Unemployment and Making a Living By Shafaq Syed & Shahid Umar
Contents Definition Features of unemployment Types of unemployment Causes of unemployment Costs of unemployment Measurement Solutions
Unemployment Unemployment refers to a situation in which the workers who are capable of working and willing to work do not get employment. According to‘ILO’It occurs when people are without jobs and they have actively looked for work within the past four weeks.
Identified features of unemployment The incidence of unemployment is much higher in urban areas than in rural areas. Unemployment rates for women are higher than those for men. The incidence of unemployment among the educated is much higher than the overall unemployment. There is greater unemployment in agricultural sector than in industrial and other major sectors.
Types of unemployment Frictional unemployment Structural unemployment Cyclical or Keynesian unemployment Seasonal unemployment
Frictional unemployment It is the time period between jobs when a worker is searching for, or transitioning from one job to another.
Structural unemployment Occurs when labour market is unable to provide jobs for everyone who wants one because there is a mismatch between the skills of the unemployed workers and the skills needed for the available jobs.
Cyclical unemployment Cyclical or demand deficient unemployment occurs when the economy is in need of low workforce. The demand for labor increases with the economy in the growth phase. Again, when the economy passes through depression, demand for labor decreases and the extra workers are released as the unemployed labor force.
Seasonal unemployment Seasonal unemployment occurs when an occupation is not in demand at certain seasons.
Causes of Unemployment High Population growth. Absence of employment opportunities. Seasonal Employment. Joint Family System. Increasing turnout of students from universities. Changing Technology Slow Developing of Industries. Insufficient Rate of Economic Progress.
Costs of unemployment Individual: Unemployed individuals are unable to earn money to meet financial needs. Failure to pay installments or to pay rent may lead to homelessness through eviction. Unemployment increases chances of malnutrition, illness, mental stress, and loss of self-esteem, leading to depression.
Society: An economy with high unemployment is not using all of the resources, i.e. labor, available to it. Since it is operating below its production capability, it could have higher output if more people are usefully employed. However, there is a difference between economic efficiency and unemployment: if the frictionally unemployed accepted the first job they were offered, they would be likely to be operating at below their skill level, reducing the economy's efficiency.
Economy When unemployment is high, consumer spending is low and economic growth is slow. This can lead to a recession. During times of low unemployment, consumer spending is high and the economy is growing at a rapid pace, which often leads to inflation..
Unemployment Rate = 𝑢𝑛𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑 𝑤𝑜𝑟𝑘𝑒𝑟𝑠 𝑡𝑜𝑡𝑎𝑙 𝑙𝑎𝑏𝑜𝑢𝑟 𝑓𝑜𝑟𝑐𝑒 ×100 Measurement Economists typically focus on the unemployment rate. The unemployment rate is expressed as a percentage, and is calculated as follows: Unemployment Rate = 𝑢𝑛𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑 𝑤𝑜𝑟𝑘𝑒𝑟𝑠 𝑡𝑜𝑡𝑎𝑙 𝑙𝑎𝑏𝑜𝑢𝑟 𝑓𝑜𝑟𝑐𝑒 ×100
The way out… Primarily two main issues.. How to provide employment to the new entrants?? How to improve quality of employment??
For issue 1. Economic growth and employment growth are correlated. More GDP growth more the employment opportunities. Government planned initiatives i.e. five year plan focuses on employment generation targets. For issue 2 Provide skill training to the new entrants to the labor force. Improving skill level of existing work force. Formal and informal skill level of training.
Solutions A Change in the pattern of investment Encouragement to small enterprises as against big enterprises Encouragement of New Growth Centers in Small Towns and Rural Areas Subsidies on the Basis of Employment Reorientation of Educational Policy