Unemployment

Types of unemployment

Cyclical Unemployment

Seasonal Unemployment

Labour Market Equilibrium

Caused by lack of demand of goods & service during economic slowdown

Structural Unemployment

Frictional Unemployment

Caused by mismatch of skills of worker required for jobs

Caused by search time required by workers to enter or change jobs

Caused by routine changes in the demand for certain kinds of labour

Economic Indicators

Unemployment Rate

Labour Force Participation Rate

(Labour Force/Working
Age Population) x 100

(No. of people unemployed/
Labour Force) x 100

Labour demand and labour supply are equal.

Cost of unemployment

Personal

Social

Economic

Loss of income

Political/social unrest

Underutilizing resources

Full Employment

No cyclical unemployment

Economy is using all its
existing resources to produce at its potential GDP

Not the same as zero unemployment (There is still frictional & structural unemployment)

Changes in Labour Market

Labour Demand

Labour Supply

Non-wage factors affecting labour demand will cause a shift of the labour demand curve.

Non-wage factors affecting labour supply will cause a shift of the labour supply curve.

Reducing Unemployment

Enhance availability of information

Job Creation

Improve Employability

Enhance skillset through education and training

Provide platforms which job seekers can find information of vacancy

Tax incentives or government grants to attract companies to set up their business in the country.

Definition

The number of workers who are able and willing to work exceeds the number of jobs available.

The supply of labour exceeds the
demand for labour in the labour market.