Study of UK Level of Unemployment

Question: Discuss about the Study of UK Level of Unemployment. Answer: Introduction This essay mainly concerns UK level of unemployment. In this course of study I have highlighted the trends in the rate of unemployment since the year 2000 shown with the help of a diagram and various policy measures adopted by the UK government to reduce unemployment. This essay embodies the meaning of unemployment its types and stated why unemployment is a crucial word to be considered to have a smooth and healthy running economy. This study explains the calculation of rate of unemployment and various methods. Meaning of unemployment and its type: - Condition of unemployment is a condition when an individual looking for job is not able to find job. Condition of unemployment is usually used to measure o the health of the economy. It is necessary to know the no. of people who have work and those who dont have. Some People in school, some at home, handicap, or retired. These people are not included in employed people and are not counted for measuring rate of unemployment .It includes people actually searching a job or going to start a job are Considered unemployed.( Princeton, New Jersey) Types of unemployment: Cyclical unemployment: Cyclical unemployment prevails in case an individual loses his job during downfall in the business. Mainly it prevails when country produces less Gross Domestic Product (GDP). When the country produces less GDP for 6month or more, then it's in a slowdown. Structural unemployment: prevails when change in the markets or advanced technologies make the skills of certain workers outdated. Regional unemployment: this type of unemployment prevails when a worker is unable to shift his location. Classical unemployment: this type of unemployment comes when net earnings are kept higher than the market clearing wage rate, resulting excessive supply of labor. Seasonal unemployment: prevails in case there are seasonal variations in industries, especially construction industries that are affected by the weather. Frictional unemployment: prevails when lesser information prevents workers and employers to know each other. Voluntary unemployment: prevails whenever there are general changes in business activity. Why is unemployment not neglected: because if person is unemployed that means they dont have income and is unable to meet their basic needs and requirement .which affects our health and economy of our country. More people without job means more poverty that means they have limited or no access to goods and At the same time, unemployment has severe effects on gross domestic product of country because GDP is countrys monetary value .For example, an increase in construction jobs might show improving construction work. That is why unemployment rate is considered an indicator of economic growth. (Megan, M, July 8 2011) Consequences of Unemployment: Lesser production Loss of individuals earning Loss of tax revenue. Unequal distribution of income and wealth Unemployed individuals are individuals earning less who are not able to spend much money on goods n services. (Megan, M) Measuring unemployment in the UK Measurement of unemployment of a particular country at times proves difficult determining economic growth within an economy for several reasons. One- economist may disagree over what unemployment is, and how to measure it. Two-, individuals may either not wish it be known they are unemployed (i.e. not claim benefits) or on the other hand claim that they are unemployed when they are not. In the UK the two main measures of unemployment are: explained with the help of a chart below: The Claimant count method and ILO - Labor Force Survey ILO (International labor organization) Labor Force Survey: This is made using the ILO criteria to make comparison of unemployment. The method involves: Whether people are without work, want a work, have actually found work within few days, and are going to start work in the next few days. Labor Force survey knows from people whether they are working or not, and if they are searching for a job. Comprises of some people not counted for JSA, This method also helps in international comparisons. However some problems of labor force survey and Claimant count method makes it difficult to compare. (Economics online) Trends and Level of unemployment since 2000: shown in the diagram below The most important measure of unemployment is the unemployment rate. Calculation of the level of unemployment and it is calculated in percent by dividing the total number of individuals without work by all individuals doing job. During economic slowdown, usually a country has a high level of unemployment rate. (Trading economics) Various UK Government policies to reduce unemployment: Financial aid for Employment: Government gives financial aid to firms that run on the long-term. People without work will create a benefit for industries to increase their no. of labors. Employment financial aid may also be available for firm. Implementation of Fiscal and Monetary policies: One of the theories of unemployment highlights the fact that if monetary and fiscal policy does not show demand up then the country is not much expected to reach rate of employment which proves good for countries health. A growing economy provides work for people willing to start work. It also, provides employment vacancies for people not working and searching for work. , increased aggregate demand is not always to be met by employing more labor. Reduced wage system: The point is that Classical/real wage unemployment is caused by the Inability of wages to fall to their equilibrium level. Hence to improve this type of unemployment you have to take away the causes of reduced wage system such: Completely abolishing minimum wage system Reduction of Trade union allow to keep wages high for their members Excessive unemployment benefits that mean that workers and employers Are not allowing wages to fall because when they fall they may be at a similar level to unemployment benefit and there would be no incentive to work. Increase the Supply of Labor: when unemployment occurs due to the fact that many in the labor force are unwilling or unable to work (often due to inadequate or out of date skills). If people from the inactive labor force are transferred to the active labor force you will reduce the Natural rate of Unemployment known by another name as voluntary unemployment, which prevails when the economy is at full employment. By changing working age: This will help because people till the age of 17 should be allowed to continue to education and training and from 2015 until they turn 18 will continue in education or training. (Gov.UK, March 16 2016) Unemployment policies are designed to: Make skills better / Increase persons earning to make people hardworking at work place, give bigger benefit to search and take work. Increase the work and regional transferability of labor. Secure enough of demand to give more enough new jobs. Supports entrepreneurs, make way of generating new products advanced and high market demand result in providing improved work vacancies. ( Tejvan, P, November 14 2011) Conclusion The word unemployment is an alarming tone for the survival of the country. The only solution to end the level of unemployment is to prepare the youth towards the welfare of the county. Industrialization should be given top preference that would lead to employment opportunities for the youths by contributing stability to the country. Intense unemployment rate of a country results to social and economic problems in the country. Economic problems leads to less productivity, less income distribution, fallen tax revenues, less GDP rate etc. References: Princeton, New Jersey, 1942.The concept of unemployment, The Quarterly Journal of Economic,vol.57,no.1, pp. 1-30 Megan, M, July 8 2011.Why unemployment matter The Atlantic, Retrieved June 3 2016, from https://www.theatlantic.com/business/archive/2011/07/why-unemployment-matters/241658/. Tejvan, P, January 24 2016.The UK unemployment mystery, retrieved June 3 2016, from https://www.economicshelp.org/blog/6744/unemployment/the-uk-unemployment-mystery/ Economics online, Measurement of UK unemployment, Retrieved June 3 2016, fromhttps://economicsonline.co.uk/Managing_the_economy/Measuring_unemployment.html Trading economics, trends in level of unemployment of UK, Retrieved June 3 2016, from https://www.tradingeconomics.com/united-kingdom/unemployment-rate Tejvan, P, November 14 2011. Policies for Reducing Unemployment, Retrieved June 3 2016, fromhttps://www.economicshelp.org/blog/3881/economics/policies-for-reducing-unemployment/ Tutor2u.net, Unemployment Main Causes of Unemployment, Retrieved June 4 2016, Fromhttps://www.tutor2u.net/economics/reference/unemployment-causes-ofunemployment. Gov.UK, March 16 2016.Policy paper budget2016, Retrieved June 4 2016, from https://www.gov.uk/government/publications/budget-2016-documents/budget-2016.