Unemployment

1.0       PART I (Introduction)

1.1       General Understanding of Unemployment

Unemployment happen when people are able and actively seeking to work but unable to get work. This will eventually resulted in the loss of incomes, production and human capital of a nation. High level of unemployment usually occurs during the economy recession where labour supply exceeds demand from the employers. Long-term unemployment severely damages a person’s job prospects by destroying human capital. The degree of unemployment in a nation indicates the economic health of the country. Unemployment rate is used to measure the underutilization of labour resources because it signifies the percentage of labour force that is unemployed but are willing and actively seeking for work. Unemployment rate provides a precise measurement which was assured by The Bureau of Labour Statistics. However, there are several factors that affect the unemployment rate in a nation such as company downsizing, merger or acquisition, changes in technology and foreign competition, and job outsourcing to other nations.

Unemployment can be divided into three parts which are unemployment of frictional, unemployment of structural, and also circle-cyclical unemployment. Frictional unemployment is arising from normal labour market turnover where people are deciding to move among job of the people, careers options and working location. It is known as fixed and healthy conditions which are resulted from the mismatching between workers and jobs. This can be related to the wages, work time, location, personality and skills. On the other hand, structural unemployment occurred during the changes in technology and foreign competition. This can be explained as the mismatch of skills of unemployed workers and available jobs in the market. Seasonal unemployment can be seen as part of structural unemployment too. This kind of unemployment is linked to certain type of seasonal jobs such as fishing, agriculture or...