unemployment Flashcards
what is unemployment?
when a person is of working age, is able and willing to work, and is looking for work, but can’t find any.
what is mass unemployment?
when 1 in 10 people in the labour force are unemployed
what is youth unemployment?
the rate of unemployment of those aged 16-24
what causes youth unemployment?
- technological advancements take away jobs in retail that are usually the first jobs for the youth
- age discrimination: employers favor older workers who are seen as more reliable and motivated
- economic downturns: the youth are more likely to be laid off when the economy struggles
- lack of skills, education, and qualifications needed for jobs
why is youth unemployment a problem?
- they lack the work experience needed to find and get a job later in life
what are discouraged workers?
people that have ceased to look for jobs as they believe there are no more suitable jobs left
what is long-term unemployment?
people have been unemployed for more than 12 months
why is long-term employment a problem?
- the longer you are out of work, the harder it is to find a job
- employers prefer those with full CVs and consistent working record
- skills may reduce over time
- decreased motivation to look
- structural supply side problem in the labour market
- decreased tax revenues and public spending
- increased governemt borrowing and spending on state-welafre benefits
how to measure unemployment?
- labour force survey: asks 60-70,000 UK households to self-classify as employed, unemployed or economically innactive
- claimant count: counts the total number of recipients of Job Seeker’s Allowance and those looking for work to claim universal credit.
what is hidden unemployment?
people who don’t have a job, aren’t actively looking for a job, or are working fewer hours than they’re willing to but aren’t counted in government reports
causes of hidden unemployment
- long term unemployed become unmotivated to look for work
- disability benefits with chronic mental/physical illness
- looking after family or elderly- may have to switch to part-time
- self-employment
- working for the Gig economy with zero-hour contracts
what are the limitations of unemployment data?
- room for error due to large sample sizes needed to be representative of the UK population
- excludes economically inactive
- excludes underemployed
- excludes hidden unemployment
- excludes those working in informal labor markets
what is the Gig economy?
people working with unset hours like food delivery drivers, freelance writers, and virtual assistants. Work is flexible and can be short-term, so people end up not working as many hours as they’re willing to, and is a more insecure job
what is underemployment?
people who are looking for extra jobs/hours or another job to replace a current job that has more hours. They work fewer hours than they want to so are under-utilized in terms of skills, qualifications, and experience. These figures can rise even if unemployment is declining and make unemployment figures look better than they are.
what is economic inactivity?
when someone is of working age but isn’t employed and isn’t actively searching for work, increased by COVID.
causes of economic inactivity:
- Students in full-time education or training courses
- looking after family/elderly
- long term sickness
- retired/early retired
- discouraged workers who have given up searching
issues with economic inactivity
the government is worried that a rise in it will hold back economic growth and recovery from COVID
policies to help reduce economic inactivity:
- improving financial incentives to make work pay and lower barriers for people trying to find jobs
- supply-side policies: tax-free childcare, higher minimum wage, cheaper transport costs, lower rented housing and pensions
what is seasonal unemployment?
- causes
- can anything be done to reduce this?
unemployment is caused when seasonal workers (e.g. in the tourism and construction industry) get laid off in the winter due to a decrease in demand in the labour market. Demand will increase again in the summer when they get employed again. Little can be done to stop this pattern as demand varies in the labour market throughout the year.
what is frictional unemployment?
- example
short-term unemployment
- finding a better job
- mothers returning to work
- early retirees returning to work
- graduates/school leavers
- in between jobs
- new entrants in the labour market
the better the info on jobs, the quicker they can get out of it and the more welfare benefits and redundancy pay, the longer they have to search for jobs without being forced into poverty.
- not a serious problem, it will always occur no matter how good the economy is
what is cyclical unemployment?
- when are they laid off?
- when are they employed again?
occurs when the economy is not in a boom, where there is a lack of demand for goods and services like during a recession so workers are laid off which causes the negative multiplier effect. Then when the economy recovers and demand increases they are employed again.
what is real wage unemployment?
- causes
when wages are set higher than producers believe workers are worth and the productivity of the workers.
- minimum wage (producers are willing to pay workers below the minimum wage and workers are willing to work for this, but don’t get employed as this is illegal)
- people refuse low-paid jobs as they can earn more money off of state welfare benefits instead of working
- when labour supply exceeds labour demand
- when there is a surplus of workers in an industry
what is structural unemployment:
- causes
- TYPES
- effects
- deindustrialisation leaves workers in the manufacturing industry unemployed, with their skill set not needed in the labour market (SECTORAL)
- (TECHNOLOGICAL) advancements like AI replace jobs
- when there is a lack of geographical mobility (REGIONAL)
- leaves barriers for them to try and find jobs: high costing childcare, high transport costs and unsuitable housing
- employment discrimination due to the lack of skills
- leads to a lack of welfare
what is the unemployment trap?
unemployed people have lost their skills and confidence, along with employers being less likely to employ someone who’s been out of work for a long time. welfare and tax system can contribute, especially in low-paid jobs.
