Unemployment In The Economy

Unemployment is a vital issue in developing economies. When there is a high rate of unemployment, it refers that labour resources are not being utilized efficiently and full employment must be a major goal of any government because it maximizes the production. Okun’s (1962) states that a one percent point reduction in unemployment rate would increase output up to 3 percent. Therefore, the economy must continually expand to avoid the waste of unemployment. In achieving macroeconomic goal which is full employment, the condition is must be fulfilled by using all the resources such as labor, land, capital and entrepreneurs for produce the output of goods and services. Inefficiency in utilizing the resources would lead to the unemployment. So, the

It is occurs when people are looking for the job and the business are seeking for the workers. This may even happen in full employment when people quit their jobs for a better position or higher wages or fresh graduates are actively seeking for a job during economic booms when unemployment is very low. Next, in naturally and regularly of business cycle, recession is occurs when it was go through the periods of economic booms. Thus, cyclical unemployment occurs because there is absent of jobs followed by demand of good and services decline, many business close down and worker are lay off. Both changes of frictional unemployment to cyclical bring the effects of a great deal of stress to workers and their families but the government has the policy to response on these two types of unemployment. However, frictional employment is merely a normal part of a healthy labor market. To overcome recession which lead the increase rate of unemployment, government implements monetary and fiscal policy. Next type of unemployment is structural unemployment arises due to the structural changes in the economy of a country and can be referred as recovery of recession because it take place after the recession and the labor force has the opportunity to become re-employed in jobs similar to their previous position. It is exists when the workers does not respond quickly in changing of demand, technological changes and competitive imported goods. Because of these, the worker found that all their skills and experience are obsolete and unwanted result to the loss of job. Technological unemployment refers to the changes in techniques of production using the sophisticated machine or technology. For example, when all the company use technology as the main component to generate production but there are many unskilled workers who cannot adopt with the modern merchanization (Wagner, 2014). This can be seen in Malaysia in