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  1. 1. Structural Unemployment • “Joblessness caused not by lack of demand, but by changes in demand patterns or obsolescence of technology, and requiring retraining of workers and large investment in new capital equipment”. • Case Study: The decline of the coal mining industries in South Wales • Why? • New industries developed abroad. • Manufacturers wanted maximise their profits at the expense of their workers. • Cleaner power sources were discovered. Carai McMahon
  2. 2. Tax Wedge • “The difference between before-tax and after-tax wages. The tax wedge measures how much the government receives as a result of taxing the labour force”. • In certain countries a tax wedge can increase if their is an increase in a employees income. • Tax Wedges may give money to the government but it causes inefficiencies in the market. Carai McMahon
  3. 3. Centralised Wage Bargaining • Centralised Wage Bargaining is a system set in place so that Trade Unions fight for employees to get real wage rates. • They also fight for low and fair tax rates for their members. Carai McMahon
  4. 4. Policies To Reduce Unemployment • Reform The Social Welfare System • Reduce The Tax Wedge • Intensify Education and Training Carai McMahon
  5. 5. Reform The Social Welfare System • This years budget has seen a large cut in the social welfare. • Joan Burton told Ireland that there would be a reduction of 20,976 off the live register. • Too many people have become dependant on the dole and this new social welfare scheme should stop that. Carai McMahon
  6. 6. Reduce The Tax Wedge • For our country to reduce unemployment, we must reduce our tax wedge. • For example, this year income tax has stayed the same. • However, if Income Tax had risen, what would happen? Carai McMahon
  7. 7. Intensify Education and Training • To reduce unemployment the government should be introducing specific skill based courses in schools and colleges. • Children, young adults and mature students should be given the opportunity to learn specific IT based skills. • For Example, in certain schools there is a programme called LCVP. • With courses like LCVP, we will see a far less drop out rate, which will in turn see more graduates and less people unemployed. Carai McMahon
  8. 8. Conclusion • • • • • • • • Today Ben and I defined: a. Replacement Ratio b. Poverty Trap c. Unemployment Trap d. Cyclical Unemployment e. Structural Unemployment f. Tax Wedge g. Centralised Wage Bargaining We also discussed the three causes of Irish Unemployment since 2008 and three policies that could be used to reduce unemployment in Ireland. Carai Mc Mahon
  9. 9. References • • VTC/south_wales_coalfield/eng/Thedeclineofcoa/default.htm • • VTC/south_wales_coalfield/eng/Thedeclineofcoa/default.htm • • • Carai McMahon