Structural Unemployment

Unemployment means unemployed people who are at legal age and jobless but actively looked for work in the past four weeks. They will not be counted in the labour force if they don't keep looking. Frictional unemployment, structural unemployment, cyclical unemployment, demand deficient unemployment and classical unemployment are the causes of unemployment. Even in a healthy economy, frictional and structural unemployment will also occur.

Frictional unemployment

Frictional unemployment is transitional unemployment due to people switching between jobs, either because they have been made redundant or are looking for new employment. It may also be called ‘search unemployment’ as it relates to the time taken to search for new job. Frictional unemployment

It is neither voluntary nor short-term. These causes usually lead to long-term unemployment which can be caused by occupational and geographical immobility of workers, the investment needed to improve skills, provide appropriate and effective training and working experience to the unemployed so that they can move their location and move on as needed. Occupational immobility refers to the difficulties of adapting new skills applicable to a new industry and technological change. Geographical immobility refers to the difficulties in moving regions to obtain a job. Technological change means advances in technology. If some industries have moderated technology development, then the demand for labour will decline because robotics replacing jobs. Structural change in the economy means it is difficult for illiteracies such as coal miners to get jobs in new industries such as computers. Next is job outsourcing. That is, when the company transfers its manufacturing or call center to another country. Costs of labour in countries with lower cost of living are

This is also known as Keynesian unemployment or demand-deficient unemployment. It occurs when the economy is below full capacity and refers to how unemployment changes with the economic cycle. With a fall in output firms will lower demand for workers when the economy slows down and goes into recession, to reduce employment to cut costs and maintain profits, creating the demand deficient unemployment. Some firms will go out of business result in large scale redundancies. In the recession period, with the company layoffs, the unemployment rate will rise rapidly. The unemployment rate for young workers is increasing most often during the recession. Older workers may be fired, but most importantly by young workers, they found that the company did not take over new employees. Companies are likely to hire existing staff rather than new employees. Even when the economy is growing, demand deficient unemployment is possible to occur. Demand deficient unemployment may lead to a higher rate of long term