Essay On Causes Of Unemployment

Causes of Unemployment Unemployment refers to a situation where a person of working age is not able to find work but is willing and able to be employed. Unemployment often occurs, even within a healthy economy. Millions of people across the world are willing and able to work but are unable to find unemployment in order to sustain their needs. This essay will examine the three major causes of unemployment namely recession, the lack of necessary skills, and poverty. One of the major causes of unemployment is recession. According to Acs (2013) during a recession, when demand for goods and services weakens, employers trim their workforces and slow their hiring. This evidently causes unemployment to rise and increases the time to obtain new employment. Acs writes that “based on historical experience, when the unemployment rate reaches 10 percent, as it did in October 2009, the share of the unemployed

According to the Social Policy and Development Division, unemployment and underemployment lies at the core of poverty. They argue that “for the poor, labor is often the only asset they can use to improve their well-being. Hence the creation of productive employment opportunities is essential for achieving poverty reduction and sustainable economic and social development.” If poverty is rife within a country, unemployment levels will be high as well. This is mainly due to the fact that poor countries do not have the capital to pay much needed wages or salaries, hence high unemployment levels. Kirby (2011) argues that it doesn’t take an economist to notice that there are key fundamental differences between the economies of developed and developing nations. Therefore it is evident that most developing countries experience extreme poverty and are unable to provide their citizens with employment. One should also keep in mind that in most of these countries people are self-sufficient and do not make use of money for an