Types of Unemployment and its consequences

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Officially the unemployed are the people who are registered with the government as willing to work and able to work at a going wage rate but can’t find suitable employment despite an active search for work.

Structural Unemployment

This type of unemployment exists even when there are job vaccines, due to the mismatch between skills of the registered unemployed and those required by the employers. People made redundant in one sector of the economy cannot immediately take up jobs in other sectors.

Seasonal Unemployment

  • Regular seasonal changes in employment/labour demand.
  • Affects certain industries more than others e.g. catering and leisure, construction, retailing, tourism, agriculture.
  • Seasonal unemployment is not a major cause or concern.

Frictional Unemployment

  • Frictional unemployment is transitional unemployment due to people moving between jobs: Includes people experiencing short spells of unemployment.
  • Includes new and returning entrants to the labour market
  • Imperfect information about available job opportunities can lengthen the period of someone’s job search.
  • Frictional unemployment also affected incentives/disincentives to search and accept paid work
  • The unemployment trap may exist for some workers
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Full Employment

This does not technically mean that everyone in the country has a job. There will always be some people out of work, either voluntarily (early retirement, for example) or perhaps those who are structurally unemployed (Lost their job in an old industry and their skills are non-transferable). In the UK at the moment, the official claimant count of unemployment is about one million. This is considered to be fairly close to full employment.

Private costs for the unemployed

  • Loss of income- but many households have major spending commitments(mortgage ,credit arrangements)
  • Fall in real living ...

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