Unemployment

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Introduction

Unemployment is the involuntary state of being unemployed or situation at which a person of working age searching for a job is unable to find work but would like to be in full time employment. It can also be caused by someone being laid off, fired or quits. This is the most damaging individual experience since the unemployed suffer a reduction of income, loss of identity, self esteem and social circumstances surrounding unemployed workers.

Unemployment has been a root cause of stress in student’s life. Most of them fear the responsibility of searching for a job they may never get and opt to continue with their studies instead. This paper is intended to explore the different types of unemployment and how they impact on the society we have to define Unemployment (Johada, 2002).

According to (Sardoni, 2011), Impact of unemployment depends on variety of factors lets mention the different types of unemployment. Demand deficiency/ Cyclical unemployment: where it occurs due to recession, inflation or sudden crash of economies, Structural Unemployment due to mismatch of skills as a result of advanced technologies and Classical unemployment occurs when wages are kept above equilibrium workers choose not to take and voluntary unemployment that occurs when workers choose not to take job at going wage rates.

Causes of unemployment

The leading cause of unemployment is when the total output declines, unemployment rises and inflation falls as elaborated in the cyclical unemployment. This is when there is a recession, when the aggregate demand for goods and services decrease and demand for labor decreases. This period countries liquidity is at its lowest hence resulting in unemployment, similarly the company would not be able to expand operations thus number of fresh employments positions that would have been created by the company would also take a hit. Major example is the great recession that occurred between 2008 and 2009 that affected the entire world economy which was considered the world global recession. If cyclical unemployment rate rises it might cause damage to labor force in a country.

Rapid changes in technology: This is because most firms are looking for skills that the unemployed have but cannot find appropriate workers. The need for numerous workforces also diminishes as most companies have limited employees. This is caused by machines and computers that do the whole jobs for them Technological unemployment leads to structural unemployment. This is also caused by lack of skills causing unemployment in certain sectors of economies such as technology industry and creates jobs in others (Petersen & Mortimer, 2006).

Increase in population is the leading cause of unemployment in the economy of most developing states. The growth of population directly encouraged the unemployment by making large addition in labor force. This is impacted in that the rate of job expansion could never match the population growth rate. Overpopulation creates higher competition for finite work opportunities, leaving others to find employment and others to lack.

The other major cause of unemployment is undulating business cycle where the higher the GDP, lower the cyclical unemployment. Unemployment increases during business cycle recessions and decreases during business cycle expansions and well causes decrease during recession on inflation and increase during expansions. This indicates that unemployment, inflation and economic growth tend to change cyclically overtime.

Unemployment affects the economy because it leads to reduction in consumer expenditure due to financial limitations and affect business sector. This will also lead to less profit by the company leading to laying off workers which will eventually lead to more unemployment. The economy also runs on taxes by citizens thus the more unemployment rate the less tax paid to sustain the economy. According to (Stretton, 1999), reduction in wages and salaries lead to decrease in the amount of tax collection on income. This also hinders funds to inject into the economy. Increase in mortgages, instances of bankruptcy and deflation has seen increase in debts by borrowers. This is as a result of unemployment or earning minimal income thus becomes hard to repay debts.

Business or retail industry will be affected due to deflation as it discourages spending, this might lead a business to close, leading to more unemployment. To sum it up a high unemployment rate means to remove more funds from the budget to sustain the majority of unemployed this is the wealth drainage. This reduces economic growth since more funds are drained for unproductive purposes rather than infrastructure development.

Financial hardships: Loss of financial security brings a lot of changes in the lives of family members. This will out rightly affect negatively on families. It has been statistically proven that when financial hardships raise so does the level of tension and conflict between family members. The expenditure done by the family members suddenly reduced due to alters financial capacity. Unemployment increases debts of an individual: The government instinctively raises tax rates because of lesser flow in the economy which encourages debts and borrowing and eventually making it harder to repay debts. Individuals also may push unemployment workers to take jobs that do not befit their skills or allow them to use their talents. This might cause individuals to great depressions and may eventually lead most taking into criminal ways.

Reduced disposable income: This might also lead to lifestyle changes as with less income comes less spending thus change of usual lifestyle to acceptable ways. All major expenditures have to be cut down reducing purchasing ability and adjust the little money with family. Dependency on government welfare programs: Since rent might not be affordable and people change to food stamps and government assistance to sustain themselves.

The great depression of 1929 is an example of how unemployment worsened due to non availability of alternate jobs which led to total dependency on primary sector industries. The unemployment rate was at its highest between 1923 and 1933. The depression had a major effect on the united state economy and unemployment as a result of, cut back business and government expenditures, few alternate job sources and complete collapse of stock market (Stretton, 1999).

The great recession of 2007-2009 caused an increase in unemployment rate mostly witnessed in the construction, real estate, financial services and auto sectors. This caused rise in asset prices and associated increase in economic demand where there was inadequate regulations and oversight. This was mainly due to poor investment decisions’ where many companies invested heavily in risky securities.

Unemployment factors are the main causes of migration and high urban population (Johada, 2002). People will always move to the areas which provide opportunities and to the places which is stress free. Students get depressed after they complete studying and most tend to go on studying since they are scared they will not be employed.

Conclusion

The major causes of unemployment are recession, rapid changes in technology ,inflation, disability, undulating business cycle, attitude towards employers willingness to work employees values and discriminating factors in the place of work just to mention a few. As stated Recession remains the major cause of unemployment in the global economy while overpopulation is a major cause in developing countries. The government can curb this by providing financial assistance to workers till the time of recovery in the economy. The government might also implement framing economies policies, improving labor mobility and extending unemployment insurance benefits can render financial protection to the unemployed (Petersen & Mortimer, 2006).

Reference

Johada, M. (2002). Employment and unemployment: A social-psychological analysis. New York: University press Cambridge.

Petersen, A. C., & Mortimer, J. T. (2006). Youth unemployment and society. NewYork: Cambridge university press.

Earnest, B. (2000). Elements of architectural design: A photographic sourcebook. United States of America: John Wiley & sons.

Stretton, H. (1999). Economics: A new introduction. (1 ed., pp. 144-180). London: Pluto Press.

Sardoni, C. (2011). Unemployment, recession and effective demand: The contributions of Marx, Keynes and Kalecki. (pp. 10-12). Northampton’s Massachusetts: Edward Elgar Publishing.