Unemployment – Definition and Causes

1. Unemployment – Definition and Causes Cyclical unemployment, Structural unemployment, and Frictional Employment

2. Unemployment: This is when members of the working population of any country are willing as well as able to work, but they are unable to find work. Working Population: Are those citizen/individual that are at the legal working age and are ‘willing’ to work in order to making a living.

3. There are three main causes of unemployment: • Cyclical unemployment • Structural unemployment • Frictional unemployment Cyclical unemployment: unemployment which results from a low demand for Goods and Services in the economy when there is a slow period of economic growth in other words a ‘Recession’

4. Business would need fewer works to meet demand if there is any Fall in demand for Goods and Services The one who are employed may get their salaries reduced and the ones that are unemployed won’t have enough to spend. Thus leading to a slump in the economy and an increase in ‘Cyclical unemployment’

5. Frictional unemployment: This is when an individual leaves or is let go from a business and he/she takes a substantial time before they find work again. When does this occur? Why does this occur? Will this have a long lasting effect on the economy? How can you save yourself from being ‘Frictionally unemployed’?

6. Structural unemployment: This occurs when there is a significant decline in a particular sector of an industry. Reason: • A change in consumer behaviour due to a change in income/taste • With the introduction of online shopping • With start of out-sourcing industry to countries like China and India • Country moving into different sectors such as from secondary to tertiary sector