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Factors Affecting Unemployment In Spain

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Unemployment is defined as “people of working age who are without work, available for work, and actively seeking employment.” (www.ilo.org). There are many factors that will affect the unemployment rate such as, exchange rates, costs of raw materials, and international economic conditions (Blink & Dorton).
Unemployment is becoming a major threat in many countries. Spain is an example of how unemployment is a big factor of causing the economy to slow down. The rich are getting richer, and the poor poorer. “We are turning into a ‘hotel economy’: managers on top, and maids and waiters at the bottom. No mid-level positions,” Alonso said (IB Times). Due to the struggles that Spain is facing the young generations are starting to learn new languages, …show more content…

The reason for this is because since Spain is in a recession, “firms will demand less workers because their business is not doing well.” Due to this, there will be a shift in the Aggregate Supply for Labor (people looking for jobs) and will decrease from ASL to ASL1.
Due to the recession that is happening in Spain, workers will not be able to find jobs since the demand for workers is not as high as before. Those who do find jobs will probably have lower wages. Since businesses are not doing well, they don’t have enough money to pay their workers, so they will have to lower wages or fire some. Less workers means that there is lower production. High unemployment rates have a large effect on society by not only affecting the workers, but economic development as well.
If shown on an AD/AS diagram, the scenario would most likely resemble this below. Led by decreases in consumption and government spending, AD in Spain is moving backward. As the amount of output/income is reduced from Yfe to Y1 and then Y2, the number of workers needed to produce that output is reduced as well. This is causing major cyclical unemployment (unemployment as a result of fluctuations in the business

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