Unemployment occurs when there are fewer jobs than workers. Also, the employment of workers is declining due to the introduction of new, especially automated, technologies.
A sharp increase in unemployment is observed during a recession in the economy. This happens when production is reduced and a lot of people enter the market and find themselves fired from their jobs.
To better understand the essence of this concept, we should consider the causes and types of unemployment.
So, reasons:
1) due to the fact that food is produced in an arithmetic progression, and the population grows exponentially (but there is a “natural” regulation of the number - epidemic, war, natural disaster);
2) job losses;
3) new unemployed (graduates, for example).
There are voluntary, involuntary, structural, cyclical, hidden, chronic and frictional unemployment. These are not all of its types, but the most frequently identified in the economy.
Voluntary unemployment implies the dismissal of an employee of his own free will. Forced is associated with a reduction in production, as a result of which part of the staff is out of work. Structural unemployment occurs when certain industries are reduced and others appear, when, during the reorientation of firms and their transition to a new product, there is a need to retrain employees or reduce some and hire new ones.
Cyclical unemployment occurs when business cycles change. It is constantly changing in scale and composition. Hidden is represented by artisans, farmers and part-time workers. And chronic unemployment is permanent and massive.
Frictional unemployment is a mismatch in the timing of transitions of workers from one enterprise to another. It also happens when moving from one profession to another, from one industry to another. Frictional unemployment is, one might say, the most undesirable type of unemployment. People are looking for and waiting for work, moving from one locality to another, moving from one duty station to another.
Frictional unemployment is the lack of work associated with the objectively necessary movement of labor. It also happens with a change in the social status of the employee. Several situations can be considered in order to better understand what frictional unemployment is. Examples:
- dismissal to change profession;
- the employee moves to another area and, accordingly, he has to quit his job;
- desire to get a job in another companyin the same speci alty.
Unemployment has social and economic consequences:
1) Gross national product falls short of potential;
2) The qualification of an employee is lost over time.
During the natural rate of unemployment, we can talk about efficient employment, which means some correlation between unemployment and employment. It can be said that both high unemployment and full employment are contraindicated in the market system.
