UNEMPLOYMENT

DEFINITION

Unemployment means that scarce human resources are not being used to produce goods and services to meet peoples needs and wants

The unemployed are people able, available and willing to work at the going wage rate but cannot find a job despite anactive search for work

FORMULA FOR UNEMPLOYMENT

TYPES OF UNEMPLOYMENTSeasonal UnemploymentStructural UnemploymentCyclical Unemployment Technological UnemploymentResidual UnemploymentFrictional Unemployment

Seasonal Unemployment

- occurs because some jobs, by their very nature, are tied to the seasons of the year.Regular seasonal changes in employment / labor demandAffects certain industries more than othersCatering and leisureConstructionRetailingTourismAgriculture

EXAMPLE-: Agriculture is a seasonal activity. There is an increased demand for labor at the time of sowing, harvesting, weeding and threshing. In between there is little or no demand for labor. Agricultural labor finds himself unemployed during this period.

Cyclical Unemployment

-occurs as a result of changes in the business cycle. -occurs when there is not enough aggregate demand in the economy to provide jobs for everyone who wants to work. Demand for goods and services fall, less production is needed and less workers too.Demand deficient unemployment occurs when the economy is below full capacity.For example, in a recession Aggregate Demand (AD) will fall leading to a decline in output and negative economic growth.With a fall in output firms will employ less workers because they are producing less goods. Also some firms will go out of business leading to large scale redundancies.In recessions, unemployment tends to rise rapidly as firms lay off workers.Caused by a fall in aggregate demand leading to a loss of real national output and employmentA slowdown can lead to businesses laying off workers because they lack confidence that demand will recover

Technological Unemployment

-this can be seen where firms use capital investment in technology to reduce their reliance on unskilled or semi-skilled labour.

Residual Unemployment

-some of the people will not even be capable of holding permanent job by virtue of some physical or mental disability.

Frictional Unemployment

-occurs when people voluntarily leave one job in search of a different job. These people are unemployed because they are temporarily between finding a suitable job.

This is unemployment caused by the time people take to move between jobs, e.g. graduates or people changing jobs. There will always be some frictional unemployment in an economy because information isnt perfect and it takes time to find work.Imperfect information about available job opportunities can lengthen the period of someones job search

Structural Unemployment-unemployment resulting from changes in the basic composition of the economy. These changes simultaneously open new positions for trained workers. Arises from the mismatch of skills and job opportunities as the pattern of labor demand in the economy changes. It can be caused by:Occupational immobility. Geographical immobility. Technological change.

CAUSES OF UNEMPLOYMENTIn the set up of a modern market economy, there are many factors, which contribute to unemployment. Causes of unemployment are varied and it may be due to the following factors:

Rapid changes in technologyWar RecessionsInflationRapid Population Growth DisabilityLack of education or skillsAttitude towards employersWillingness to work

EFFECTS OF UNEMPLOYMENTUnemployment affects not just the person himself but also his/her family and in the long run the society where he lives.Unemployment brings with it despair, unhappiness and anguish. It forces people to live their lives in a way they do not wish to The life expectancy is negatively affected.Life expectancy is the ease by which people living in a time/place are able to satisfy their needs/wants. Here are the some aspects:

Mental healthHealth diseasesTension at homePolitical issuesCrime and violenceSuicide casesSocial outingLose of skills usage

POLICIES TO REDUCE UNEMPLOYMENTEducation and Training

-The aim is to give the long term unemployed new skills which enable them to find jobs in developing industries, e.g. retrain unemployed steel workers to have basic I.T. skills which helps them find work in service sector. However, despite providing education and training schemes, the unemployed may be unable or unwilling to learn new skills. At best it will take several years to reduce unemployment.

POLICIES TO REDUCE UNEMPLOYMENTReduce Power of trades unions

- If unions are able to bargain for wages above the market clearing level, they will cause real wage unemployment. In this case reducing influence of trades unions (or reducing Minimum wages) will help solve this real wage unemployment.Employment Subsidies

- Firms could be given tax breaks or subsidies for taking on long term unemployed. This helps give them new confidence and on the job training. However, it will be quite expensive and it may encourage firms to simply replace current workers with the long term unemployment in order to benefit from the tax breaks.

POLICIES TO REDUCE UNEMPLOYMENTImprove Labour Market Flexibility

- It is argued that higher structural rates of unemployment in Europe is due to restrictive labour markets which discourages firms from employing workers in the first place. For example, abolishing maximum working weeks and making it easier to hire and fire workers may encourage more job creation. However, increased labour market flexibility could cause a rise in temporary employment and greater job insecurity.

POLICIES TO REDUCE UNEMPLOYMENTStricter Benefit requirements

- Governments could take a more pro-active role in making the unemployed accept a job or risk losing benefits. After a certain time period the government could guarantee some kind of public sector job (e.g. cleaning streets). This could significantly reduce unemployment. However, it may mean the government end up employing thousands of people in un-productive tasks which is very expensive. Also, if you make it difficult to claim benefits, you may reduce the claimant count, but not the International Labour force survey.

POLICIES TO REDUCE UNEMPLOYMENTImproved Geographical Mobility

- Often unemployed is more concentrated in certain regions. To overcome this geographical unemployment, the government could give tax breaks to firms who set up in depressed areas. Alternatively, they can give financial assistance to unemployed workers who move to areas with high employment.

WORLDS STATISTICS ON UNEMPLOYMENTSource:http: Statista; The statistics portal

WORLDS STATISTICS ON UNEMPLOYMENTSource:http: Statista; The statistics portal

COUNTRYS WITH HIGHEST UNEMPLOYMENT RATESource: http://www.statista.com/statistics/268830/unemployment-rate-in-eu-countries/

CountryRateGreece25.7%Spain23.9%Cyprus16.8%Croatia16.6%Portugal13.9%Italy13.4%Slovakia12.6%Euro Area11.5%Bulgaria11.1%Ireland10.75%

ASIAS STATISTICS ON UNEMPLOYMENTThe Philippines has the highest unemployment rate among members of the Association of Southeast Asian Nations (Asean), according to a report of the International Labor Organization (ILO) published in 2014.

PHILIPPINES STATISTICS ON UNEMPLOYMENT

PHILIPPINES STATISTICS ON UNEMPLOYMENTSource: DOLE

HIGHEST AND LOWEST UNEMPLOYMENT IN THE PHILIPPINESSource: DOLE

Highest UnemploymentPercentage Lowest Unemployment Percentage 1. NCR11.2%1-2. Region II & ARMM3.8%2. Region 19.3%3.Region XII4.0%3. Region IV-A8.9%4. Region IX4.2%4. Region III8.8%5. Region IV-B5.1%5-6. Region V & CARAGA7.5%6. Region XI6.4%7. Region X7.0%8.-9. Region VI & Region VII6.6%10. CAR6.5%

SOURCES

-Definition of unemploymenthttp://tutor2u.net/economics/revision-notes/as-macro-employment-unemployment.html-Causes of Unemploymenthttp://www.economicshelp.org/macroeconomics/unemployment/causes/-Effects on Unemploymenthttp://www.job-interview-site.com/the-effects-of-unemployment-on-society-and-the-economy.html -Worlds statistics on unemploymenthttp://www.statista.com/statistics/279790/unemployment-rate-in-seclected-world-regions/-Asias Statistics on unemploymenthttp://globalnation.inquirer.net/103286/ph-has-highest-asean-unemployment-rate-ilo-report/-Philippines Statistics on unemploymenthttp://www.bles.dole.gov.ph/PUBLICATIONS/LABSTAT%20UPDATES/vol18_7.pdf-Policieshttp://www.economicshelp.org/blog/3881/economics/policies-for-reducing-unemployment/