MLS 2-C

Morata
Pealosa
Querubin
Taburno
Moreno

UNEMPLOYMENT

DEFINITION

Unemployment means that scarce human

resources are not being used to produce goods
and services to meet peoples needs and wants

The unemployed are people able, available and

willing to work at the going wage rate but cannot
find a job despite anactive search for work

FORMULA FOR UNEMPLOYMENT

TYPES OF UNEMPLOYMENT
Seasonal

Unemployment
Structural Unemployment
Cyclical Unemployment
Technological Unemployment
Residual Unemployment
Frictional Unemployment

 Seasonal

Unemployment

- occurs because some jobs, by their very nature, are tied

to the seasons of the year.
Regular seasonal changes in employment / labor
demand
Affects certain industries more than others
Catering and leisure
Construction
Retailing
Tourism
Agriculture

EXAMPLE-: Agriculture is a seasonal activity. There is an

increased demand for labor at the time of sowing,
harvesting, weeding and threshing. In between there is little
or no demand for labor. Agricultural labor finds himself
unemployed during this period.

 Cyclical

Unemployment

-occurs as a result of changes in the business cycle.

-occurs when there is not enough aggregate demand in the economy to
provide jobs for everyone who wants to work. Demand for goods and
services fall, less production is needed and less workers too.
Demand deficient unemployment occurs when the economy is
below full capacity.
For example, in a recession Aggregate Demand (AD) will fall leading
to a decline in output and negative economic growth.
With a fall in output firms will employ less workers because they
are producing less goods. Also some firms will go out of business
leading to large scale redundancies.
In recessions, unemployment tends to rise rapidly as firms lay off
workers.
Caused by a fall in aggregate demand leading to a loss of real
national output and employment
A slowdown can lead to businesses laying off workers because
they lack confidence that demand will recover

 Technological

Unemployment

-this can be seen where firms use capital investment in

technology to reduce their reliance on unskilled or semiskilled labour.
Residual

Unemployment

-some of the people will not even be capable of holding

permanent job by virtue of some physical or mental
disability.

 Frictional

Unemployment

-occurs when people voluntarily leave one job in search

of a different job. These people are unemployed because
they are temporarily between finding a suitable job.

This is unemployment caused by the time people take to

move between jobs, e.g. graduates or people changing
jobs. There will always be some frictional
unemployment in an economy because information isnt
perfect and it takes time to find work.
Imperfect information about available job
opportunities can lengthen the period of someones
job search

 Structural

Unemployment

-unemployment resulting from changes in the basic

composition of the economy. These changes
simultaneously open new positions for trained workers.
Arises from the mismatch of skills and job opportunities
as the pattern of labor demand in the economy changes.
It can be caused by:
Occupational immobility.
Geographical immobility.
Technological change.

CAUSES OF UNEMPLOYMENT

In the set up of a modern market economy, there are

many factors, which contribute to unemployment.
Causes of unemployment are varied and it may be
due to the following factors:

Rapid changes in technology

War
Recessions
Inflation
Rapid Population Growth
Disability
Lack of education or skills
Attitude towards employers
Willingness to work

EFFECTS OF UNEMPLOYMENT
Unemployment

affects not just the person himself but also his/her

family and in the long run the society where he lives.
Unemployment brings with it despair, unhappiness and anguish. It
forces people to live their lives in a way they do not wish to The life
expectancy is negatively affected.
Life expectancy is the ease by which people living in a time/place are
able to satisfy their needs/wants. Here are the some aspects:
Mental

health
Health diseases
Tension at home
Political issues
Crime and violence
Suicide cases
Social outing
Lose of skills usage

POLICIES TO REDUCE
UNEMPLOYMENT
Education and Training
-The aim is to give the long term unemployed new
skills which enable them to find jobs in developing
industries, e.g. retrain unemployed steel workers to
have basic I.T. skills which helps them find work in
service sector. However, despite providing
education and training schemes, the unemployed
may be unable or unwilling to learn new skills. At
best it will take several years to reduce
unemployment.

POLICIES TO REDUCE
UNEMPLOYMENT
Reduce Power of trades unions
- If unions are able to bargain for wages above the
market clearing level, they will cause real wage
unemployment. In this case reducing influence of trades
unions (or reducing Minimum wages) will help solve
this real wage unemployment.
Employment Subsidies
- Firms could be given tax breaks or subsidies for
taking on long term unemployed. This helps give them
new confidence and on the job training. However, it will
be quite expensive and it may encourage firms to simply
replace current workers with the long term
unemployment in order to benefit from the tax breaks.

POLICIES TO REDUCE
UNEMPLOYMENT
Improve Labour Market Flexibility
- It is argued that higher structural rates of
unemployment in Europe is due to restrictive labour
markets which discourages firms from employing
workers in the first place. For example, abolishing
maximum working weeks and making it easier to hire
and fire workers may encourage more job creation.
However, increased labour market flexibility could
cause a rise in temporary employment and greater job
insecurity.

POLICIES TO REDUCE
UNEMPLOYMENT
Stricter Benefit requirements
- Governments could take a more pro-active role in
making the unemployed accept a job or risk losing
benefits. After a certain time period the government
could guarantee some kind of public sector job (e.g.
cleaning streets). This could significantly reduce
unemployment. However, it may mean the government
end up employing thousands of people in un-productive
tasks which is very expensive. Also, if you make it
difficult to claim benefits, you may reduce the claimant
count, but not the International Labour force survey.

POLICIES TO REDUCE
UNEMPLOYMENT
Improved Geographical Mobility
- Often unemployed is more concentrated in certain
regions. To overcome this geographical unemployment,
the government could give tax breaks to firms who set
up in depressed areas. Alternatively, they can give
financial assistance to unemployed workers who move
to areas with high employment.

WORLDS STATISTICS ON
UNEMPLOYMENT

Source:http: Statista; The statistics portal

WORLDS STATISTICS ON
UNEMPLOYMENT

Source:http: Statista; The statistics portal

COUNTRYS WITH HIGHEST

UNEMPLOYMENT RATE
Country

Rate

Greece

25.7%

Spain

23.9%

Cyprus

16.8%

Croatia

16.6%

Portugal

13.9%

Italy

13.4%

Slovakia

12.6%

Euro Area

11.5%

Bulgaria

11.1%

Source:
10.75%
Ireland
http://www.statista.com/statistics/268830/unemployment-rate-in-eucountries

ASIAS STATISTICS ON
UNEMPLOYMENT
The Philippines
has the highest
unemployment rate
among members of
the Association of
Southeast Asian
Nations (Asean),
according to a
report of the
International Labor
Organization (ILO)
published in 2014.

PHILIPPINES STATISTICS ON
UNEMPLOYMENT

PHILIPPINES STATISTICS ON
UNEMPLOYMENT

Source: DOLE

HIGHEST AND LOWEST

UNEMPLOYMENT IN THE
PHILIPPINES
Highest

Percentage

Unemployment

Lowest

Percentage

Unemployment

1. NCR

11.2%

1-2. Region II &

ARMM

3.8%

2. Region 1

9.3%

3.Region XII

4.0%

3. Region IV-A

8.9%

4. Region IX

4.2%

4. Region III

8.8%

5. Region IV-B

5.1%

5-6. Region V &

CARAGA

7.5%

6. Region XI

6.4%

7. Region X

7.0%

8.-9. Region VI &

Region VII

6.6%

10. CAR
Source:
DOLE

6.5%

SOURCES

-Definition of unemployment
http://tutor2u.net/economics/revision-notes/as-macro-employment-unemployment.html
-Causes of Unemployment
http://www.economicshelp.org/macroeconomics/unemployment/causes/
-Effects on Unemployment
http://
www.job-interview-site.com/the-effects-of-unemployment-on-society-and-the-economy.html
-Worlds statistics on unemployment
http://www.statista.com/statistics/279790/unemployment-rate-in-seclected-world-regions/
-Asias Statistics on unemployment
http://globalnation.inquirer.net/103286/ph-has-highest-asean-unemployment-rate-ilo-repor
t
/
-Philippines Statistics on unemployment
http://www.bles.dole.gov.ph/PUBLICATIONS/LABSTAT%20UPDATES/vol18_7.pdf
-Policies
http://www.economicshelp.org/blog/3881/economics/policies-for-reducing-unemployment/