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Overcoming unemployment Common to all types of unemployment measures include creation of new jobs by stimulating small and large businesses, and establishment of labor exchanges and other types of employment services (Verhaar & Jansma, 2014; OECD, 2010; Blustein et al., 2012).However, in general, effective implementation of methods to overcome unemployment requires identifying the factors that determine the supply and demand of labor for each particular form of unemployment.
By the end of 2013 there were nearly 202 million unemployed in the world, that is, about five million more than in the previous year (Nattrass, 2014, p. This especially harmed 74.5 million young people aged 15 to 24, which is a million more than in the previous year (Nattrass, 2014, p. If governments continue to do nothing and do not deal with the crisis of youth employment, stagnant unemployment and other problems of the labor market, this may lead to further social tensions.
Thus, unemployment is currently one of the most serious challenges that contemporary economies must overcome.
Partly, hidden unemployment is represented by people who stopped looking for work (Verhaar & Jansma, 2014, p. The reduction of unemployment is an extremely challenging task namely due to the existence of a variety of its types.
Theoretically, it is not possible to develop a common way of dealing with unemployment, and therefore any state is forced to use different methods to solve this problem, some of which are discussed below.
In turn, voluntary unemployment is related to the reluctance of people to work, for example under conditions of reduced wages.
Voluntary unemployment increases during economic boom and decreases in recession.Further in this paper, we will examine the main types of unemployment and produce recommendations on preventing the development of factors causing them.Major types of unemployment All working-age population that is not working, but is looking for job is considered unemployed.Also, there is a concept of “unemployment trap”, when a person’s income do not differ much, regardless of whether one works or not (due to deprivation of the right to appropriate compensation and fringe benefits, as well as significant payments of insurance premiums, etc.), which reduces a person’s interest to employment (Verhaar & Jansma, 2014, p. One of the key types of unemployment is structural unemployment which is caused by structural changes in the economy, such as changes in the structure of demand for products of different industries, consumer goods and production technologies, elimination of obsolete industries and professions (Nattrass, 2014).As a result, the structural mismatch occurs between the skills of the unemployed and demands of the available vacancies.The criteria for distinguishing the types of unemployment, as a rule, are the reasons for it.Thus, involuntary or unemployment of expectations occurs when an employee is able and willing to work at a given wage, but cannot find a job.Frictional unemployment is a phenomenon not only inevitable but also desirable, as it promotes a more rational allocation of labor and higher productivity.In addition, OECD experts (2010) distinguish institutional unemployment emerging in the case of state or unions intervention in setting the size of wage rates that differ from those that could be generated in the natural market economy, as well as marginal unemployment of poorly protected population layers and the lower classes, in particular unemployment among women, youth unemployment in a group of 18-25-year-olds, and unemployment among people with disabilities.Thus, unemployment entails a significant reduction in potential gross product and national income.According to Okun’s law the increase in actual unemployment by 1% compared to its natural rate leads to 2.5% loss of GNP, which further manifests in the reduction of total consumption, savings and investment, general increase of social burden and uneven distribution of unemployment costs among different population groups, and overall reduction of households’ welfare (Verhaar & Jansma, 2014, p. In addition, the rise in unemployment causes worsening of crime situation, worsening of growth dynamics of public interest in labor, as well as loss of qualifications of able-bodied citizens.