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unemployment - Coggle Diagram
unemployment
COSTS OF UNEMPLOYMENT:
costs to the unemployed and their dependents:
one obvious cost of being unemployed is that they lose out on earnings they would otherwise be receiving if they were employed. another cost of being unemployment is the stigma that comes with being unemployed, which is often associated with failure. studies show that the unemployed tend to have other problems such as above incidence levels of stress, marital breakdown, suicide, physical and metal illness and higher death rates. also the longer these workers go unemployed, the harder it will be for them to find jobs in the future.
costs to local communities:
unemployment, particularly in younger people, tends to lead to an increased violence and crime in the streets and vandalism too. also areas with high unemployment become more run down and shops go out of business.
costs to governments:
governments have to pay out increased benefits that come with unemployment and they also lose out on revenue that would've come through the workers paying taxes if they were employed. this means that taxpayers have to pay more tax for increased government spending and to make up for the taxes that aren't being payed by the unemployed.
costs to the economy as a whole:
there is a loss of output, which those that are unemployed could have produced if they had been in work, leading to more goods and services available or consumption. there are also social costs such as increased violence and depression.
costs to consumers:
unemployed consumers lose out as they have less money to spend and consumers is high areas of unemployment lose out as shops tend to be more run down and don't offer the facilities of shops in high areas of employment
costs to firms:
unemployment indicates a loss of demand in an economy. long term unemployment reduces the pool of skilled workers firms could hire.
CAUSES OF UNEMPLOYMENT
frictional unemployment:
many people who are in search of a job after losing their old one typically only go a short period of time unemployed. this short term unemployment is called frictional unemployment and is not regarded as a major issue in the economy.
seasonal unemployment:
many workers such as builders or people who work in the tourism industry will typically face seasonal unemployment. normally during the winter these workers would e unemployed but then by summer they would be employed again and there is little that can be done about the issue.
structural unemployment:
structural unemployment is when the demand for labour is less than the supply. some examples of this are:
regional unemployment-through the post war period, the south of England was sat full employment whereas areas such as northern Ireland was suffering with unemployment due to lack of mobility of factors of production between regions.
sectoral unemployment- some workers may become unemployed due to their being no demand for the job any further. this leaves them unemployed and their skills not being needed in any other jobs.
technological unemployment- this happens when some workers may be put out of work due to technological improvements
cyclical or demand deficient unemployment:
unemployment may vary in periods of boom or recession in an economy. cyclical unemployment occurs when the economy is not in boom. in recession periods not only workers are being underutilised but also capital, therefore offices and machinery can remain unused.
real wage unemployment /classical unemployment:
this exists when wages are stuck at a level above what is needed to reduce unemployment. a cause of this could be minimum wages, some workers may be willing to work under the minimum wage but employers legally aren't allowed to hire them. also unemployed workers may refuse to take low wage jobs as they can receive more through benefits.
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REDUCING UNEMPLOYMENT:
3 main groups are targeted in order to try and reduce
unemployment:
women tend to be more likely to leave work when they have kids to stay at home and look after them instead of actively working. including more women in the work force would increase recorded GDP and therefore increase growth as a result
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older workers have a lower activity rate and many retire before the age of retirement. governments suggested increasing the retirement age in order to reduce spending on pensions. also they are encouraged to stay in work or find another job instead of retiring at an early age
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many governments have reduced unemployment rates by reclassifying them as being unable to work due to disability. this then makes it difficult to get these people back into work as some are genuinely mentally or physically unable to work and others have became so unskilled that it would be costly and time consuming to re-teach them basic skills required to work.
migration:
immigrants, typically from eastern europe come into the UK highly motivated and at a working age in order to find jobs. migrants often are well motivated and are wiling to work minimum wage jobs, this makes it more competitive for UK workers who are typically less motivated and don't want to work low wage jobs.
skills:
many jobs require increasing skill levels, problems occur when skill levels required by jobs don't match those of job seekers. training is costly and the result if often unemployed workers become long term unemployed as their skills are not good enough for jobs.