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Assess the relative effectiveness of the alternative macroeconomic…
Assess the relative effectiveness of the alternative macroeconomic policies that the sg govt could adopt to maintain a low rate of unnmt. [15]
assess: give 2pov + COME TO A CONCLUSION
alternative: give more than 1 policy
macroeconomic policies: 5 possible policies
unnmt: cyclical, structural, frictional
sg: frictional unnmt is OUT
intro
- define unnmt rate
- define the unemployed
- state the situation in singapore (eg what is the unnmt rate during covid, what is the normal unnmt rate (it is 2%))
- explain that
- sg does not experience much frictional unnmt due to us being a small country and thus lack of imperfect info
- frictional unnmt is always present, so it is not a cause for concern
body
structural unnmt
What causes structural unnmt
- technological advancements, government policies and government driven growth has caused structural unnmt ot increase
- eg in singapore manufacturing sectors, we have shifted to better tehcnologies like 3D printing etc
- this means that some existing workers have been displaced unless they acquire skills fst enough to move onto new jobs
Improving skills and retraining
limitations
- effectiveness depends on workers' attitudes and mindsets
- employers must be willing to hire older workers and be willing to give them time to upskill
- long time lag, since it takes time to upskill people
- govt also has to spend money on retraining, thus opp cost is incurred
cyclical unnmt
- explain what causes cyclical unnmt
- eg global pandemic like COVID
- other economies suffer
- cannot buy sg exports
- since sg is X oriented, we exprience a large fall in X and thus AD
- cyclical unnmt
EFP
- increased spending on public infrastructure, increased hiring of civil servants
- SG united Job Initiative was rolled out in 2020
- longer term jobs created/hiring brough forward in the Public Service Division for healthcare and early childhood education sectors
taken together
- this causes an increase in AD and NY by a multiple (MUST GIVE THE STANDARD EXP)
- preventing unnmt
- draw graph and explain
EMP
- sg adopts a neutral stance
- give the standard exp for EMP
-
limitations
EFP
- attempts to increase AD will leak out as import expenditure, reducing multiplier effect
- which basically means that people will spend more on mpm, thus decreasing k and decreasing the multiplier effect
ERP
- keeping sgd on neutral stance might not spur exports if the economic outlook is bleak for trading partners too
EV
- the govt also has the JSS which helps to increase the SRAS
conclusion
since unnmt stems from a mix of factors, a policy mix is required
moving on, the emphasis should be on equipping workers with the relevant skills to take on new jobs post COVID
- this is because COVID will pass (means that the cyclical unnmt will pass)
- whereas the structural unnmt will continue
- hence workers need to be able to take on better paying jobs so that the govt can achieve inclusive growth
- explain what causes the unnmt
- how can it be solved