What is meant by unemployment and what are its different types? Essay

Un involution tummy non be simply defined as the design of bulk without lineages. Such a definition would include children who argon too teen to grittytail it, pensi whizzrs and housewives and others who choose non to take up paid up employment. Since these groups shell no serious scotch puzzles. Unemployment in a country refers to either those stack who atomic number 18 leaveing to turn over, but argon unable to obtain a speculate. More all in all over unemployment is a very complex phenomenon. It is rather soft to notice but difficult to define. Broadly, unemployment whitethorn mean lack of employment.Thus, bothbody who fails to gain whitethorn be rented as being unoccupied and in that locationfore fired for the concerned period. Ordinarily, the term unemployment denotes a condition of lineageless(prenominal)ness. In the early 1980s worldwide unemployment rose to very high levels, higher than during some of the course of study 1930s although not as high as the peak unemployment grade of that earlier Great Depression whereby the ov timell level of unemployment as wellspring as the structure of unemployment was extremely varied. (References Wikipedia.com) The pulsationment of unemployment is very measurable for any(prenominal) prudence. Unemployment is one of the most serious sparing problems and it is important for the authorities to certainise the level and the come in so that it john take appropriate nonindulgent measures. Formula for calculating topical anaestheticise of unemploymentUnemployment Rate = Total number inactive x 100 boil ForceLabour Force = minute of pile employed + Number of spate unemployedUnemployment regularize in MauritiusThe graph above shows the historical trend of unemployment. In division 2004 unemployment rate was high 10.8% then it decreased from 2005. As from 2008 to 2011 we skunk observe that the unemployment rate was stabilized at most 7%. Which shows rock-steady reforms campai gn by the governance despite the economic crisis which affected Mauritius in 2008.Types of Unemploymentthither is a lot of confusion and disagreement regarding the meaning and nature of unemployment. So, to comprehend the problem in a proper way and suggest remedies, we whitethorn demonstrate the respective(a) character references of unemployment. Unemployment so may be discussed broadly low several(prenominal) heads seasonal worker unemploymentFrictional unemploymentStructural unemploymentCyclical unemploymentTechnological unemploymentDisguised unemploymentSeasonal Unemployment concord to Beveridge, Seasonal unemployment message the unemployment arising in particular industries through seasonal variations in their activity brought closely by climatic changes. Seasonal unemployment occurs imputable to lack of productive work during certain periods of the year. Certain industries or occupations atomic number 18 seasonal in character.Take the case of ice-cream production, wh ich has a peak lease during the summer.In the winter season, with a descend in the assume for ice-cream, the film for craunch engaged in its production to a fault falls, and seasonal unemployment takes place.A sugar lollygag may be closed for a number of months in a year, as the supply of sugarcane stops. Seasonal unemployment may also be witnessed in the case of traditional and belowdeveloped agriculture. For instance, in India, the cultivators tilling the unirrigated lands very of decennary rebriny idle for 120 to 150 days in a year.Seasonal unemployment takes place mainly collectable to the lack of fitted alternative employment opportunities in the slack season. Such unemployment usually does not require to serious distress, as the wages in seasonal occupations atomic number 18 comparatively higher, which countenances for the period of unemployment. Solutions to Seasonal UnemploymentSuch unemployment can be bring down by encouraging heap to take different jobs in th e saturnine season. Reduced unemployment benefits and improving the flow of reading may also be safe.2. Frictional UnemploymentThe term frictional unemployment refers to the unemployment that is associated with the normal turnover of crowd. mint leave jobs for many reasons and they take time to find new jobs elderly persons leave the labour advertize and young person enter it, for exercising, take leavers but often new workers do not fill the jobs vacated by those who leave. Inevitably all of this movement takes time and give mature to a pool of persons who are frictionally unemployed while in the course of conclusion new jobs. This unemployment would occur even if the occupational, industrial and regional structure of unemployment were unchanging. When the eudaemonia reconcilements are to a greater extent(prenominal)(prenominal) attractive than the work itself, some of the unemployed call up that the tax and the benefit system hold out reduce momentously the ben efit add in income from taking paid work and choose to be on the welfare alternatively. Causes of frictional unemploymentThe relationship between workers and employers tends to be inhomogeneous in some or the other way. This mismatch can lead to frictional unemployment, which makes it closely related to morphological unemployment. Fresh graduates looking for a good job, but are not able to get it practiced away because of certain bespeaks by the employers in terms of skills and follow up, therefore forgeting in frictional unemployment. Factors related to privilegeence, work environment, skills, remuneration, location, work timings, etc., always rise a sense impression of dissatisfaction in the workers or employers. This is one of the main causes of frictional unemployment. Solutions to frictional unemploymentThe regimen can make the information about the labour commercialize more readily available. Schools can provide more guidance about the jobs in the foodstuff and in vite professionals to speak about their jobs so as to provide more information to the school leavers. The government can flatten a penny some part time jobs as a solution to the unemployment. strait-laced educational advice to college students in terms of the job demands and skills required to get job faster.(Reference tutor2u.com)3. Structural UnemploymentStructural unemployment takes place because of a change or blot in the economic structure of a country. It occurs as a result of changes in demand and supply conditions for certain categories of labour. According to Beveridge, structural unemployment means the unemployment arising in particular industries or localities through a change of demand so great that it may be regarded as affecting the main economic structure of a country. There are some evident similarities between frictional and structural unemployment, as both arise due to maladjustment between the demand for and supply of labour. nevertheless, there are certain important differences between the ii. Frictional unemployment is of a shorter duration and takes place because of temporary factors. therefrom although the demand for labour may decline in certain industries this fall in demand is counterbalanced by a rise in demand in some other industries. In case of structural unemployment, the deficiency in demand for labour is more permanent, extensive and occult rooted. The barriers to mobility are rather more formidable. According to Thomas D. Simpson structural unemployment is more heavily concentrated among certain employment and demographic groups. It affects a significant number of workers in certain occupations, industries, racial, and age groups, whereas frictional unemployment tends to occur more widely. Secondly, structural unemployment is less voluntary than frictional unemployment.Solutions to Structural UnemploymentThe government can retrain the workers to meet the demand for a new set of skills. For usage, farmers should try t he new techniques of production using automation rather than rely moreover on the traditional method of farming. Workers should amend their skills and reduce occupational immobility. Policies should provide the unemployed with skills they need in separate to be re-deployed. In this era of information technology, workers should cook IT knowledge to remain employed. Education and training opportunities should be made available to the workers so that they can get trained and improve their chances of taking on new jobs that are available in the economy.4 Cyclical/ Keynesians unemployment/ deficient-demand unemployment Cyclical unemployment happens to be the most common type of unemployment in an industrially developed capitalist economy. According to the classical economists, in the presbyopic cannonball along there would be a ripe employment equilibrium. except in reality we find that a capitalist economy is characterised by alternate periods of prosperity and depression, risin g economic activity and employment and indolent descent conditions and falling employment opportunities. Cyclical unemployment is also popularly cognise as Keynesian unemployment, following Keynes. Keynes has culled this type of unemployment as involuntary unemployment. Lerner has termed this unemployment during an economic depression as deflationary unemployment.Moreover, cyclic unemployment is when workers lose their jobs during downturns in the business cycle. It generally happens when the economy contracts, as measured by Gross home(prenominal) Product (GDP). If the economy contracts for ii fundaments or more, then the economy is in a recession. Cyclical unemployment is usually the cause of high unemployment, when evaluate quickly grow to 8% or even 10% of the wear down promote. Its known as cyclical because, when the economy re-enters the expansion frame of the business cycle, the unemployed lead get rehired. Cyclical unemployment is temporary although it could fa il anywhere from 18 months (the typical time frame of a recession) to ten years (during a depression). (Reference, Wikipedia)Cyclical unemployment through a diagramAs we can see in the AD/AS diagram, the fall in AD to AD1 will result in a fall in the Real output (Y1).This will depict the firms to reduce their output and thus reduce their workforce from ADL to ADL1. However, due to wage stickiness it is less likely that real wages will fall (as seen in the labour diagram). Therefore, the wages instead of coming down to W1 will remain at We. This will grow a surplus situation where the aggregate demand for labour will be at a and the aggregate supply of labour will be b. (reference tutor4u.com) 5. Technological Unemployment.Technological unemployment takes place because of rapid scientific improvements. Introduction of improved machinery and labour saving know-how has a tendency to fire labour force. Myrdal cites the example of scientific unemployment in the American agricultura l sector in the fifties, when due to the introduction of labour-saving techniques, the agricultural workers as part of the heart civilian labour force declined from 126 to 85 per cent. Introduction of improved technology in production will put down the capital-output ratio and the labour-output ratio. This will doorwayion the productivity of capital and labour, causing technological unemployment. Probably due to this reason, even now introduction of electronic computers has always been viewed with suspicion by the workers. 6. Disguised Unemployment.As the word suggests, mantled unemployment refers to a situation when a person is apparently employed, but in outcome unemployed. t is a phenomenon of concealed unemployment, not visible to the open eyes. present it is not possible to identify as to who are unemployed, as all appear to be working. As Nurkse has remarked, In an overpopulated peasant economy, we cannot point to any person and say he is unemployed in disguise. The peo ple may all be occupied and no one may consider himself idle. The concept of disguised unemployment was originally conceived by Mrs. Joan Robinson.Her concept of disguised unemployment is more applicable to the advanced developed countries. According to her, a decline in demand for the product of the general run of industries leads to a diversification of labour from occupations in which productivity is higher, to others where it is lower. The cause of this diversion, a decline in stiff demand, is exactly the same as the cause of unemployment in the ordinary sense and it is natural to describe the adoption occupations by dismissed workers as disguised unemployment. ConclusionUnemployment is something which is of great concern to individuals as well as the economy. It is for sure something to worry about as it wastes economic resources and causes human suffering such(prenominal) as poverty, famine, depression and so on. Also experiences of unemployment are becoming a good deal lo nger in duration and are increasing significantly. thusly succour of unemployment is a prime aim of the government in order to come along the economy.How could you measure unemployment and discuss the problem associated with each measure?Most people understand intuitively that being unemployed means not having a job. That said, its important to understand more precisely how unemployment is measured in order to properly interpret and make sense of the numbers. essentially there are two types of method to measure unemployment I. Claimant count methodII. The Labour Force SurveyClaimant Count MethodThis method calculates unemployment by metre the number of people receiving benefits (Job Seekers allowance). If the rate is up, it indicates a lack of expansion deep down the labor securities industry, while it indicates economic expansion and could spark inflationary pressures if the rate is down. Generally, a decrease of the figure is seen as positive, while an increase is seen as n ix. Source www.fxwords.comgraphical record 2 shows look atant count of wholeed Kingdom An example of a aimant count chart can be illustrated above where we can analyses a decreasing trend during the years of people claiming for unemployment benefits thus indicating beneficial economic conditions, ceteris paribus.The Labour Force SurveyA labour force survey is an inquiry transported to households designed to obtain information on the labour market and related issues by means of personal interviews. The information collected on the labour market can then be used to develop, manage, evaluate and report on labour market policies.According to the Mauritius Labour Force, Employment and Unemployment survey the following result were obtained Second the skinny 20121. Employment of Mauritians is estimated at 548,300 at the indorse quarter of 2012 compared to 535,500 at the world-class quarter of 2012 and 531,400 at the second quarter of 2011.2. The unemployment rate is estimated at 8.2% for the second quarter of 2012compared to 8.0% at both the first quarter of 2012 and the second quarter of 2011.3. The main characteristics of the unemployed at the second quarter of 2012 were(i) The 48,900 unemployed comprised 20,100 males (41%) and 28,800 females (59%).(ii) close to 22,300 (46%) of them were aged below 25 years.(iii) About 55% of the unemployed were single. Among males, the absolute majority (80%) was single while among females, the majority (61%) was ever married.(iv) Some 7,800 or 16% had not reached the Certificate of Primary Education (CPE) level or equivalent weight and a further 21,900 (45%) did not have the Cambridge School Certificate (SC) or equivalent.(v) 11,300 (23%) had been looking for work for more than one year.(vi) 18,900 (39%) were looking for a job for the first time.Thus these result could be use to devise policies by the government for example whether to invest more or not, in order to combat unemployment and other economic turmoil.Reference gov.muProblem associated with claimant countThe criteria to be eligible for benefits often changes, usually this has been to reduce the claimant count. This makes it difficult to compare over time. The claimant count excludesPeople over pension age, who will typically claim pensions rather than Job Seekers allowance People under 18, (with a a couple of(prenominal) exceptions)People in full time education, who may dormant be classed as unemployed. People not eligible for contribution based JSA. To claim the contributions based JSA they need to have paid at least two years of NI contributions. Also, their level of savings or their partners income may be too high to be eligible. Any one on a government training schemesMarried women looking to takings to workThose looking for part time work and not full time workSome people may claim benefits whilst still working in the black market i.e. claim JSA fraudulently. Some people may be able to work upto 16 hours a calendar week and still legally claim JSA (JSA- Job Seekers allowance)Problem associated with Labour force surveyIt could be subject to sampling errors and may not be truly representative. The sample chosen may be from just few regions of the country, instead of the whole universe/every region. This will generate preconceived idea result thus it will be wrongly interpreted pencil lead to inefficient policies to combat unemployment.It is time consuming and costly, basically conducting this survey may take months or years depending on the size of the economy and the number of population. In the same vein a lot of paper work is needed for this survey, more finishicers must be hired to conduct privy interview.Hence there is no perfect method to measure unemployment accurately, as all measures have theirs pros and cons. For example claimant count consider various criteria to be eligible for the allowance whereas Labour Force Survey may not be representative. The method to measure unemployment also depend o n the type of economyDiscuss the proceeding of unemployment on an economy?Unemployment is universally recognised as a bad thing. It brings a lot of obstinate effect to an economy. The consequences are as follows1. The consequences to the individualIncrease health risk Unemployment increases cogency to malnutrition, illness, mental stress, and loss of self-esteem, leading to depression. Not everyone suffers equally from unemployment, highly conscientious people suffers more than twice. For example fresh graduates or people retentivity a degree but is unable to find a job are the most affected. essentially the table below shows the unemployment rate of people having a tertiary education in Mauritius. The Unemployment with tertiary education (% of kernel unemployment) in Mauritius was last reported at 7.90 in 2010, harmonise to a World Bank report create in 2012. Graph 3 show Unemployment with tertiary education (% of total unemployment) in Mauritius Source indexmundi.com /cso loss of incomeUnemployment normally results in a loss of income. The majority of the unemployed experience a decline in their living standards and are worse off out of work. This leads to a decline in disbursal power and the rise of falling into debt problems. The unemployed for example may find it difficult to concur up with their mortgage repayments.2. The Consequences to the businessLess overall spendingWhen people are unemployed in large numbers, it hurts the rest of the economy, creating a cyclical problem. When people have less money to spend because of unemployment, other companies suffer from less consumer demand. Then, when companies suffer because of lost business, they might in turn be forced to make layoffs of their own, making the unemployment rate rise and overall spending drop even more. The cyclical effect of unemployment is the reason for government-issued economic stimulation packages to help businesses in difficulty. Logic suggests that when people have more m oney, they spend it, thereby stimulating the economy and simulating job growth. Social problemsBusiness may be impacted by social problems associated with high unemployment (e.g. rising umbrage). If the market of a business is situated in a place where the crime rate is high and where there is high unemployment rate, it can have adverse effect on the business. Demand may fall due to the negative image of the areas, potential consumers may prefer to purchase their goods and services at a more secure place for personal credentials thus if demand fall, the firms revenue will decrease which can lead to bankruptcy consequently more people will be unemployment. Inferior goodsDemand for inferior goods (lower footing, quality) may increase, the demand for luxury goods will decrease. Thus business engage in production of inferior good will gain and those in luxury good will lose.Graph 1 demand for luxury goods under unemployment Graph 2 demand for inferior goods under unemploymentAs shown above, in graph 1 the demand of luxury goods has decrease from D to D1 dueto unemployment, lack of potential buyers. step supply has decreased from Q to Q1 leading to a decrease in price from P to P1. Area P,T,Z,P1 is the loss incurred by the firm operating under luxury goods production. On the contrary graph 2 shows the increase in demand for inferior goods from D to D1 due to unemployment. People will prefer to buy cheap goods due to lack of income. Quantity supply has increase from S to S1 causing price to rise in the long run from P to P1. Area P1,T,Z,P is the profit incurred by the firm operating under inferior goods production due to a rise in demand. 3. The Consequences for the governmentFiscal costsHigh unemployment has an impact on government expenditure, taxation. 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 th ey contribute lessto the government in indirect taxes, the government will have to musical scale back plans for public spending on public and merit goods. politics BorrowingSpending along with the fall in tax revenues due to unemployment may result in a higher government acquire requirement (known as a public sector net currency requirement). The Central government debt total (current LCU) in Mauritius was last reported at 113289300000 in 2010, according to a World Bank report published in 2012.Graph 4 shows The government of Mauritius debts4. The Consequences for the economy as a wholeLost output of goods and servicesUnemployment causes a waste of remarkable 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.Negative multiplier effectsThe shutdown of a local factory with the loss of hundreds of jo bs can have a large negative multiplier effect on both the local and regional economy. One persons spending is anothers income so to lose well-paid jobs can lead to a drop in demand for local services, downward pressure on house prices and second-round employment effects for businesses supplying the factor or plant that closed down.Hence unemployment affects many aspects in an economy such as social, individual, economical and so on. Unemployment affects the economy in ways that most people do not visually see. Some effects are avoidable and some are inevitable. Evaluate the impact of the different policy measures adopted by the government of Mauritius in order to control unemployment? A range of government policies are available for the giving medication of Mauritius wanting to reduce the scale of unemployment in the economy. The Government can do many things to try and influence the level of employment.However some policies the government use can conflict with other policies for example if they were to spend more on education and training (so increasing the skills of workers) they would have to spend less on other things such as health-care. Basically the situation of unemployment in Mauritius is alarming, here is a chart to illustrate the earnestness of the issueChChGraph 5 shows the Mauritius unemployed personsunemployed Persons in Mauritius increased to 44000 Persons in February of 2012 from 43800 Persons in November of 2011, according to a report released by the Central Statistics Office, Mauritius. Historically, from 2004 until 2012, Mauritius Unemployed Persons averaged 45757.6 Persons reaching an all time high of 56100.0 Persons in May of 2005 and a record low of 35000.0 Persons in November of 2008. Sourceindexmundi.comFiscal measureThe extra Stimulus Package was presented in December 2008 to support enterprises on a short-term basis. The package introduced a Mechanism for Transitional Support to the orphic Sector, which was eventually replaced by the frugal Restructuring and Competitiveness Programme in 2010 under the Facing the Euro Zone Crisis & Restructuring for Long Term Resilience roll presented in August 2010.This programme also included SURE (Support Unit for Re-Employment of Employees), and plans for restructuring the tourism industry, and for supporting the sugar industry. In 2012, Rs 7.3 Billion has been committed to a depicted object Resilience Fund to help businesses better face the economic downturn. Thus this would secure current employees job and would create new jobs. During the monetary crisis in the 2008, The government of Mauritius injected Rs6 one million million in the economy for education, training, food security and This massive enthronization has been possible due to the fruit of past reforms in terms of fiscal benefits.In addition to these policy options, the Mauritian government introduced an Additional Stimulus Package in December 2008. In effect, Rs4 billion was earmarked to save employmen t. Much effort was made to sustain, modernise and ease the access to finance of local enterprises to help them improve their productivity and competitiveness. In year 2011, 5000 new Small & Medium Enterprises were created and were awarded grants by the government compared to 7,600 in reunion Island in the same year. Thus creating jobs. The government appointd a tax price reduction on all earnings for new entrepreneurs in the first two years, certain taxes have been suspended over two years, in tourism, twisting and other sectors. Consequently, there will be a boost in their revenue and it may encourage the creation of new jobs. Source Le Matinal(newspaper)Supply side policies (reduce frictional and structural unemployment) To educate is to empower. The government proposed more funds allocated to SMEs so that they can provide required training to their employees. The National Resiliency Fund was created last year by the Minister of finance to encourage the youth employment. The g overnment in his last budget proposed that all secondary schools have a qualified career advisor and propose that all schools promote extra-curricular activities such as the Young Enterprise Awards. There should also be qualified staff in each put in school, to help channel underperforming students in their right vocation. The Minister of Finance promised Rs 500,000 to schools around the island. The more skillful you are the more secure you are to get a job. Reflating Aggregate DemandThe government succeeded in attracting foreign direct investment in Mauritius as it rose by 19.8 percent in the first six months of 2012 to 4.077 billion Mauritius rupees ($133.89 million) from 3.401 billion a year ago, according to the central bank thus contributing in enhancing the real study output consequently increasing the demand for labour.Foreign direct investment has risen causing aggregate demand to shift from AD1 to AD2 consequently the demand for labour to shift from LD1 to LD2 causing an obvious decrease in unemployment.Basically in assessing the effectiveness of these measures we just have to compare the working population to previous years Graph 6 shows Employedpersons in Mauritius Economic policies till 2008 to 2012 had a positive impact on the labour market as there has been a rise in labour force which shows the effectiveness of these policies adopted by the government of Mauritius.Hence unemployment do not have an exact definition, it do not have a measure to calculate it exactly, its effects are vast and there are various measures to combat it. Unemployment is inevitable in an economy. The economy must see unemployment as a challenge, opportunity and tackle the issue with intelligence, not as a major economic turmoil, or be afraid of.