Unemployment:

Unemployment is the state of an individual looking for a paying job but not having one.

Unemployment occurs when a person who is actively searching for employment is unable to find work. Unemployment is often used as a measure of the health of the economy. The most frequently cited measure of unemployment is the unemployment rate. This is the number of unemployed persons divided by the number of people in the labor force.

Measuring Unemployment:

Types of Unemployment:

Frictional unemployment workers in between jobs Demand Deficient Unemployment. Lack of AD in economy (e.g. Recession)

Diagram showing fall in AD and lower Output which leads to higher unemployment

Structural Unemployment workers lack necessary skills or geographical immobility

Real Wage or Classical Unemployment wages above equilibrium

This occurs when wages are artificially kept above the equilibrium Voluntary Unemployment. workers prefer not to work Seasonal Unemployment Occur off season in many geographical area. Disguise Unemployment Lack of proper count. What kind of unemployment in Bangladesh: Rate of unemployment in Bangladesh is 5.1% (FY 2008-2009). Now a days in Bangladesh dominant by involuntary unemployment. Because the amount of job vacancy is very little against educated person. Our all educated person cannot get a job cause of job vacancy level is low. Bangladesh produce more and more well educated person every year but there are not created vacancy post against them. The other factor is there are population is increasing in a high rate but job vacancy is not increasing. We can find lot of educated and technical people in our population but we cannot use them properly. If we are unable to use them we lose our resource and much social violence is creating by them. To overcome from this situation we need to increase our industrial area and create more job vacancy against that people who are able and willing to work.

When Recession Created: When recession create in an economy then there create demand deficient unemployment or Keynesian unemployment. Because of in recession period economy loss demand, for the reason industry decreases their production. In this situation every industry cut their extra employee. Who lose their job they are unemployed. This unemployment called demand deficient unemployment.

When Technology Progress: When technology progress in an economy then there create a structural unemployment or technological unemployment. When technology upgrade then industry need to technology support people. Sometimes old employee can not adopt the new technology. In this situation industry remove the employee (Basically Privet sector). We can see now many industry use robot machine against man power (Labor). So lots of employee loses their job. Those employees are created Structural Unemployment.

Beggars: Yes, beggars are unemployment. They are not contributing in our GDP. This people are not participating in any productivity. They have no income. They get help from other. This people are not calculated in economical statistic. So we can say the beggars are unemployment.

Phillips Curve: The Phillips curve represents the relationship between the rate of inflation and the unemployment rate. Graphic description of the inverse relationship between wages and unemployment levels (higher the rate of change of wages lower the unemployment, and vice versa). Although its main implication is that a government has to strike a balance between the two levels, the relationship between the levels (in general) is not stable enough to reach an exact judgment. Also called tradeoff curve, it was invented in 1958 by the UK engineer and economist Albert William House go Phillips (1914-75). Phillips conjectured that the lower the unemployment rate, the tighter the labor market and, therefore, the faster firms must raise wages to attract scarce labor. At higher rates of unemployment, the pressure abated. Phillipss curve represented the average relationship between unemployment and wage behavior over the business cycle. It showed the rate of wage inflation that would result if a particular level of unemployment persisted for some time.

Bangladesh Cases: Rate of unemployment in Bangladesh 5.1% (FY 2008-2009)

Cause of unemployment in Bangladesh: Unemployment is common everywhere in the world. No country in the world is completely is free from it. So, Bangladesh is not exception from it. Rather, this problem is very serious in our country. Many people are badly suffering from the curse of unemployment.

There are many direct or indirect causes of unemployment. They are as follows: Our country is over populated. The rate of population growth is very high. So the present job facilities cannot keep pace with the growing population. Besides, our country is not developed in industries. They can absorb only a limited number of people. Again, our education system is very defective. It is traditional and depends on memorization. It does not make them self-reliant. There is less opportunity for vocational training. So, only the memorized bookish knowledge does not help them in the work field.

Moreover, our students have a false sense of prestige to become officers. They hanker after only for official jobs. So they remain unemployed. Then, there is serious lack of skilled manpower. This limits the scope of jobs. We have a lot of natural resources but we cannot use these properly. This also causes the problem.

Unemployed people fail to maintain themselves and their families. They lose their mental peace and social status. We know that an idle brain is devils workshop. So they commit many crimes. This is increasing social crimes and hampering social peace.

Relationship between inflation and unemployment: There has been an inverse relation between rate of inflation and the rate of unemployment in an economy. The more the entrepreneur extends the employment opportunity the more he has to pay to that particular factor of production and the more payment to factor of production the increase in the cost of producing a unit will be observed and in order to maintain the profitability of the product the entrepreneur will inflate the price of that product. A similar process will be observed throughout the economy when the government intends to create job. The price of products or services, where the workforce is installed, will increase hence an increase in the rate of inflation will be visible throughout the economy.

The Phillips Curve Demonstrates the inverse relationship between unemployment rates and inflation rates Assuming a constant short-run AS curve: Inflation rate Unemployment (when AD increases, there is a upward pressure on prices and UE therefore decreases) Inflation rate Unemployment (when AD decreases, there is a downward pressure on prices and UE therefore increases)

In Bangladesh rate of unemployment is increasing along with increasing rate of inflation from FY 2005-06 and thus the relationship between inflation and unemployment has become positive. Thus, the economy of Bangladesh is heading towards a two-way trap; as high inflation is creating income erosion and increasing unemployment rate is preventing access of general people into income source. On an average, workers are losing Tk. 384.04 per month of their

nominal earnings due to the effects of inflation in 2009 (till June).Decreasing scope of employment is triggering the poverty situation and creating inequality. Therefore, poor people are faced with a twin pressure of loss of income and scope of getting employed.

Inflation and Unemployment rate Surveys

Inflation in corresponding years (%) 8.3 6.7 2.79 4.38 7.17 7.31

Unemployment rate (%)

LFS,1990-91 LFS,1995-96 LFS,1999-2000 LFS,2002-03 LFS,2005-06 MES,2009

1.9 2.57 4.3 4.3 4.3 5.1