Unemployment
In labour market we
have studied that labour market consists of all those people who are willing to
work i.e. employees (supply side) and those who are willing to hire i.e.
employers (demand side).
If supply side is
greater than demand side i.e., if there are more people to work and less people
to hire them it will lead to unemployment.
Full
employment:
When we are referring
full employment to inflation it
means *full
employment is when the country uses up all its resources and can no longer
produce any more. The supply of all the country will be perfectly inelastic in
the long run.
Here, full employment
refers to a situation where the demand for labour is equal to the supply of
labour. At full employment, the number of job vacancies is equal to number of
people out of work. It means frictional employment is evident.(see in frictional
unemployment)
It refers to a situation where people who are
actively seeking for job are unable to find it at current wage rate within a
reasonable time.
The rate of unemployment:
The unemployment rate is the number of people on the claimant count
(registered as unemployed)
Unemployment rate = registered unemployed X 100 / Labour force.
Types, Causes and remedies of Unemployment
There are four main types of unemployment… They are as follows………..
1) Frictional unemployment
2) Structural unemployment
3) Seasonal unemployment
4) General unemployment
Frictional unemployment
Meaning:
Frictional unemployment occurs when people move from one job to another
job.
Causes
Frictional unemployment is caused by immobility of labour. People
remain unemployed either they don’t wants to change the location
(geographically immobile) or lack sufficient skills (occupationally immobile)
It is also called as search
unemployment as some workers always will be in process of changing job for reasons
like better salary, immobility, optimism of getting better job etc.. Therefore
full employment is almost impossible at any given point of time.
It is also referred as casual
unemployment as some workers will quit the job for family commitments, holidays,
or to take a break etc….
Remedies
This type of unemployment can be reduced by
a) Providing better information of available jobs
b) Reforming the unemployment insurance programme
c) Providing job advisory services regarding most appropriate jobs
Structural unemployment
Meaning
Structural unemployment
occurs when workers have job skills that do not match the skills required by
available jobs.
For example, if a steel
mill closes, for example, the steelworkers are likely to become structurally
unemployed. There may not be enough jobs in other steel mills for all of the people
who are trained to work in the production of steel.
Industry concentrated
in one particular area may suffer regional
unemployment. If such industry is facing decline in income generation it
will affect the employment as the region is dependent on such industry.
Technological
unemployment occurs, as the employees who are
adapted to traditional way of work and lack knowledge of improved technology
will be unemployed.
When
an industry becomes less competitive and loose its export market the workers
will be unemployed leading to international
unemployment.
Remedies
This type of unemployment can be reduced by
a) Improve the
ability of these workers to acquire additional education, skills and training.
b) Government should assist and protect the workers
c) Promoting occupational or geographical mobility of workers
Seasonal unemployment
Meaning
It occurs due to seasonal changes that affects the jobs in certain
industries like tourism, fishing, construction etc.
For example: Tourist guides are
unemployed during off-season
Causes:
It will be of no use to employ in
off season as there will be very less or no business in off season hence this
jobs are there in peak seasons only.
Remedies:
Seasonal unemployment can be
eliminated by following measures
a)
By providing training
to take up alternative jobs
b)
By organising job
centers
c)
Through financial assistance
to get self employed
Cyclical unemployment
Meaning
It occurs when aggregate demand for the product
falls leading to recession in the country.
Causes
As the aggregate demand for the product decreases
the demand for the labour is less, it is therefore also called as demand deficiency unemployment. It is
also called as General Unemployment.
Following are reasons for cyclical unemployment
a) Fall
in demand for exports
b) Fall
in government spending
c) Lack
of technological progress in production
d) Rise
in the export price due to cost-push inflation
Remedies
a) Increase
in government spending
b) Promoting
private spending through fiscal and
monitory instruments (see
policies to reduce inflation)
c) Granting
production subsidies
d) Import
substitution and export promotion
Changes
in pattern of employment
There are tremendous
changes took place in the recent years in the nature of the labour force around
the world. Over time, patterns of employment change. Some industries go into
decline and jobs disappear while new types of industries emerge developing new
jobs. Following are some changes in pattern of employment:
1)
A rise in the part time employment:
Students attending college and university are available for part time jobs
like, receptionist, cashiers, tutors etc… and females who wish to work only
part time as they have family commitments resulted in huge increase in part
time labour force..
2)
More skilled workers: As there is development
in education and training programs more number of people are seen taking up
professional careers.
3)
Rise of service sector: Over years’
service sectors has gained its importance.. sectors like tourism, insurance,
banking etc.. has increased.
4)
Participation of women at work: As there
is change in social attitude of women working now many women are available for
work.
Consequences
of unemployment
a)
Increase in crime rate:
unemployed person has nothing to do hence can easily indulge in crimes.
b)
Lower standard of living:
People who lose their jobs suffer a
fall in their standard of living, and so far do their dependents.
c)
Mental trauma:
Unemployment can have damaging effects
on the morale of those out of work, who can be made to feel rejected and
unwanted.
d)
Loss of Skill: Workers
who are unemployed for long periods of time may lose their skills.
e)
Effect on government spending: As there is less revenue collected in the form of income
tax government has less to spend.
Measuring
of unemployment
The number of people unemployed [in
the UK] is measured by the government each month. The job seekers allowance claimant count is the number of people who
are claiming unemployment benefits from government.
The rate of unemployment is usually expressed as parentage of the
working population or labour force
Unemployment rate
= Registered unemployed x
100
Labour force
This enables to compare the
unemployed situation in different countries.
UNEMPLOYMENT SUMMARY
|
|||
TYPE
|
DESCRIPTION
|
CAUSE
|
REMEDY
|
FRICTIONAL
|
Workers temporarily between jobs
|
Delays in applying interviews and
accepting jobs
|
Improve job information, example
computerized job centers
|
STRUCTURAL
|
Workers have the wrong skills in the work
place
|
Declining industries and the
immobility of labour
|
Subsidies and improve the mobility of
labour
|
CYCLICAL
|
All firms need fewer workers
|
Low total demand in the economy
|
Increased government spending or lower
taxes
|
SEASONAL
|
Unemployment for part of the year
|
Seasonal variation in demand
|
Retraining
|
TYPE
|
DESCRIPTION
|
CAUSE
|
REMEDY
|
TECHNOLOGICAL
|
Firms replace workers with machine
|
Automation and information technology
|
Retraining
|
INTERNATIONAL
|
Overseas firms replace countries
producers
|
High priced / low priced goods
|
Tarrifs quotas or money depreciation
|
REGIONAL
|
High unemployment in one area
|
Local concentration of declining
industries
|
Regional aid, example: relocation and
grants
|
VOLUNTARY
|
Workers choose to remain unemployed
|
Family
commitments, more unemployment benefits etc..
|
Reforming
unemployment benefit program, provide job assistance etc..
|
Some of the important features of unemployment in most of the countries at present are……
ü
Rate of unemployment is growing at a faster rate.
ü
The number of long term unemployment is increasing.
ü
The unemployment rate among young people is very higher.
ü
Unemployment of unskilled workers is higher than skilled
workers (with professional qualifications).