I would like to begin my topic by defining the term unemployment. There are many definitions of unemployment, but I’ve chosen the following: unemployment is an economic condition marked by the fact

Unemployment

I would like to begin my topic by defining the term unemployment. There are many definitions of unemployment, but I’ve chosen the following: unemployment is an economic condition marked by the fact that individuals actively seeking jobs remain unhired.

The level of unemployment differs with economic conditions and other market forces. Basically there are five types of unemployment: frictional, structural, classical, cyclical and seasonal unemployment.

Frictional unemployment is a temporary condition. This unemployment occurs when an individual is out of his current job and looking for another job. The time period of shifting between two jobs is known as frictional unemployment. The probability of getting a job is high in a developed economy and this lowers the probability of frictional unemployment. There are employment insurance programs to tide over frictional unemployment

Structural unemployment occurs due to the structural changes within an economy. This type of unemployment occurs when there is a mismatch of skilled workers in the labor market. Some of the causes of the structural unemployment are geographical immobility (difficulty in moving to a new work location), occupational immobility (difficulty in learning a new skill) and technological change (introduction of new techniques and technologies that need less labor force). Structural unemployment depends on the growth rate of an economy and also on the structure of an industry.

Classical unemployment is also known as the real wage unemployment or disequilibrium unemployment. This type of unemployment occurs when trade unions and labor organization bargain for higher wages, which leads to fall in the demand for labor.

A recession and cyclic unemployment often go together. When there is a downturn in an economy, the aggregate demand for goods and services decreases, as well as the demand for labor. At the time of recession, unskilled and surplus labors become unemployed.

A type of unemployment that occurs due to the seasonal nature of the job is known as seasonal unemployment. The industries that are affected by seasonal unemployment are hospitality and tourism industries and also the fruit picking and catering industries.

One of the central places in the theory of unemployment takes the concept of full employment. Full employment is a situation in which all or almost all of the citizens of a community who are able and willing to work are able to do so, within the prevailing wages and the working conditions found within that community. While generally considered more of a theoretical state than an actual set of circumstances, the concept of full employment is often associated with Say’s Law. This law essentially states that the production of all goods and services is directly tied to the pursuit of other goods and services, thus creating an ongoing and balanced medium of exchange. When everyone is involved in the creation of these products as a means of earning resources to acquire other goods and services, full or complete employment is the result.

Over the years, other definitions for full employment have also been presented. One approach is to consider any situation where the number of people looking for work is not exceed by the number of open positions available. In theory, each one of these work seekers could be matched with a job, thus creating a balance between available work and the available work force. Other concepts of full employment allow for the existence of a small number of people who are temporarily seeking employment, and are anticipated to find work within a relatively short period of time.

Different economists hold various theories about full employment. Many agree with the idea that some small amount of unemployment is necessary in order to control the rate of inflation and deflation within an economy. Others tend to think that a situation in which no unemployment exists creates a lack of true competition among employers for job applicants, causing no need to offer competitive wages and benefits based on merit. As a result, there is little room for advancement, and no real incentive to offer raises or other benefits to employees. While full employment may create conditions in which there is a great deal of job guarantee or security, it can also lead to a situation where wage slavery exists, thus limiting the options for employees to better their circumstances.

Measuring and defining unemployment is one of major problems for every government, since measuring of unemployment rate is often at least as difficult as, for example, determining the rate of economic growth within an economy, for several reasons. Firstly, economist may disagree over what unemployment is, and how to measure it. Secondly, individuals may either not wish it be known they are unemployed (i.e. not claim benefits) or alternatively, claim that they are unemployed when they are not.

There are different ways for national statistical agencies to measure unemployment. These differences may limit the validity of international comparisons of unemployment data. To some degree these differences remain despite national statistical agencies increasingly adopting the definition of unemployment by the International Labor Organization. To facilitate international comparisons, some organizations, such as the OECD, Eurostat, and International Labor Comparisons Program, adjust data on unemployment for comparability across countries.

The International Labour Organization (ILO) measure of unemployment assesses the number of jobless people who want to work, are available to work and are actively seeking employment. It is used internationally so comparisons can be made between countries. It also enables consistent comparisons over time. The ILO measure is calculated using data from surveys of a country's labour force; it can therefore be subject to sampling differences between one country and another. It differs from the claimant count unemployment measure, which only includes people claiming unemployment-related welfare benefits. The ILO measure gives a higher figure than the claimant count measure as it includes those who are classified as available for work but who are not claiming jobless benefits. The ILO measure may include students who are actively seeking work but may not qualify for jobless benefits. Similarly, second earners within a household may be reluctant to claim jobless benefits but would be classified as unemployed under the ILO measure as they are available for work.

Eurostat, the statistical office of the European Union, defines unemployed as those persons in the age from 15 to 74 who are not working, have looked for work in the last four weeks, and ready to start work within two weeks, which conform to ILO standards. Both the actual count and rate of unemployment are reported.

The Bureau of Labor Statistics measures employment and unemployment (of those over 15 years of age) using two different labour force surveys conducted by the United States Census Bureau (within the United States Department of Commerce) and/or the Bureau of Labor Statistics (within the United States Department of Labor) that gather employment statistics monthly. The Current Population Survey (CPS), or "Household Survey", conducts a survey based on a sample of 60,000 households. This Survey measures the unemployment rate based on the ILO definition of unemployment.

High unemployment rate can cause severe damage not only to the economics, but to the society and individuals. Unemployment causes a waste of scarce economic resources and reduces the long run growth potential of the economy. An economy with high unemployment is producing within its production possibility frontier. The hours that the unemployed do not work can never be recovered. But if unemployment can be reduced, total national output can rise leading to an improvement in economic welfare. High unemployment has an impact on government expenditure, taxation and the level of government borrowing each year. An increase in unemployment results in higher benefit payments and lower tax revenues. When individuals are unemployed, not only do they receive benefits but also pay no income tax. As they are spending less they contribute less to the government in indirect taxes. This rise in government spending along with the fall in tax revenues may result in a higher government borrowing requirement (known as a public sector net cash requirement).

Perhaps the main cost of unemployment is a personal one to those who are unemployed. However, if they suffer then the whole economy suffers. Individuals may become dispirited by unemployment, they may lose their self-esteem and confidence. This may affect their motivation to work. The longer they are unemployed the more they may lose their skills and this has to be bad for the economy as well. On top of that these problems (and financial ones) often lead to the unemployed being less healthy.

High unemployment can also cause social problems such as increased family breakups, homelessness, domestic violence, higher and rising crime rates, brutalisation of lifestyle, lost income etc.

High levels of unemployment can be causes of civil unrest, in some cases leading to revolution, and particularly totalitarianism. The fall of the Weimar Republic in 1933 and Adolf Hitler's rise to power, which culminated in World War II and the deaths of tens of millions and the destruction of much of the physical capital of Europe, is attributed to the poor economic conditions in Germany at the time, notably a high unemployment rate of above 20%.

Reducing unemployment in one of the most difficult task for the economy management. According to different types of unemployment there are various approaches to reduce it. Most economists believe that an increase in cyclical unemployment is caused by a decrease in aggregate demand. If wages and other input prices are "sticky," the economy can experience relatively long periods of cyclical unemployment and policies will be needed to reduce the unemployment. Stabilization policies, government policies intended to maintain full employment and a reasonably stable price level, can be used. Policy suggestions to reduce structural unemployment include providing government training programs to the structurally unemployed, paying subsidies to firms that provide training to displaced workers, helping the structurally unemployed to relocate to areas where jobs exist, and inducing prospective workers to continue or resume their education. Frictional unemployment can be reduced by establishing a computerized national job bank that would provide job seekers and prospective employers with better information and implementing apprenticeship programs similar to those used in Austria and Germany.

Many countries aid the unemployed through social welfare programs. These unemployment benefits include unemployment insurance, unemployment compensation, welfare and subsidies to aid in retraining. The main goal of these programs is to alleviate short-term hardships and, more importantly, to allow workers more time to search for a job.

Unemployment is a global phenomenon and a growing concern for most governing bodies. As rate of employment is related to many microeconomic factors of a country's progress, many discussions have emerged which have lead to many theories. Unemployment was an issue even before the global recession; it is just that recession emphasized and highlighted the issue. So nowadays problem of unemployment is of a great concern.

Дата добавления: 2015-11-05