Consequences of Unemployment

Unemployment is a major incentive to economic action in a market economy. However,

it brings about manifold negative social and economic consequences as well. They are most

visible in developing or inefficiently operating labor markets. The larger and longer the

unemployment, the deeper and more complicated are the social and economic problems it causes

in society. The existence of stable long-term unemployment extracts a segment out of the labor

force and isolates it economically and socially. Long exemptions from labor life and labor

environment lead to losses of professional qualification. For society this means a loss of

economic and social gains and no return of investments made. Reintegration of unemployed into

working life requires new investments. Moreover, unemployed people represent a vulnerable

economic and social group. In their struggle to survive, they are inclined to join the shadow

economy and to conduct criminal and violent behavior. Many consequences of unemployment

are manifest in psychological and behavioral deformations of personality

.

The negative effects of long-term unemployment are rather relevant when the model of

management of economy is being changed as this is currently the case in Eastern Europe. The

mechanisms of labor market in the region are still evolving simultaneously with the structural

adjustment. This brings about difficulties in the adaptation of economic actors to long-term

unemployment. The slow and painful reforms in Bulgaria offer a typical example of such a

development where the economic and social costs of the transition by far exceed the

expectations.

The labor market is not simply unfavorable to young people. The unfriendly situation

is long lasting. One quarter of long-term unemployed are young people. They stay very

long in the position of job-seekers. This seems to be paradoxical since the young segment of

manpower is better educated. It isomer adaptable towards the...