Report Macroeconomic Issue- Unemployment (ECO 211) PDF

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FACULTY OF BUSINESS AND MANAGEMENTMACROECONOMICS(ECO211)WRITTEN REPORT:MACROECONOMIC ISSUE: UNEMPLOYMENTGROUP:J4BA1173APREPARED FOR:MADAM SITI MAHIRAH BINTI MOHAMEDPREPARED BY:NAME STUDENT IDCASUARINA NISHA ANAK AYU 2019244868GENVEANA LAURA ANAK INSOL 2019264602MUHAMMAD HIDIR BIN MOHD YUSOFF 2019209...

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FACULTY OF BUSINESS AND MANAGEMENT MACROECONOMICS (ECO211)

WRITTEN REPORT: MACROECONOMIC ISSUE: UNEMPLOYMENT

GROUP: J4BA1173A

PREPARED FOR: MADAM SITI MAHIRAH BINTI MOHAMED

PREPARED BY: NAME CASUARINA NISHA ANAK AYU GENVEANA LAURA ANAK INSOL MUHAMMAD HIDIR BIN MOHD YUSOFF NURUL NAJIEHA BINTI RAMIZAN SITI AMINAH BINTI BAHARI

STUDENT ID 2019244868 2019264602 2019209156 2019251238 2019240068

SEMESTER: OKT 2020 - FEB 2021

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ACKNOWLEDGEMENT First of all, we would like to thank each one of our group members because they had gave 100% of their cooperation to finish this written report assignment. We finally managed to finish this group assignment with a great determination.

Also, we would like to acknowledge our gratitude, to those who had guided us throughout this assignment. Firstly, we would like to thank to our Fundamental of Macroeconomics lecturer, Madam Siti Mahirah binti Mohamed. She has gave us good guidelines throughout the process of carrying out this report. Without her guidance and encouragement, this report would have not been possible to accomplish. Moreover, we would like to thank to all of our friends who had helped and share their knowledge with us. They also give us support and advices. Lastly, we want to thank to our beloved parents who has been supporting us physically and emotionally and for their love, understanding, prayers and encouragement in making this report.

We had put so much efforts and acknowledgement to search information and ideas to complete this assignment. We hope it is done as followed as we had done our best.

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TABLE OF CONTENT ACKNOWLEDGEMENT....................................................................................................................1 1.0

INTRODUCTION.....................................................................................................................3

2.0

ANALYZING CURRENT MACROECONOMICS PROBLEM...........................................5

2.1

Reduction productivity........................................................................................................5

2.2

Created negative supply stock..........................................................................................5

2.3 Manufacturing productive activity slowing down due the global supply chain disruptions and closures of factories..........................................................................................6 2.4 Service industries such as tourism, hospitality, and transportation have suffered significant losses due to reduction in travel.............................................................6 2.4.1

Transportation...................................................................................................................6

2.4.2

Tourism................................................................................................................................7

3.0 APPROPRIATE MEASURES TO OVERCOME THE MACROECONOMICS PROBLEM...........................................................................................................................................8 4.0

CONCLUSION......................................................................................................................10

REFERENCES..................................................................................................................................11

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1.0

INTRODUCTION Unemployment is a term that refers to people who are employable and those who

searching for a career but are unable to find a job. In comparison, that is the people in the workforce or the pool of individuals that are eligible for jobs who do not have a suitable employment. Unemployment is often used as a measure to gauge the health of the company in a country. There are six types of unemployment which is classical, frictional, seasonal, structural, technological and cyclical. Firstly, type of unemployment is classical unemployment. It is also known as the real wage unemployment. Classical unemployment happens as actual wages remain above the market-clearing wage rate, due to excess labour supply. It arises when trade unions drive wages in excess of the market clearing levels, resulting in a fall in demand for labour. Trade unions usually negotiate to increase real wages causing classical unemployment. Classical unemployment is also caused by government minimum wage [ CITATION Tej21 \l 1033 ]. Secondly, is frictional unemployment. Frictional employment is the product of voluntary employment transitions within the economy. Frictional unemployment arises normally, often in an increasing, prosperous economy. This occurs when people enter the labour market to look for jobs or people leave their jobs, either voluntarily or are asked to go, and are unemployed for a period of time while they are looking for a new job. Frictional unemployment involves recent arrivals, such as school leavers, new graduates and reentrants, such as individuals who have left their jobs for a better career or higher pay or retired home-makers [ CITATION Jul20 \l 1033 ]. Next, seasonal unemployment is one of the types of unemployment. Seasonal unemployment refers to the span of time when demand for labour or labor is smaller than usual under such circumstances, but this condition is only temporary and thereafter work returns to normal. It results from fluctuations in weather condition, climatic changes or changes in the trend of demand. For an example, there are a few extra jobs created around Christmas and New Year's Eve, such as salesmen in a few department shops, Christmas tree sales, decoration, Santa costumes, and more after which they will not have any work for the rest of the year. They are recruited primarily for the purpose of dealing with extra customer activity during the relevant season and will not be hired for a whole year, but rather for the particular season [ CITATION Wha20 \l 1033 ].

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Other than that, is structural unemployment. Results from structural decline of industries, unable to compete or adapt to changing demands and new products, or changing method of production. Structural unemployment refers to the discrepancy between the available jobs and the skill levels of the unemployed. It's caused by forces other than the business cycle. It happens as the underlying change in the economy makes it difficult for certain people to find jobs. It is more difficult to fix than other forms of unemployment. Workers who are laid off or out of work even longer, will find difficulties in getting their job as their job skills may no longer match [ CITATION KIM20 \l 1033 ]. Furthermore, the type of unemployment is technology unemployment. Technological unemployment happens as technological changes and working methods lead certain workers to lose their jobs. Arise from a labor-saving manufacturing process or advanced technologies involving employees with a particular range of skills. People who have lost their jobs will have to learn new skills and the government can assist by offering retraining or retraining services [CITATION Tej211 \l 1033 ]. Last but not least for the type of unemployment is cyclical unemployment. It also known as the demand deficient unemployment. Cyclical unemployment is the component of overall unemployment that results directly from cycles of economic upturn and downturn. Cyclical is caused by a lack of demand in the downswing of the business cycle or recession. It exists because there is a recessionary gap forcing business to lay off large numbers of workers to cut costs. Cyclical unemployment typically increases during recessions and decreases during economic cycles and is a central concern of economic policy [ CITATION STA20 \l 1033 ]. The unemployment rate in Malaysia and other countries is described as the number of unemployed people as a percentage of the workforce. Labor comprises people who are either working or unemployed, that is who do not have a job but are constantly searching for one. Labor should not include people who are not looking for jobs, teenagers, and pensioners [ CITATION Mal20 \l 1033 ]. There are data provide by The Global Economy that show Unemployment rate of Malaysia [CITATION Mal201 \l 1033 ]. The data is as shown below:  Malaysia unemployment rate for 2019: 3.32%, a 0.03% decline from 2018.  Malaysia unemployment rate for 2018: 3.35%, a 0.06% decline from 2017.  Malaysia unemployment rate for 2017: 3.41%, a 0.03% decline from 2016.  Malaysia unemployment rate for 2016: 3.44%, a 0.34% increase from 2015. 5

2.0

ANALYZING CURRENT MACROECONOMICS PROBLEM As we all know that our country was infected by covid-19 early 2020. Not just our

country, but all over the world was infected. Day by day, reported cases are increasing. The pandemic of Covid-19 severely affecting the global economy and financial markets. This pandemic has caused direct impacts on reduction in productivity, created a negative supply shock, manufacturing productive activity slowing down due the global supply chain disruptions and closures of factories. Not only that, service industries such as tourism, hospitality, and transportation have suffered significant losses due to reduction in travel [ CITATION Pak20 \l 1033 ].

2.1

Reduction productivity The global economy has been hampered by a series of shocks that undermined

productivity growth because of COVID-19. These shocks have compounded the erosion caused by an undercurrent of weakening fundamental drivers of productivity growth. This epidemic left lasting scars on labour productivity. COVID-19 are compound the erosion caused by an undercurrent of weakening fundamental drivers of productivity growth. In addition to the health crisis from COVID-19, the uncertainty about the duration of the pandemic weighs on investment, as well as preventing trade; restrictions on foreign direct investment and mobility could delay the reallocation of workers away from low-productivity firms to higher-productivity ones [CITATION Ali20 \l 1033 ].

2.2

Created negative supply stock In response to the COVID-19 outbreak, public health authorities around the world

implemented mitigation measures such as social distancing, which shut down entire sectors of the economy, especially those that involve interpersonal contact, such as restaurants and salons. While authorities have forced many such establishments to close, leaving many workers jobless, and issued stay at home orders which is called as lockdowns, consumers also decreased their use of these services. Furthermore, newly unemployed workers reduced their consumption of all goods and services.

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For this reason, most economists would agree that the pandemic combines aspects of supply and demand shocks. A supply shock is anything that reduces the economy's capacity to produce goods and services, at certain prices. Lockdown measures preventing workers from doing their jobs can be seen as a supply shock. A demand shock, on the other hand, reduces the ability or willingness of consumers to purchase goods and services, at given prices. People avoiding restaurants for fear of getting infected are an example of a demand shock. Additionally, when service sector workers lose their jobs and income, they stop buying all kinds of goods, such as cars and appliances, which can also be considered of as a sectoral demand shock [CITATION Ist20 \n \l 1033 ].

2.3

Manufacturing productive activity slowing down due the global supply chain

disruptions and closures of factories Manufacturing productive activity also slowing down due the global supply chain disruptions and closures of factories. For example, in China, the production index in February decreased by more than 54% from the previous month's value. In addition to the impact on productive economic activities, consumers typically changed their spending behavior, mainly due to decreased income and household finances, as well as the fear and panic that accompany the epidemic [ CITATION Ant20 \l 1033 ].

2.4

Service industries such as tourism, hospitality, and transportation have

suffered significant losses due to reduction in travel.

2.4.1

Transportation Airline industry players has highlighted that the current travel bans and

plummeting demand around the world have put the loss-making carrier at risk of bankruptcy. As a result of travel reduction, the service industry has decided to reduce the number of workers due to large losses and inability to pay the employee salary. For example, low-cost airline companies like Air Asia Bhd and Air Asia X Bhd have confirmed the retrenchment of 10% of their 24,000 employees. This is because AirAsia might be planning a new round of layoffs involving hundreds of its personnel for the continued survival in an industry severely affected by the COVID-19 crisis [ CITATION Ber20 \l 1033 ].

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2.4.2

Tourism

The outbreak of COVID-19 has exposed a major risk to Visit Malaysia 2020 (VM2020) campaign as 50% of Malaysia’s tourists are originate from Singapore and China. The increasing cases of COVID-19 in both countries has led to the cancellation of many tours, which has already led to a large drop in the number of tourists to Malaysia. In order to fully contain the virus, The Prime Minister of Malaysia announced the 4 phases of Movement Control Order (MCO) as they expected the number of COVID-19 cases would continue to increase. The prohibitions during the MCO will further contract Malaysia’s tourism industry and therefore effective policies to assist the industry players are imperative [CITATION The20 \l 1033 ]. Because of this Movement Control Order (MCO), tourism industry a huge loss problem and had to lay off workers and this makes the unemployment rate rising.

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3.0 APPROPRIATE MEASURES TO OVERCOME THE MACROECONOMICS PROBLEM Based on the unemployment issue, there are several measures to overcome these macroeconomic problems. This is because the problem of unemployment is very important for us to address so that we can produce individuals who are successful and have goals in life. Therefore, some steps must be taken professionally so that the standard of living of a society will be improved. A lack of adequate instruction in software, technology, equipment, or other processes would be the most apparent issue affecting low productivity. In other words, "hard abilities." These are the types of abilities that are apparent when something goes wrong or isn't done properly. With preparation, all kinds of hard skills can be quickly tackled. Because of its shortened training period, usage of less tools, and better learning retention outcomes, microlearning is a common tool of choice. An on-demand video format that covers the skills needed for the needs of the particular employee will get them up to speed easily and more effectively than ever. For management and subordinates, soft skills are highly important. In the ability to lead and coach, which are the key outlets for inspiring workers who do not see their worth in the business or fail to remain active among other stressors, they play a significant role. Measuring soft skills can be more difficult than hard skills, but it is also beneficial to offer instruction in these fields through a number of approaches, including microlearning recordings, mentoring services, and 360 reviews [ CITATION Kri20 \l 1033 ]. Reduction of individual income tax rates and reduction or elimination of import duties on certain goods including intermediate goods, which aims to reduce business operating costs as well as production costs which can indirectly increase supply. In addition, lower taxes will increase household disposable income and increase consumption. It also results in increased after-tax profits and more money can be used to make investments. For example, to encourage the manufacture of machinery and other equipment in Malaysia, the valueadded criteria for the purpose of granting pioneer status and investment allowance investment has been reduced from 30% to 20% [ CITATION Pen02 \l 1033 ]. To strengthen the contribution of the agricultural sector to economic growth, reinvestment by existing companies is given an income tax exemption for five years. Hence, tax reduction can further boost production activities which will increase employment demand.

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The government needs to reduce the dependence of resources on foreign countries or factory activities to ensure production will not be disrupted. For example, many countries, including Malaysia, stopped production after the current supply of essential goods COVID19, which is mostly produced from China as the largest producer. In addition, Malaysia also needs to diversify the supply chain of imported goods to reduce the high dependence on one source of import. So, the government spends money to develop development projects in the production sector. this will Therefore, production activities will not be disrupted if there are restrictions on goods from abroad and there is no unemployment [ CITATION DrZ20 \l 1033 ]. In overcoming the problem of significant losses due to reduction in travel, the central bank needs to lower interest rates and be able to direct commercial banks to lower interest rates on deposits. At the same time increase purchasing power and encourage people to spend. For example. The Malaysian government also exempted tourism tax for the period from 1 July 2020 to 30 June 2021 is one of the measures decided by the government to reactivate the industry in the country. In addition, the government also exempts taxes on the tourism industry such as travel agencies, hotel operators and airlines until the end of this year. This will directly increase the demand and production of the sector, which will reduce the unemployment rate [ CITATION Ast20 \l 1033 ]

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4.0

CONCLUSION

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REFERENCES AMADEO, K. (30 August, 2020). Why It's Harder to Find A Job Now in Some Industries. Retrieved from The Balance: https://www.thebalance.com/structural-unemployment-3306202 AUTHOR, S. (31 August, 2020). Cyclical Unemployment. Retrieved from Investopedia: https://www.investopedia.com/terms/c/cyclicalunemployment.asp Awani, A. (5 January, 2020). Cukai Pelancongan dikecualikan sehingga Jun 2021- PM. Retrieved from Astro Awani: https://www.astroawani.com/berita-malaysia/cukai-pelancongan-dikecualikan-sehingga-jun2021-pm-245796 Bernama. (09 October, 2020). AirAsia confirms laying off 10% of staff. Retrieved from The Edge Markets: https://www.theedgemarkets.com/article/airasia-confirms-laying-10-staff Brubaker, K. (28 January, 2020). How to Solve Low Employee Productivity in the Workplace. Retrieved from BizLibrary: https://www.bizlibrary.com/blog/organizational-culture/solve-productivity-problems/ Dieppe, A. (18 September, 2020). Slowdown in productivity growth compounded by COVID-19. Retrieved from VOX, CEPR Policy Portal: https://voxeu.org/article/slowdown-productivity-growth-compounded-covid-19 Foo, L.-P. (12 Jun, 2020). The impact of COVID-19 on tourism industry in Malaysia. Retrieved from Taylor & Francis: https://www.tandfonline.com/doi/full/10.1080/13683500.2020.1777951 Kagan, J. (29 November, 2020). Frictional Unemployment. Retrieved from Investopedia: https://www.investopedia.com/terms/f/frictionalunemployment.asp Malaysia Unemployment Rate 2016-2019. (2020). Retrieved from MacroTrends: https://www.theglobaleconomy.com/Malaysia/unemployment_rate/ Malaysia Unemployment rate. (2020). Retrieved from TheGlobalEconomy.com: https://www.theglobaleconomy.com/Malaysia/unemployment_rate/ Pak, A. (29 May, 2020). Economic Consequences of the COVID-19 Outbreak: the Need for Epidemic Preparedness. Retrieved from Frontiers in Pub...