an individual to acquire and improve marketable skills that can lead to gainful employment.

KEY TAKEAWAYS

• Employability is a product consisting of a specific set of skills, such as soft, hard, technical, and transferable.

• It is also considered as both a product (a set of skills that enable) and as a process that empowers an individual to acquire and improve marketable skills that can lead to gainful employment.

• For labor/human capital to be used efficiently, it warrants the acquisition of knowledge, skills, and capabilities that employers need in our current economic times and knowledge-driven economy.

• From a macroeconomic perspective, a lack of employability contributes to both frictional and structural unemployment and affects the productivity of the labor force.

• If individuals are not employed, they are not spending, which means businesses do not invest in capital and labor or try to expand to meet consumer demand. This translates into an economic slowdown and increasing unemployment.

What Is Employability?

Employability is the lifelong, continuous process of acquiring experience, new knowledge, purposeful learning, and skills that contribute to improving your marketability for enhancing your potential to obtain and maintain employment through various shifts in the labor market. It is based on a set of individual characteristics.

It is not equivalent to employment; rather, it is a prerequisite for gainful employment. Essentially, employability is your relative ability to find and stay employed, as well as make successful transitions from one job to the next, either within the same company or field or to a new one, at the discretion of an individual and as circumstances or economic conditions may dictate.

Employability will vary with economic conditions, although there are some exceptions in professions insulated from economic fluctuations, such as healthcare, education, and defense sectors. It applies to almost everyone who is part of the labor force, as the ability to obtain, maintain, and switch employment over time is imperative to anyone’s survival as well as success in life. You must have a set of skills that are usable in the labor market.

Understanding Employability and the Economy

Each factor of production is used differently, and labor or human capital can be used either in the process of manufacturing a product or providing a service within an economy. The distinction between labor and capital may relate to the fact that labor usually refers to blue-collar laborers/workers, while human capital generally means white-collar workers.

Labor and human capital are in limited and scarce quantities. For labor/human capital to be used efficiently, it warrants the acquisition of knowledge, skills, and capabilities that employers need in our current economic times and knowledge-driven economy.

Firms and businesses are running leaner, with fewer organizational layers, and they are prone to rapid restructuring, striving to adapt to their shareholders' profit-maximizing goals (stock price appreciation and dividend growth), meeting their constituents’ needs, and surmounting the challenges of the ever-changing business landscape.

The Skills of Employability

Employability consists of numerous components or skills, such as technical, nontechnical, transferable, nontransferable, context-dependent, context-independent, and metacognitive.

Read the full article on:- https://www.investopedia.com/articles/economics/12/employability-labor-force-economy.asp#toc-the-skills-of-employability