Unemployment: Causes, Forms, and Consequences

Unemployment is an economic phenomenon in which part of the working population cannot find work in their specialty
or cannot find a job at all.

The International Labor Organization (ILO) addresses unemployment issues, including accounting methodology and
terminology development.

Expanded Definition of Unemployment

In a general sense, unemployed people are those of working age (the working age framework is determined by national
statistical rules), who have been unemployed for a certain period of time (the period of time is also determined by national
standards and rules), are able to work (the concept of "work capacity" is regulated by national legislation in each country),
and are making efforts to find work but cannot find it.

Thus, to be considered unemployed, it is necessary to:

• Be of working age.

• Be unemployed for a certain period of time.

• Be able to work (for example, not be disabled, have legal capacity).

• Have a desire to work (be actively looking for work).

Causes of Unemployment

• Loss of Work: Involuntary termination of employment.

• Voluntary Quitting of Work: Choosing to leave a job.

• First Appearance on the Labor Market: Entering the job market for the first time.

Forms of Unemployment

• Frictional Unemployment: Occurs due to the time taken to find a job that matches one's skills and preferences.
  It is typically short-term and voluntary, such as during job searches after graduation, maternity leave, voluntary
  resignation, or relocation.

• Structural Unemployment: Results from economic shifts and technological advancements. Jobs and professions
  become obsolete, requiring retraining and new skills. This type of unemployment is long-term and involuntary.

• Cyclical Unemployment: Deviates from the natural unemployment rate and is most common during economic
  downturns and depressions. It usually disappears during economic upswings.

• Voluntary Unemployment: Occurs when individuals choose not to work because available jobs are low-paying
  or undesirable.

• Involuntary Unemployment: Happens when there is an excess supply of labor in the market.

• Institutional Unemployment: Arises from institutional factors affecting labor demand and supply. For example, high
  unemployment benefits may reduce the incentive to find a job.

• Regional Unemployment: Results from varying levels of economic development in different regions, leading to
  different unemployment rates.

• Stagnant Unemployment: Involves individuals living on irregular, random earnings.

• Technological Unemployment: Occurs when technological advancements reduce the need for labor.

• Hidden Unemployment: Common in planned economies, where an excessive number of people perform the same job.

Consequences of Unemployment

Unemployment has several significant consequences for individuals, society, and the economy:

• Economic Consequences:

  • Loss of Income: Unemployed individuals lose their source of income, leading to reduced purchasing power
    and lower standards of living.

  • Reduced Economic Growth: High unemployment rates can lead to decreased consumer spending, which in
    turn slows down economic growth.

  • Increased Government Expenditure: Governments may need to increase spending on social welfare programs,
    unemployment benefits, and job training programs.

• Social Consequences:

  • Increased Poverty: Unemployment can lead to higher poverty rates as individuals and families struggle to meet
    their basic needs.

  • Social Exclusion: Long-term unemployment can result in social isolation and exclusion from community activities.

  • Mental Health Issues: Unemployment can lead to stress, anxiety, depression, and other mental health problems.

• Personal Consequences:

  • Loss of Skills: Prolonged unemployment can lead to a loss of skills and work experience, making it harder for
    individuals to find new employment.

  • Reduced Self-Esteem: Unemployment can negatively impact an individual's self-esteem and sense of purpose.

  • Family Strain: Financial difficulties and stress associated with unemployment can strain family relationships.

Addressing Unemployment

To mitigate the negative effects of unemployment, various measures can be taken:

• Job Creation Programs: Governments and private sectors can invest in infrastructure projects, green energy, and
  other industries to create new jobs.

• Education and Training: Providing education and vocational training programs can help individuals acquire new skills
  and adapt to changing job markets.

• Support for Small Businesses: Encouraging entrepreneurship and supporting small businesses can create new
  employment opportunities.

• Unemployment Benefits: Providing financial assistance to unemployed individuals can help them meet their basic
  needs while they search for new employment.

• Labor Market Policies: Implementing policies that promote labor market flexibility, such as reducing barriers to hiring
  and firing, can help reduce unemployment rates.