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Factors that lead to unemployment

Updated: May 9

Author: Varban Todorov Boev

Date of Publication: 24/05/2023


Unemployment is one of the biggest problems these days for many economies around the world. As a result of unemployment, various social and economic problems arise. There can be a decline in the economy, poverty, and high crime, which appears as a result of the lack of income. So, in this article, we will look at the factors that lead to unemployment.


Frictional Unemployment


Frictional Unemployement - Work Needed

Leaving the workplace


People quite often leave their workplace for various reasons. Some leave because they cannot cope with their tasks there, others because of stress. However, there are still others who do not need income at all so they just quit. So, with a continuous process of changing jobs, the rate of unemployment increases permanently.


Workers relocate


Another example of Frictional Unemployment is workers relocation. Especially in poorer economies, people often move to other cities and countries for better pay and living. This leads to higher unemployment because it often takes time to find a job in a new place.


Enter the workforce


Most often, young people who have graduated from college or university take time to find a suitable job. This is due to a lack of experience and knowledge. Therefore, this is one of the most common reasons for unemployment among young people.


Re-enter the workforce


Another reason for unemployment can be because of job seekers who re-enter the workforce. Such situations usually happen to people who have not worked for a certain period because they were raising children or were sick and could not work.


Structural Unemployment


Advances in technology


This is when people lose their jobs and professions because a robot or other technology can do their job. This problem is expected to become more serious in the future.


Advances in Technology

Job outsourcing


Many companies outsource their production to other countries. They usually move it to a country where there is cheap labor and thus save costs. This leads to an increase in unemployment in some countries.


Cyclical Unemployment


Demand-deficient unemployment


This usually occurs when there are more people in a particular occupation than there are jobs available. For example, if a country has too many graduates in economics, it is very likely that these people will be unemployed. This is because there are not enough jobs available to them.


In conclusion, it is important to understand that unemployment is a natural part of the economy of any country. So, it is completely normal to deal with it at some point. Therefore, people should be able to get a good education on it. Also, national governments should take adequate political and economic measures to keep the unemployment rate low.


 

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