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Unemployment - Coggle Diagram
Unemployment
Section C: What's the cause?
Limitations of unemployment rate
Does not indicate natural employment
Frictional and structural
Not indicating productivity of labour
Excludes under-employed
Part timers who would like to be employed full time and people working in jobs for which they are greatly over-qualified
Not indicating how long workers are unemployed
Excludes discourage people who have been unemployed for a long time and given up to search for work
Costs of unemployment
Social
Rising suicide rate
Rising divorce rate
Rising crime rate
Politcal / social unrest
Economic
Decline in consumption and investment
Loss of income tax revenue
Under-utilising of resources
Personal
Loss of skills
Low self-esteem
Loss of income
Psychological stress
Types of unemployment
Structural
Mismatch of skills of workers required for jobs
Was retrenched due to not having necessary skills in workplace
Frictional
Search time required by workers to enter or change jobs
A fresh graduate is in the midst of finding job
Cyclical
Lack of demand of goods and services during economic slowdown
Was retrenched from the job due to recession
Seasonal
Routine changes in demand for certain kinds of labour
Lost his jobs after the festive period
Reducing unemployment
Jobs creation
Tax incentives or Government grants to attract multi-national companies to set up operations in the country
Government subsidy
Tax cut or incentives
Increase in Government spending
Improve employability
Enhance skill set through education and training
Internship
SkillsFuture Earn and Learn Programme
Encourage in upgrading of skill set
Singapore SkillSFuture Credit
Enhance the availability of information
Provide platforms for Job seekers to find information of vacancy
Jobs portal (Jobs DB, Monsters)
National Jobs banks
Careers fairs
Full employment
When the economy is operating at full employment level, there is no cyclical unemployment
There will always be some frictional and structural unemployment even when the economy is at its full employment
At full employment, unemployment rate not equals to 0%
The economy is using all its existing resources to produce at its potential Gross Domestic Product (GDP)
This level of unemployment is also known as Natural of Unemployment
Section B: The Job market
Labour Market Equilibrium
Labour market refers to supply of and demand for labour where employees who are willing and can work constitute the labour supply while employers who provides the job make up the labour demand
LD is the demand curve
Number of workers firms are willing and can hire
LS is the Labour Supply curve
Number of workers who are willing and can work
Is in equilibrium when
LD intercepts with LS
Demand and supply of labour are equal
Q* workers employed at an equilibrium wage rate of $6
Changes in the labour market
Labour Demand
Non-wage factors affects the labour demand to cause a shift of the labour demand curve
A rise in the level of consumer demand for a product, means that a business need to take on more workers
During recession or slowdown, the aggregate demand (AD) for labour will decline as businesses look to cut operations costs and sale back on production
Labour Supply
Non-wage factors affects the labour supply to cause a shift of the labour supply curve
The population increases, the supply of labour increases
A changing attitude towards work and more childcare choices available, more women choose to work instead of being a stay
home mothers, resulting in a rise of labour supply
Minimum wages
Usually set above the equilibrium wage
At a higher wage rate, more workers willing to supply their labour than firms demanding labour
A legally mandated price floor on hourly wages
There is a surplus of workers without jobs and hence, unemployment
Section A: Unemployment, what does it mean?
What is unemployment
Number of workers who are able and willing to work exceed the number of jobs available
When the supply of labour exceeds the demand for labour in the labour market
Economic Indicatiors
Labour Force Participation Rate
Willingness of people of working age to take jobs
Proportion of adult population who are economically active
LFPR = (Labour force / Working age population) x 100
Unemployment rate
The extent to which people who wants jobs but unable to find them
Non-availability of jobs for people who are able and willing to work
Unemployment = (No. of people unemployed / labour force) x 100