Monday, August 24, 2009

Types of Unemployment

Following are the different types of unemployment found in the world.

1. Structural Unemployment

In the modern world, man by himself hardly produces anything. Even the primitive man needed some elementary tools like the bow arrows to engage in hunting for earning of his livelihood. With the growth of technology and specialisation to needs much more capital with which to engage in productive activity. All these instruments of production constitute community’s stock of capital of a country; the entire addition of the labour force can not be absorbed in productive employment because not enough of instruments of production are there to employ them. The resulting unemployment is known as the structural long term or Marxian unemployment.

2. Seasonal Unemployment

Seasonal unemployment arises because of the seasonal character of a particular productive activity so that people become unemployed during the slack season. Pakistan agriculture is a seasonal occupation so that the farmers have not sufficient work to do during the slack season. Other examples of seasonal industry are the ice factories, the rice mills, the sugar factories etc. The solution has to be found in re-arranging the process of production, and, where this is not possible complementary and subsidiary jobs have to be created fort the people suffering from seasonal unemployment.

3. Frictional Unemployment

Frictional unemployment exists when men are temporarily out of work because of the lack of perfect mobility on the part of the labour. In a growing and dynamic economy, in which some industries are declining and other are rising and in which people are free to work whenever they wish, some volume of frictional unemployment is bund to exist. This is so because it takes sometime for the unemployed labour to learn new traders or to shift to new places, where there is demand for labour. Thus frictional demand for labour, but the unemployed workers are either not fit for the jobs in question or are not in the right place to meet this demand.

In frictional unemployment, workers are only temporarily unemployed, the reason being immobility of labour, the seasonal work, shortages of materials, break downs in machinery and equipment, ignorance of the job seekers etc.

We can not conceive of frictional unemployment, unless there is unsatisfied demand for labour some where in the economy. If in a country, the total demand, for labour fails short of the total supply of labour then the cause is not frictional but some other. Some action can be taken to minimize the harmful consequences of frictional unemployment by offering quick retraining facilities to unemployed, providing labour exchanges, and by arranging adequate social security measures to help the unemployed during the transition and by regulating in an orderly manner, the pace of technological change.

4. Cyclical Unemployment

Keynesian unemployment occurs due to business fluctuations. This is also called cyclical unemployment. It is so called because business depression occurs at more or less regular intervals. During times of depression, business activity is at low ebb and unemployment increases. Some people are thrown out of employment altogether, others are only partially employed. Advanced capitalist countries have been suffering from time to time from this type of unemployment. This type of unemployment arises not because of “too little capital” but because of “ too much capital” for a short while in relation to demand for goods and services.

We know that cyclical unemployment is due to the deficiency of effective demand so that we can fight this type of unemployment by boosting the level of effective demand. This can be done by raising the rate of investment or shifting the consumption function to the left.


2 Responses to “Types of Unemployment”

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July 18, 2012 at 12:27 AM

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