UNEMPLOYMENTDefine as a situation in the economy where there are people between the age of 16-65 who are not working but are actively seeking jobsUnemploymentrate (%) = Number unemployed labour force X100
• Labour force - total population between age of 16-65 who are not in institution who are either employed or unemployment but seeking works.• Full employment - economy where all available are employment to product goods and services.
• Types of unemployment1. Cyclical unemployment - caused by insufficient aggregate expenditures. The level of aggregate spending determines the level of national output, which determines employment level.- The economy and business activities slow down where some firms may close down or retrench worker to cut cost.
2. Seasonal Unemployment- involves workers who have jobs for at least a part of the year but find themselves unemployed at other times because of seasonal factors.- these kinds of jobs need to have skills in other fields so that they may continue to work during these seasons.
3. Frictional Unemployment- caused by workers voluntarily changing jobs and by temporary layoffs. This may even happen at full employment when people quit jobs for better position or pay or when fresh graduates seek employment for the first time.- this unemployment is temporary, but for the economy it is ongoing throughout the year.
4. Structural Unemployment- caused by changes in the structure of demand for consumer goods.- workers are unemployment either because employers do not demand their skills or because they lack sufficient skills to obtain employment.- it involves labor shortages in some geographical areas and job fields and labor surpluses in others.
THE EFFECT OF UNEMPLOYMENT1. For Individuals : Financial & Emotional2. For Economy: Low Production, Low Income, Slow Growth and High Poverty
MEASURES TO REDUCE UNEMPLOYMENTA. MONETARY POLICIESB. FISCAL POLICIESC. DIRECT CONTROL POLICY