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Unemployment (Types of unemployment (Seasonal unemployment (Policies (work…

- - - - Causes
        
        Changes in conditions of supply
        
        Regional unemployment
        
        Technological unemployment
        
        Change in pattern of demand
      - Policies
        
        funds from the govt
        
        supply side policies
        
        upgrading the skills of the workforce
        
        using subsidies
        
        provision of training facilities enables workers to learn new skills that will help then fit into new jobs
        
        Provide incentives such as grants and subsidies for skills upgrading
        
        encourages workers to develop skills that are sought after
        
        the location of an industry can be controlled so as to control the level of structural unemployment
        
        Evaluation: in the long term, policies are not beneficial
        
        agreements to hire surplus workers raise costs and can hasten the decline of an industry
        
        an industry that is declining due to economic changes becomes an increasingly large burden to the government
  - - - Deficiency of demand
        
        Arises when there is an economic recession
    - - Usage of appropriate demand management policies, leading to higher AD and thus more labour demanded
        
        expansionary fiscal policies
        
        govt either lowers its taxes or raises its expenditure on goods and services and public works
        
        expansionary monetary polcies
        
        results in greater money supply and amount of credit available
      - supply management policies
        
        reduce structural rigidities, increases short run AS, leading to rise in employment
        
        provide subsidies to reduce costs of production
        
        recommending wage cuts
  - - - rearranging the production process such that production is spread evenly throughout the year
      - work-sharing programme allows for available employment to be spread equally among workers
        
        however, this may result in disguised unemployment
      - other lines of production can be added to allow workers to remain employed throughout the year
      - the price system can also help solve the problem of seasonal unemployment
    - - Traditions and customs
      - Annual weather cycle
  - - - Causes
        
        Imperfect information, resulting in time lag
      - Policies
        
        better job information
        
        improvements in the employment exchange services
        
        labour exchange to be set up
        
        provides an information pool for use of both workers and employers
        
        Examples: JobsCentral, Careers@Gov, MyCareersFuture
        
        improvement in industrial relations, reduces breakdowns and bottle necks
  - - - wages should be set at more realistic levels, instead of distorting the market by imposing minimum wage laws
        
        such policies include restricting the power of trade unions, and reducing or removing the legal minimum wage
- - - - lowered standards of living
      - decline in physical and mental health of individuals
        
        may give rise to mass protests, violence and social unrest
  - - - with fewer people working, there will be a fall in tax revenue since the unemployed pay no income tax
        
        furthermore, if the govt spends on unemployment benefits, it may run into a budget deficit
        
        the govt may thus need to raise taxation or scale back plans for spending on public and merit goods
    - - unemployment wastes scarce resources used in training workers
      - when workers remain unemployed for too long, the may face an erosion of skills with time, reducing chances of gaining employment in the future
    - - the loss of output that could have been produced by the unemployed means that welfare is not maximized.