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UNEMPLOYMENT

DEFINITION
Its need to define labour force in order to understand the concepts of unemployment such as
full employment, unemployment, unemployed,underemployement and discouraged worker.

1. Labour force

Defined as people from the total population above 16 years of age, who are nit in
institution, and who are either employed or unemployment but actively seeking
employment.

2. Full employment

Working labour force is employed to produce goods and services.

3. Unemployment
Labour force participants being available and willing to work but unable to find jobs.

4. Unemployed
People who are registered as able,available,and willing to work at the going wage rate
but who cannot find work.

5. Underemployment
Describe those who take on part-time jobs below their capability hut are seeking full-
time employment. Eg: a fresh graduate working as a salesperson in a supermarket.

6. Discouraged worker
Individual who wants to work but has been unsuccessful for a long period of time in
finding a job and who has consequently given up on seeking for jobs.

7. Part time workers vs Full time workers


Part time workers are those who work less than 35 hours a week than full time
workers.
TYPES OF UNEMPLOYMENT

1. Frictional Unemployment
 Temporary, normal (few month)
 Factor: Imperfect information in labour market
: Fresh graduates , between jobs
2. Cyclical Unemployment
 Long term
 Involuntary to serious problems, during recession
 Factor:⬇AD , ⬇output , firm shut down , unemployment ⬆

3. Structural Unemployment
 Changes in Technology, demand, ⬆import
4. Seasonal Unemployment
 Temporary unemployment
 Factor: wealth, festive, season and fashion.
CAUSES OF UNEMPLOYMENT

 Business Cycle

 Low aggregate demand

 Drop in aggregate supply

 High population growth

 Technology advancement

 Immobility of labour

 Lack of workforce information

 Minimum wages policy

 Political instability
EFFECT OF UNEMPLOYMENT

Economy

 Ruins the economic growth


 Wastage of production resources
 Fall in national per capital income

Individual

 Loss of live hood and income


 Loss of job skills
 Loss of confidence

Society

 Family Dispute
 Social problems
 Low standard of living

Government

 Threats to political stability


 Increase in criminal rate
 Drop in government revenue
 Squatters problems
 Social and political problems
 Decline of government development activities
METHOD TO CONTROL UNEMPLOYMENT

Monetary Policy
Commercial Bank
Individuals
Quantitative

 Deflation / unemployment
 Expansionary ( Supply of money increase)
 Minimum statutory reserves
 Minimum requirement of liquidated assets
 Buy government securities
 Decrease discount rate (loan)
 Reduce interest rate (savings)

Qualitative

 Selective credit control


 Reduce control on margin requirement
 Reduce control on credit mortgage
 Reduce control on credit instalment
 Special directive
 Moral persuasion

Expansionary Fiscal Policy  Tax increase Government, expenditure also increase

 Increase government expenditure


 Increase transfer payment
 Decrease tax
Direct control policy

Frictional Unemployment

 Disseminate labour market information

 Increase labour mobility

 Creation of new employment opportunities

 Encourage foreign investment

Structural and Technology Unemployment

 Upgrade of skills and technical education

 Increased investment in worker training

 Creation of more employment opportunities

Casual and Seasonal Unemployment

 Diversity economic activity

 Development of new land

Disguised / Hidden Unemployment

 Family planning in the long run

 Modernization of agriculture sector

 Improve level of education

Real Wage Unemployment

 Restrict labour union activity.

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