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Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
Final powerpoint presentation, prof3 a sphiwe dladla-201221896
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Final powerpoint presentation, prof3 a sphiwe dladla-201221896

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  • 1. Economics Grade 10- Contemporary Economic issues Unemployment By Sphiwe Dladla 201221896
  • 2. What is Economics? In a nutshell…
  • 3. Economics is the study of how individuals, businesses, governments and other organisations within society choose to use scarce resources to satisfy their unlimited needs and wants in a manner that is efficient, equitable and sustainable.
  • 4. UNEMPLOYMENT
  • 5. SO….What is Unemployment? In economics, unemployment refers to the condition of unwanted job losses, or willing workers without jobs. The willingness of the unemployed worker to be employed is the key to the idea. A person who is :Physically Fit Mentally sound Well qualified Willing to work at prevailing wage rate BUT DOES NOT GET JOB , THIS SITUATION IS CALLED UNEMPLOYMENT !!
  • 6. Key Concepts To Understanding Unemployment  Adult Population  Labour Force  Labour Force Participation Rate  Unemployment Rate  Discouraged Worker
  • 7. Quick Facts about unemployment  Unemployment is lack of full utilization of resources, and eats up the production of the economy. Unemployment management is one of the toughest jobs of every government in the world.  Along with price level, unemployment is probably the most observable economic indicator that the general public complains about their government.  Unemployment rate can be anywhere between 1% ~ 30% (beyond is very much unlikely), and a healthy economy is believed to have an unemployment rate around 5%.  Unemployment rate is highest among young workers aged between 15 and 24.
  • 8. Classification Of Unemployment Unemployment can be broadly classified under two broad categories –  VOLUNTARY UNEMPLOYMENT - Unemployment that results when people who are willing and able to engage in production choose not to produce output. These are people that decide to leave one job, often in search of another.  INVOLUNTARY UNEMPLOYMENT - The contrast to voluntary unemployment is involuntary unemployment, in which people are forced out of work. Involuntary unemployment is also known as Forced Unemployment. Now that’s HECTIC!!
  • 9. Measurement Of Unemployment Labour Force - The total number of people employed or seeking employment in a country or region. Also called work force.
  • 10. Measurement Of Unemployment The rate of unemployment in a country is measured by the following formula:- Unemployment rate = Labour force – Employed labour X 100 Labour Force Or Unemployment rate = Number of unemployed Labour Force X 100
  • 11. Types Of Unemployment
  • 12. Seasonal Unemployment Seasonal unemployment refers to a situation where a number of persons are not able to find jobs during some months of the year. Example: Agriculture is a seasonal activity. There is an increased demand for labour at the time of sowing, harvesting, weeding and threshing. In between there is little or no demand for labour. Agricultural labour finds himself unemployed during this period. This is called seasonal unemployment.
  • 13. Cyclical Unemployment Because of business cycles, many firms reduce the demand for inputs, including labor in recessional periods when production declines. Cyclical unemployment is used to refer to the fluctuation in unemployment i.e. the unemployment caused by economic recessions. Cyclical unemployment can be zero in full expansions during a business cycle.
  • 14. Technical Unemployment Unemployment caused by technological changes or new methods of production in an industry or business. Example: The evolution of the automobile assembly plant. In the beginning, everything on the line was done by humans in order to build a car. The assembly line itself was a great technological innovation. Today, robots are employed for much of the hand-work humans used to do.
  • 15. Frictional Unemployment This is a type of voluntary unemployment that arises because of the time needed to match job seekers with job openings. Just as friction always takes place before the slider comes to its final position on the surface, people need time to find the best job, thus voluntarily rubbing back and forth between choices and staying unemployed Example: When you make up your mind and set off looking for a better job and abandoning the current one, you are in the frictional unemployment labor force.
  • 16. Structural Unemployment This unemployment arises due to structural change in dynamic economy. Unemployment caused by massive mismatch of skills or geographic location is noted as structural unemployment. Example: Heavy Manufacture (mining) - Manufacture now involves machines so humans are no longer needed for the harder work. Structural unemployment poses more of a problem because workers must seek jobs elsewhere or must develop the skills demanded. The process is full of pain and frustration, and may lead to negative impacts on society.
  • 17. Disguised Unemployment When more people are engaged in some activity than the number of person required for that, this is called disguised unemployment. Disguised unemployment exists where part of the labor force is either left without work or is working in a redundant manner where worker productivity is essentially zero. Example: An agricultural field require 4 laborers but people engaged in this activity is 6 then this unemployment for 2 labors is called disguised unemployment
  • 18. Cost Of Unemployment Personal Cost  Loss of paycheck - Loss of earnings to the unemployed  Loss of self esteem - Those who are unemployed will find it more difficult to get work in future(this is known as hysteresis effect)  Increase in social problems - Areas of high unemployment (especially youth unemployment) tends to have more crime and vandalism.
  • 19. Cost Of Unemployment Economic Cost  Loss in output – Labour has productivity, high or low, depending on its skill and availability of capital per labour. Therefore, unemployment means loss of output expected from the employment of unemployed labour force.  Increased Govt borrowings. Tax revenue will fall because there are less people paying Income Tax and VAT. Also the Govt will have to spend more on unemployment benefits.  Lower GDP for the economy - The economy will be below full capacity. This is inefficient and will lead to lower output and incomes.
  • 20. Inflation and the rate of Unemployment As per A. W. Philips, a British economist, he found an inverse relationship between the rate of change in the money wage rate and the rate of unemployment According to his findings, if rate of inflation is high, rate of unemployment is low. On the other hand, if the rate of inflation is low, unemployment rate is high. For example, when a government intends to lower down the rate of unemployment it had to bear the increase rate of inflation in the national economy.
  • 21. The Philips Curve According to the Phillips curve, the lower an economy's rate of unemployment, the more rapidly wages paid to labor increase in that economy. Philips curve reveals that there exists a trade-off between the rate of unemployment and the rate of change in money wage rates, that is, a lower rate of unemployment can be achieved only by allowing money wage rate to increase up to a certain level. This implies that inflation reduces unemployment
  • 22. Why Philips Curve Relationship? Why is there an inverse relationship between the rate of inflation and the rate of unemployment? OR How does inflation reduce the rate of unemployment or how does it promote employment? The inverse relationship between the inflation rate and the unemployment rate can be explained by both the Demand-pull and the Wage-push factors.
  • 23. Demand-Pull Factor Philips postulated that during demand-pull inflation, demand for labour increases as increase in prices. Thus with the increase in the money wage rates following the rise in inflation rate, the rate of unemployment decreases. Two conclusions can be drawn from this description:  Unemployment rate and wage rate are inversely related, and  Upward movement in wage rates is rapid and quick during inflation, and downward adjustment in wages is gradual, rather sticky, during the period of deflation.
  • 24. Wage-Push Factor Wage-Push Inflation is caused by the autonomous demand by the labour unions for increase in wages in excess of increase in labour productivity. The lower the rate of unemployment, the greater the union’s power to push the wages up and vice versa. Also, the period of low unemployment is generally the sign of ‘buoyant’ product market and high profits. Therefore employers are willing to pay higher wages. There is fast upward movement in wages and decrease in unemployment.
  • 25. Benefits of Unemployment  Businesses can keep wages low and maintain lower costs.  Inflation can be kept low.  The will be reduced consumption of nonrenewable raw materials.
  • 26. Ways to reduce or combat unemployment 1. Demand-side policies The government can try to stimulate demand in the economy by increasing taxation and government spending and create more jobs as a result of increased demand.
  • 27. 2. Supply-side policies This includes programmes that reduce occupational immobility like the Sectorial Education and Training Authorities which train people so that mobility between different jobs may be easier.
  • 28. References o o o o http://www.slideshare.net/UdayBansode/ unemployment-15749757 DOE CAPS Document- Economics FET Grade 10-12 http://www.slideshare.net/zatrutakrew/un employment-and-inflation-presentation5860685 http://www.slideshare.net/kinnar32/inflati on-unemployment
  • 29. Thanks for viewing! 

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