Victoria Stepanchuk, group 2

ELECTIONS

Victoria Stepanchuk, group 2

I'm going to speak about elections according to the following points:
first of all, I’m going to give the definition of elections and speak about the types of elections; I would like to continue with the major principles of democratic elections and two types of electoral system; I would also like to put my attention to the stages of an election campaign and the election procedure; and at the end of my speech I’m going to speak about the latest elections in the world.

So what is unemployment? There are many definitions of this word. It’s a situation in which someone does not have a job, it’s also the number or percentage of people in a country or area who do not have jobs. But it seems to me, the most appropriate one is that unemployment is the state of a person who is out of work and actively looking for a job.

Speaking about unemployment, we should outline the different types of unemployment and explain how each one can arise in an economy. Economists often refer to “structural”, "frictional", and “cyclical” types of unemployment.

Structural Unemployment, is associated with the mismatch of jobs and workers due to the lack of skills or simply the wrong area desired for work. It depends on the social needs of the economy and dynamic changes in the economy. For instance, advances in technology and changes in market conditions often turn many skills obsolete; this typically increases the unemployment rate. For example, with the rise of computers, many jobs in manual book keeping have been replaced by highly efficient software. Workers who find themselves in this situation find that they need to acquire new skills in order to obtain a new job.

Frictional Unemployment is always present in the economy. This type of unemployment is caused because unemployed workers may not always take the first job offer they receive because of the wages and necessary skills. This type of unemployment is also caused by failing firms, poor job performance, obsolete skills, or by workers who will quit their jobs in order to move to different parts of the country. For instance, a case of frictional unemployment would be a college student quitting their fast-food restaurant job to get ready to find a job in their field after graduation.

Unemployment that is attributed to economic contractions is called cyclical unemployment. The economy has the capacity to create jobs which increases economic growth. Therefore, an expanding economy typically has lower levels of unemployment. On the other hand, according to cyclical unemployment an economy that is in a recession faces higher levels of unemployment. When this happens there are more unemployed workers than job openings due to the breakdown of the economy. This type of unemployment is heavily concentrated on the activity in the economy.

While speaking about different types of unemployment, it’s important to mention, that the main goal of economic and social reforms of the 19^th and 20^th centuries was full employment. Еconomists mostly define full employment as an unemployment rate that includes no cyclical unemployment – in other words, when there is enough overall demand in the economy for everyone who wants a job to have one. Actual zero unemployment is considered undesirable on the grounds that it would allow employees to demand the pay they wanted, which would fuel inflation. So full employment really means something like an acceptable figure above 0% that is consistent with stable inflation.

But recently, economists have come up with a concept called the non-accelerating inflation rate of unemployment, or NAIRU, measuring the level of unemployment – often referred to as "structural" – that is supposedly consistent with pretty much everyone being able to find a new job if they want. The Bank of England and Office for Budget Responsibility currently put Britain's long-term NAIRU at around 5%.

Unemployment and underemployment lie at the core of poverty. Unemployment leads to financial crisis and reduces the overall purchasing capacity of a nation. This in turn results in poverty followed by increasing burden of debt. In the European Union, for instance, the rate of unemployment averaged 10.8 per cent in 2013, up from a low of 7.1 per cent in 2008. Some individual countries experienced far worse conditions, with unemployment at 25 per cent in Spain, 24.3 per cent in Greece and 15.9 per cent in Portugal.

But in EU those who’s income is lower than 60% of the average are considered to be under the threat of poverty. In Luxembourg, for example, this figure is 18550 euro per year, in Denmark – 14497, but in Russia this figure is much lower and it’s less then 1600 euro. Moreover 54% of Russians can only afford buying food and clothing, which provides only physiological survival and 7% can not afford even buying food. In Russia poor man refuses meat or dairy products, not delicacies. In EU such kind of poverty doesn’t exist.

I would also like to pay attention to the economic impact of immigration, using the example of Britain. Public opinion towards immigration in Britain is negative. Many people think, that migrants move to Britain, taking jobs, scrounging welfare benefits, and occupying state housing. But new study by two economists tells, that between 1995 and 2011 the migrants made a positive contribution of more than $6.4 billion to Britain. The scholars point out that the cost of some government services remains the same no matter what the population, so the overall cost of providing them to immigrants is zero. Immigrants’ overall positive contribution is explained in part by the fact that they are less likely than natives to claim benefits or to live in social housing, also migrants tend to be young and it is likely that many recent migrants will return home, to enjoy their less productive later years. The contributions of those who stay in Britain may well increase. And it’s a new form of foreign direct investment.

Addressing the issue of unemployment requires information about the extent and nature of the problem. How many people are unemployed? How did they become unemployed? How long have they been unemployed? Are their numbers growing or declining? Are they men or women? Are they young or old? etc. But where do the statistics come from?

Measuring unemployment accurately is made difficult because of imperfect knowledge. Not all instances of unemployment are recorded, and some records of unemployment may not be accurate. Because the unemployed are eligible for benefits, some individuals may work, but not disclose it, and claim benefit. Conversely, many unemployed may not bother to inform the authorities, and this unemployment goes unrecorded.

In US, for example, early each month, the Bureau of Labor Statistics (BLS) of the U.S. Department of Labor announces the total number of employed and unemployed people in the United States for the previous month, along with many characteristics about them. These figures, particularly the unemployment rate—which tells you the percentage of the labor force that is unemployed—receive wide coverage in the media.

The Claimant Count in the UK records those claiming unemployment benefit (Job Seekers Allowance, or JSA) and can prove they are actively looking for work. It excludes housewives and those on training schemes. But, as it was mentioned earlier, the Claimant Count may not reflect the true level of unemployment in the economy, because still there are those, who are unrecorded.

The labour force survey is undertaken by the International Labour Organisation (ILO) and is a more direct assessment of unemployment, rather than those who claim benefit. It is based on an interview of a sample of 60,000 households (approximately 120,000 people) and tries to measure ‘unemployment’ as a whole, rather than those simply claiming benefits. To be considered as being unemployed individuals must:

- Have been out of work for 4 weeks.
- Be able to start work in the next 2 weeks, so they must be readily available for work.
- Be available for work for one hour per week, so part-time unemployment is included in the measurement, though these workers are unlikely to claim unemployment benefit. This tends to make ILO unemployment much higher than the Claimant Count.

Another statistical office, Eurostat, publishes unemployment statistics according to the ILO definition: unemployed persons are those aged 15 to 74 who are without work, are available for work and are actively seeking employment (see methodological notes). The main source used is the European Union Labour Force Survey (EU-LFS), which collects data on all member states each quarter. Both the actual count and rate of unemployment are reported, as well as a long-term unemployment rate, which is defined as part of the unemployed who have been unemployed for an excess of 1 year.

When we speak about unemployment, we can not ignore the issue of unemployment costs, both obvious and hidden, for an economy. First of all, unemployment represents an opportunity cost, because there is a loss of output that workers could have produced had they been employed. The government also spends more on unemployment benefit; hence there is another opportunity cost. The money going on unemployment benefit could be spent on hospitals and schools, for example. The next point is waste of resources, asif they are not employed, the left idle, and this is a waste to an economy – education and training costs are wasted when individuals who have received these benefits do not work. The unemployed also do not pay income tax, and pay less indirect tax as they spend less. In addition, the unemployed also experience relatively poor physical and mental health.

While speaking about those, who are unemployed, the most important point is that they have lower personal incomes and lower standards of living. Erosion of human capital occurs, as being unemployed means fewer new skills are acquired, and existing skills are lost. And, last but not least, some externalities,or further external costs associated with unemployment, such as increased crime, alcoholism and vandalism.

So it goes without saying, that we should search the ways to combine unemployment. One of the solutions for unemployment is, obviously, to create new jobs. But usually, when unemployment creeps above 6-7% and stays there, it means the economy isn't strong enough to create sufficient new jobs without help. That's when the government is expected to step in and provide solutions.

The solution used first to address sustained high unemployment is monetary stimulus, which is powerful, quick and usually effective. Lower interest rates allow families to borrow more cheaply to buy what they need, like cars, homes and consumer electronics. This stimulates enough demand to put the economy back on track. Low interest rates also allow businesses to borrow for less, giving them the capital to hire new workers to meet rising demand.

However, when monetary policy doesn't work, then fiscal policy is usually demanded. This means the government must either cut taxes or increase spending to stimulate the economy. Fiscal policy is usually slower to get started, however, it can be more effective once executed. There are also some incentives for hiring the unemployed. For example, in the US the federal Hiring Incentives to Restore Employment (HIRE) Act of 2010 provided significant tax savings for qualified employers who hired previously unemployed workers.

However, several research studies show that the most cost effective solution is unemployment benefits, which are a government welfare program where employable people, who are currently unemployed under no fault of their own, receive an allowance while they search for a new job. To receive these benefits they must register as being unemployed and need to prove that they are currently seeking work.

But is welfare a desired alternative? The concept of welfare may be prevalent in every civilized nation, but government must take care not to promote it as a viable alternative to work. Similarly, out-of-work parents must strive to set a positive example to the next generation of job seekers.

In terms of youth unemployment, which is considered a global time bomb, there also are different schemes designed to fight this problem. By assessing internships, education and welfare, the government may well be able to reduce the nation's levels of youth unemployment, or at least identify the key areas for reform. Strong partnerships with schools and universities should be established, as well as training providers, employment services, social partners, career guidance providers, to ensure early intervention and action.

In Croatia, for example, "The Workplace Training Programme" was conceived in 2010 by two girls. This program intends to provide internships and jobs to unemployed people who have recently graduated or have no work experience in their respective fields. For the people who are included in this program the "Croatian Employment Service" provides the cost of health insurance and safety at work for the first twelve months of professional training. They also provide financial assistance in the form of a training allowance of 1,600 Croatian kuna (approximately 220 euros) per month.

Summing up, I would like to pay attention to Belarus, which prides itself on having one of the lowest unemployment rates in the world. But the actual number of unemployed people, which is reported by the National Statistical Committee of the Republic of Belarus, is much higher than the official 0.50 per cent (2013).

The thing is in the definition of unemployment. For example, an unemployed person in the U.S. is a person who has no stable earning during 5 days. In our country, an unemployed is a person who has registered for employment service. Moreover, at least half a million of people, who didn’t find work in the country and have to work in neighbor countries, are not taken into account in Belarus. About 160,000 workers, who had to take permanent vacations due to administration of idle plants, are not taken into consideration, too. And there are at least 80-90 thousand of those people, who don’t want register themselves for employment service for various reasons. Since less than 4 million of people in Belarus can be referred to economically active citizens of working age, it’s easy to calculate the real unemployment rate in the country. The estimates vary from 5 per cent to above 10 per cent.

The question is, why do Belarusians choose not to register as unemployed? The first reason is the extremely low level of unemployment benefits. According to the National Statistics Committee, in the average payment is BYR120,500 (around $12) a month. The second reason is that registered job seekers are obliged to participate in public works program. As a result, instead of relying on the help from the state many unemployed choose to search for jobs on their own. They often prefer to look for opportunities in the ‘shadow sector’. For the state a large number of freelancers and unregistered entrepreneurs and employees also results in lost tax payments. But the problem of the labour market in Belarus is that working in the 'shadow sector' is very beneficial and helps avoid certain potential problems.

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