What are the different types of unemployment PDF

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What are the different types of unemployment? There are five different types of unemployment, which are cyclical, structural, frictional, seasonal and wage-inflexible. Cyclical unemployment occurs when there is a lack of demand for goods and services, which relates to the cyclical trends in production and growth that occur within the business cycle. Since labour is a derived demand, firms would sack people, leading to workers losing their jobs from the downturn of the business cycle. When there is a decrease in demand for goods and services, unemployment increases. However, since demand tends to move in cycles, therefore as more and more people become unemployed, wages fall, which enables businesses to reduce wages to create jobs. Structural unemployment tends to be long term and very problematic for the wider economy. Structural unemployment is also more difficult to be dealt with since it correlates to labour mobility. This unemployment occurs when there is a misalignment between the skills that employees have and demand (the skills that employers want). The only solutions to this problem are to re-educate people for the future and re-skill. However, these methods are very expensive and time consuming, since it requires the government to look into the future to meet demand of jobs that will be available later on. There is not much the government can do for this type of unemployment alongside frictional unemployment. Frictional unemployment takes place between jobs for short periods, when people move from one job to another, such as when graduates enter the job market. Frictional unemployment is a short-term problem whereas there’s not much the government can do again. Nevertheless, the government can help them find jobs by promoting and funding job searching and matching websites.

Seasonal unemployment occurs when people are unemployed at certain times of the year, because they work seasonal dependent jobs in industries where they are not needed all year round, such as fruit pickers, ski instructors and chimney cleaners. This is one of the most non-troubling types of unemployment since they are expected to have work when their skills are acquired for, such as skiing. The government can fund a wider variety of jobs in attempt to lessen the problem. Last but not least, wage inflexible unemployment happens when minimum wage tends to increase unemployment. When minimum wage increases, companies cannot afford to pay all the people so they have to let people go. This implementation of minimum wage implies that it is only beneficial to the people who get to stay in the industry, while it causes problems to both the employers and the people unemployed since the employers have less people working for them, while the unemployed people have lost their jobs. The only way to reduce wage inflexible unemployment is to lower the national minimum wage, since a high minimum wage disrupts the business cycle, however since this method does not look pleasant to the labour force, it is difficult for the government to implement this policy, in hopes of relieving this problem. In conclusion, there are five different types of unemployment. Due to the different causes and severity of these various types of unemployment, it is important to differentiate between them to ensure that the policies can target them and lower the unemployment....