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DEFINITION
LABOUR
FORCE
People age 1664
Employed
Unemployed
but searching
for a job
Students,
homemakers,
retirees and
handicapped
people are
excluded

EMPLOYMENT

Total amount
of labor force
involved in the
production of
goods and
services in an
economy

UNEMPLOYME
NT
Situation
where
someone of
working age is
not able to get
a job but is
actively
seeking for
employment.

STRUCT
URAL

DISGUIS
ED

SEASON
AL

UNEMPLOY
MENT

FRICTIO
NAL

TECHNO
LOGICAL

CYCLICA
L

STRUCTURAL
UNEMPLOYMENT

Fundamental shifts
in a structure of an
economy

Example: An
economy based on
agriculture to
industry

Long-lasting and
hard to tackle due
to the time
needed for
employees to be
trained

Example: Malaysia
was originally
based on
agriculture. Shifts
into industry in the
1980s

Seasonal
Unemployment

Due to changes in
the season

Doesnt last long.

Early preparations
can be made to
reduce the negative
effects of
unemployment

Ski resort unemployment is likely

to be higher in the summer when
there is no snow

Occur when people are

switching between jobs,
either because they
have been made
redundant or are
looking for new
employment
If the search takes too
long and mismatches
are too frequent, the
economy suffers.
Frictional
unemployment
Short-termed

Also know as normal

unemployment

Cyclical Unemployment

Overall demand for

goods and services in
an economy cannot
support full
employment. It occurs
during periods of slow
economic growth or
during periods of
economic contraction.

Unpredictable and longlasting

increases during a recession and

decreases during an expansion

During the Great Depression,

1929 to 1939 the
unemployment rate in North
America, Europe and other
industrial nations surged as
high as 25%

Considered to be part of
a wider concept known
as structural
unemployment
Technological
Unemployment
Occurs when
technological change
causes some workers to
lose their jobs

When labour saving

machines are introduced
into the productive
process, a firm can get
rid of workers and
produce the same
amount of goods than
before

Disguised Unemployment

Disguised unemployment
exists where part of the
labor force is either left
without work or is
working in a redundant
manner where worker
productivity is essentially
zero
An economy
demonstrates disguised
unemployment where
productivity is low and
where too many workers
are filling too few jobs

Disguised unemployment
exists frequently in
developing countries
whose large populations
create a surplus in the
labor force.