Unemployment
Working Population
a) Structure of the working population
UK population is divided into two sections:
(i) The working population is made up of the groups ( Employed, Self-employed
and registered unemployed), All those people employed or self employed
make up the labour force.
(ii) Dependants make up the groups ( Students and housewives, Children and
retired)
Measurement of Unemployment
When calculating the level of unemployment the government only counts those people
who register as unemployed and claim benefit. A large number of people seeking work
either do not register or do not claim benefit and are now excluded from official figures.
The unemployment rare is the percentage of the labour force officially jobless. Full
employment occurs when the number of notified job vacancies exceeds the number of
registered unemployed,
Cost of Unemployment
a) Lost output
‘The opportunity cost of each unemployed person is their forgone output. If the
average annual output per worker is AUD12000, unemployment of 3 % million
costs Australia AUD 40 billion a year in lost goods.
b) Increased benefit payments
Each extra person who become unemployed stop paying tax (AUD 2500) and
starts receiving benefits (AUD 3000). The government had to raise an extra AUD
15 billion to finance unemployment benefits.
c) Human costs of unemployment
‘The long-term and youth unemployed feel increasingly isolated and removed
(alienated from society).‘Types, Causes and Remedies for Unemployment
Type Description Cause Remedy
Frictional Workers temporarily between jobs Delays in applying interviewing Improving job information,
And accepting jobs e.g computerized job centre
Structural Workers have the wrong skills in Declining industries and the Subsidies and improve the
the wrong place immobility of labour mobility of labour
Cyclical All firms need fewer Low total demand in the Increased government
Economy spending or lower taxes
Technological Firms replace workers with machines Automation and information Retraining
technology
Regional High unemployment in one area Local concentration of declining Regional aids, e.g relocation
Industries grants
Seasonal Unemployment for part of the year Seasonal variation in demand Retraining,