In addition to this, an industry may change its methods of productions. If the workers in the industry seeking employment in the production sector of this industry underwent training using outdated production techniques, then they may not get employment in this sector. High levels of unemployment affect the economy of countries negatively due to the loss of income of the citizens. Thus, the living standards of the citizens reduce since they cannot get money required to access quality medical care or education. There spending power also reduces and thus they fail to maximize their utility (Knight 279). Moreover, most of the citizens who are unemployed do not have the money to pay their mortgages. Unemployment also leads to loss of the national output of a country.
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When graduates complete their education, it may take time for them to find their dream jobs. During the time that they are searching for jobs, they become unemployed. A worker may voluntarily change his current job since he/she feels that the job is not paying him/her well enough considering his/her experience (Tucker 224). During the period that he/she looks for an alternative form of employment, this worker would be unemployed. A worker may also change his employment since the current employment does not relate to his tastes. The employer may post a worker in the accounting department but his/her tastes may be in art. People someone also quit their employment because of the strict work time of the previous employment and unfavorable location of the previous employment. During the period that the worker moves from one job to another, he/she becomes unemployed raising the unemployment levels. A mismatch between the skills of the labor force and the industrial requirements of new job opportunities. This normally arises due to the effects of capital labor substitution and decline of demand of goods in a particular industry (Tucker 235). If an industry advances its technology, then all the workers in the market who may be willing to work in that industry may not get opportunities if they do not match their technological requirements.
Some industries lay off a percentage of their workforce in an attempt of reducing their labor overheads so that they remain in business during this period. This leads to an increase roles in the levels of unemployment. Furthermore, some companies reduce the number of their branches by shutting down the braches that incur the most losses. This leads to the loss of job by the workers in these branches (Tucker 211). Since the demand for products reduces during this period, companies decide to reduce their production levels by producing fewer units or working in fewer days per week. This causes workers to lose their jobs. Since the number of workers seeking employment is more than the vacancies that are available in the market during recession, unemployment arises. Unemployment caused by people changing from one job to another.
Moreover, these laws restrict the authority of employers to fire their employees. Due to this, employers do not hire new employees since they will incur more costs in paying these employees wages above the market clearing level (Sexton 584). This causes the number of people seeking employment to be more than the vacancies for job opportunities available in the market leading to unemployment. Transition of the economy, transition of the economy through business cycles causes unemployment. During economic recessions, unemployment levels increase since most of the industries shut down their operations due to heavy losses (Sexton 596). This is because the consumers purchasing power decreases within this period. This obliges them to purchase only commodities that are necessary for survival due to the budget constraints. Companies producing luxury goods make the greatest losses.
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Unemployment takes place when people who are willing and able to work are in an economy fail to find employment opportunities (Tucker 194). Governments of essay most nations use the rate of albert unemployment in their countries to determine how the economy in their country has improved. This rate measures the unemployment prevalence by dividing the quantity of unemployed individuals searching for jobs in the market with the total number of employed individuals who are currently in the labor force in that country. This essay focuses on the causes of unemployment in economy. It gives the effects of unemployment on the economy, an individual and the whole society.
There are several causes of unemployment that result negatively in the economy, the individual who is unemployed and the society. Unemployment occurs when trade unions and wage councils force the level of real wages above the market clearing level. This leads to a type of unemployment known as real wage unemployment. The reason that trade unions force the level of real wages above the market clearing level is in an attempt of ensuring that the employers do not exploit the services of their employees (Tucker 203). In addition to this, they aim at ensuring that employees get more income that would enable them to improve their standards of living.
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