UNSW Business School

Assignment Cover Sheet - Individual

Course Name: FINS5568 Capstone - Portfolio Management Process

Teaching Period: Semester 1, 2017

Lecturer: Henry Yip

Student information: Complete the entries below

UNSW Student ID number z5093991
Surname Abbineni
Given names Varun

Submission item: Type the letter x next to the relevant submission item
Information memorandum x
Reflection report

Class: Type in the day and start hour of your class

DAY Monday
START TIME 16:00

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Reproduce this assessment item and provide a copy to another member of the University
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checking).

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Unemployment

Unemployment is a major problem faced by people around the world. According to statistics
published by the Central Intelligence Agency, 8.6% of all employable people were
unemployed in 2016. The World Bank identifies the low-skilled, vulnerable people, and youth
as suffering the most from unemployment (World Bank, 2014). One of the major forms of
unemployment is structural unemployment, where citizens do not possess the skills and
education required for certain jobs. This is made worse by occupational equality, where
citizens may be discriminated when applying for jobs, based on their ethnicity, sex,
economic status, or age.

Current situation in Colombia

Colombia has historically struggled with high structural unemployment, with the
unemployment rate peaking at around 16% in 2000 (DANE, 2017). Although the
unemployment rate has reduced considerably, to around 9.7% in March 2017 (Trading
Economics, 2017), it continues to be a serious problem for Colombias workforce. The
problem is especially bad for the youth, as Colombia recorded a youth unemployment rate of
16.5% in 2016 (Instiglio, 2017). The capital city of Bogota is a significant contributor to
Colombias unemployment rate, recording an average of 413,000 unemployed citizens in
2016 (Colombia Reports). The problem has been exacerbated by the significant wage and
education inequality, adversely affecting the Afro-Colombian and Colombian indigenous
population (World Bank, 2015). The high unemployment rate has been attributed by the
OECD to Colombias peculiarly high level of urbanisation, creating labour market uncertainty,
tensions in service provisions, transport, housing, and, importantly, crime (OECD, 2015).

While there has been a decrease in violent crime (such as kidnapping, terrorism, rape,
murder, assault and battery) in Colombia since the early 2000s, National Police statistics
show that it continues to be high in some parts of the country (Revista Criminalidad, 2011).
Further, there has been an increase in common delinquency, such as mobile phone theft, or
mugging incidences of bank customers withdrawing money from ATMs. An increase has
also been observed in drug trafficking on the city streets (Revista Criminalidad, 2011). This
persistently high crime rate has affected the quality of life and tranquillity of the citizens.

Studies have shown that there may be a link between Colombias rural-urban influx and its
high crime rate, as immigrants may resort to crime when they face poor labour market
opportunities (Roche-Villarreal, 2012). Colombia is the tenth most unequal country in the
world, with close to 25% of the population living in poverty, rising to ~46% in rural areas
(ABColombia, 2015). Therefore, we can surmise that there is a significant cost to Colombian
society, of unemployment, and that there is a need to curb the unemployment and crime
rates (World Bank, 2014).

Curbing unemployment through an intervention program

Given the dire employment situation in Colombia, it appears there is an immediate need to
address the issue using intervention programs. The programs will be developed to improve
education, reduce income disparity and secure long-term employment opportunities for
vulnerable populations. We have formulated a three-stage program to address the issue.
The first stage will comprise of several SIBs that will be implemented over a five-year period.
The second stage will deal with building markets, and the third stage with curating the

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knowledge gained from this program, and disseminating our learnings, with a view to
implementing similar intervention programs in other high-unemployment countries with
vulnerable populations.

The intervention program

a) Program implementation

The intervention will be aimed at high school graduates between the ages of 18 and 40,
who are formally unemployed at the commencement of the program. Eligible individuals
will score less than 41.74 points on SISBEN (a poverty scale), registered with Red
Unidos (the poorest members of the population), or be refugees of the Colombian armed
conflict. Eligible individuals will also not have participated in any previous Colombian
government employment programs.

The program will identify vulnerable individuals in three cities of Colombia facing
unemployment pressures, namely Bogota, Cali, and Pereira. The program will offer
these eligible individuals a wide range of employment measures, such as psychosocial
support and skills training, as well as intermediation services for work placement and
retention.

b) Subsequent steps

The trained individuals will then be matched with employers seeking employees with the
requisite skills. The individuals employment status will be assessed on a quarterly basis
to gauge employee retention rates, and subsequently, the effectiveness of the
intervention program.

If the participants perform as well as, or better than expected, then the plan will be
scaled up to include more participants, or participants from other cities, in further SIBs. If
the retention rates are lower than expected, then the plan will be reviewed and an
assessment performed as to what could have been done better, and implemented in
subsequent SIBs.

Benefits of the intervention program

To participants: Individuals participating in the program will receive access to skills

development, increasing their employability and ability to attract well-paying employers. This
will in turn increase their contentment and make them unlikely to resort to crime, improve the
quality of their lives, and provide them stable livelihoods.

To the Colombian government: The individuals ability to attract high-paying employers will
increase employment, reduce income inequality, lower the unemployment rate and reduce
social welfare payments. The increase in employment will help the government lower the
crime rate and improve social security, helping create a more peaceful environment.

To society: The reduced crime rate and increased employability of the citizens, coupled with
Colombias strategic geographical situation will help the country attract foreign investments,
improving the Colombian economy, and further accelerating public reforms.

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List of References

Gustafsson-Wright, E and Boggild-Jones, I. 2017. Colombia leads the developing world in

signing the first social impact bond contracts. https://www.brookings.edu/blog/education-
plus-development/2017/03/31/colombia-leads-the-developing-world-in-signing-the-first-
social-impact-bond-contracts/ [Accessed 30 April 2017]

DANE. 2017. Empleo Informal y Seguridad Social.

https://www.dane.gov.co/index.php/estadisticas-por-tema/mercado-laboral/empleo-informal-
y-seguridad-social [Accessed 30 April 2017]

Johnson, J.V. 2017. Colombia unemployment on the rise for first time in 8 years.
http://colombiareports.com/colombia-unemployment-rise-1st-time-8-years/ [Accessed 30
April 2017]

World Bank. 2015. Colombia - Systematic Country Diagnostic.

http://documents.worldbank.org/curated/en/142801468188650003/pdf/97878-CAS-
P151459-R2015-0135-IFC-R2015-0201-MIGA-R2015-0053-Box391496B-OUO-9.pdf
[Accessed 30 April 2017]

Central Intelligence Agency. 2017. The World Factbook.

https://www.cia.gov/library/publications/the-world-factbook/fields/2129.html [Accessed 30
April 2017]

Roche-Villarreal, L. 2012. Forced Displacement and Crime in Colombia.

http://master.sciences-po.fr/sites/default/files/Laura_Roche_Villarreal_memoire.pdf
[Accessed 30 April 2017]

Revista Criminalidad. 2011., Policia Nacional de Colombia. [Accessed 01 May 2017]

World Bank, 2014. It has been proven, less inequality means less crime.
http://www.worldbank.org/en/news/feature/2014/09/03/latinoamerica-menos-desigualdad-se-
reduce-el-crimen [Accessed 01 May 2017]

Trading Economics. 2017. Colombia Unemployment Rate.

http://www.tradingeconomics.com/colombia/unemployment-rate [Accessed 01 May 2017]

ABColombia. 2015. Poverty, Inequality and Drugs.

http://www.abcolombia.org.uk/mainpage.asp?mainid=76 [Accessed 01 May 2017]

Instiglio. 2017. Workforce Development Colombia Results-based Financing Social

Impact Bond. http://www.instiglio.org/en/employment-colombia/ [Accessed 01 May 2017]

Instiglio. 2017. Social Impact Bonds & Education in Latin America.

http://www.instiglio.org/wp-content/uploads/2016/05/Eddy-et-al-SIBs-in-Education-in-LatAm-
GEMS-White_Paper_FINAL.pdf [Accessed 01 May 2017]