Unemployment is a condition that occurs when a person who is actively searching for employment is unable to find one. It is a situation where those who are willing and able to work cannot get a work to do.
Unemployment rate: This is a measure of the prevalence of unemployment. It is calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labour force. During periods of recession, an economy usually experiences a relatively high unemployment rate.
Types of unemployment
- Mass unemployment: Also known as Cyclical Unemployment, occurs because of the ups and downs of the economy over time. When the economy enters a recession, many of the jobs lost are considered Mass Unemployment. Cyclical unemployment occurs as a result of general fall in the quantity of goods demanded.
- Structural Unemployment: This occurs when there is a mismatch between the number of people who want to work and the number of jobs that are available. The unemployed workers may lack the skills needed for the jobs, or they may not live in the part of the country or world where the jobs are available.
- Voluntary Unemployment: This is a situation where Unemployed people decided not take a job probably because the pay is not attractive or because they are getting benefits from the government or any other legal source.
- Residual unemployment: This arises as a result of physical or mental disabilities of the person that is to be employed.
- Casual unemployment: This is common with the unskilled kind of labours; it involves job that is not permanent.
- Frictional unemployment: Also called technological unemployment, occurs as a result of advancement in technology, where workers are replaced with machines in the process of production.
- Seasonal Unemployment: This occurs in industries whose production is subject to seasonal variations i.e. the season or event at a time determine their level of production so when it is not time for production, workers become unemployed.
Causes of unemployment
- Some people voluntarily quit unfulfilling jobs. They have the luxury to search until they find just the right opportunity.
- It is also caused when workers must move for unrelated reasons. They are unemployed until they find a position in the new town.
- It occurs when new workers enter the workforce. That includes students who graduate from high school, college, or any higher degree programme.
- Technology advances can lead to unemployment. That’s when computers or robots replace workers. Most of these workers need retraining before they can get a new job in their field.
- Job Outsourcing. That’s when a company moves its manufacturing or call center functions to another company or location.
- Demand-deficient unemployment – This occurs when there are fewer jobs than the number of job seekers.
- Large-scale unemployment results when consumers’ demands become very low, and the company begins to lose profit. If sales is not expected to pick up anytime soon, some staff will be laid off.
Not All Causes of Joblessness Create Unemployment
Someone who voluntarily gives off employment cannot be classified as unemployed. If someone retires, goes back to school or leaves the work force to take care of children or other family members, that is not unemployment. That’s because they no longer look for work.
If the economy is growing, more workers are needed. If it shrinks, then workers lose their jobs. During recessions, unemployment rates tend to grow. The effects of unemployment are wide-ranging and include high costs to the government, a reduction in spending power for consumers and economic recession.
Consequences of unemployment
- Unemployment leads to threat to peace and stability in the society
- Wastage of human resources
- There will be high rate of dependency
- It leads to high migration rate
- It leads to insecurity amongst employees
- It leads to increase in the rate of crime.
- Lose of skills’ usage: The unemployed is not able to put his/her skills to use. And in a situation where it goes on for too long the person may have to lose some of his/her skills.
Solutions to the problems of unemployment
- Population control: When the population of a country is reduced, it will help to reduce the number of those who are looking for job. The population should be able to match up with the available resources.
- Industrialisation: When there are enough industriess in a country, demand for labour will increase.
- Incentive to potential investors: investors should be motivated to create jobs. Incentives like tax holidays, provision of social amenities etc. should be made available to investors.
- Proper developmental plans: The government should make proper developmental plans for those who are unemployed in a country.
- Redesigning of educational system: The educational system should introduce curricula that can help graduate to create employment.