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Summary Unemployment Essay
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Megan van den BergEconomics essay
Introduction
Unemployment occurs when a person who is actively searching for employment is unable to find work.
Types of unemployment
Frictional unemployment
Frictional unemployment occurs when a person is between jobs, or is looking for a job for the first time
(such as a school-leaver or student who has recently graduated).
It is supposed to last for a short period.
Cyclical unemployment
Cyclical unemployment is the result of cyclical changes or fluctuations in the economy.
During an economic recession, many workers lose their jobs.
When the economy recovers and starts to expand, these workers may find jobs again.
Structural unemployment
Structural unemployment occurs when the nature of the economy changes and the skills of the labour
force do not match the needs of the economy or the technology used in the workplace.
For example, South Africa has a shortage of engineers.
Structural unemployment can happen as a result of a number of factors: production methods and
techniques change, foreign competition increases, important industries change
Workers have to be re-trained or moved from one area to another where they can find work where
their skills and qualifications are needed.
Seasonal unemployment
Seasonal unemployment occurs when workers in a particular occupation are only needed for part of
the year.
For example, fruit farmers only use fruit-pickers and packers during the harvest.
Seasonal unemployment is common in the agricultural and hospitality industries.
Real wage unemployment
Real wage unemployment occurs when wages are set above the market equilibrium level.
This causes the number of job-seekers to exceed the number of jobs and there is therfore an excess
supply of labour.
Trade unions and minimum wage legislation are seen as the factors causing this type of
unemployment.
Additional part
Growth of production
If we increase the demand for goods and services, we have to increase production to satisfy this
demand.
This means more people have to be employed. This will reduce unemployment.
Encourage the development of small and medium-sized businesses: these businesses tend to use more
labour than large businesses. The government can encourage the development of entrepreneurial
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