Unemployment

Unemplyment - situation when people are willing and able to work and actively seeking for job, but they are unable to find it.

Employment - use of factors of production in the production processa and it refers to the labour force/resources.

Formal sector employment - refers to officially recorded employment, workers who pays taxes and contributes to country’s GDP.

276 str. minimum wage in Poland 2023 is 3490 zł gross / 22,80zł per hour

Labour force - people at working age who are employed or seeking for job, those who are avaliable for work at current real wages rates.

International Labour Organisation states that 15 is the minimum age to enter the job market. People who are full-time students are not considered as unemployed. A retirement aged in Norway is 67 so as in Italy, Iceland and Greece.

Claimant count - measure the number of people who are unemployed but actively seek for work and claim unemployment benefits.

Hidden unemployment/disguised unemployment- people who are not counted in the official statistics . e.g. discourage workers or underemployed.

Discourage workers are those who stop looking for a job because they were rejected too many times.

Volountarily unemployed - people who choose to do not take a full-time jobs.

Underemployment - a measure of employment and labor utilization in the economy that looks at how well the labor force is being used in terms of skills, experience, and availability to work. People are employed but they do not use their skills efficiently on the current workplace.

Measuring unemployment avoid disparities like:

  • regional disparities - different regions of county meet different disparities
  • ethnic disparities- ethnic minority groups tends to suffer from unemployment more
  • age disparities
  • gender disparities - female participation rate which measures the proportion of women who are economically active.

Cyclical unemployment/ demand deficient unemployment - Cause by economic downturn in the business cycle, caused by lack of AD which cause a fall in real national output. Lack of demand for particular goods and services. It results in mass jobs losses caused by recession because firms must to control costs and protect their profitability.

282 str. deflationary gap

Structural unemployment - when the demand for labour is less than a supply of labour in particular industry. Arise from the skills mismatch or change in geographical locations of the industry. Market demand different skills and qualifications.

Seasonal unemployment - caused by regular of periodical change in the demand for particular good and services at different times of the year. For example inc creak retailers, ski instructors, school bus drivers

Measure of unemployment is modified to account seasonal fluctuations in demand for certain goods.

Frictional unemployment - people who are temporarly unemployed while they are actively search for new job. For example people that quit in order to find a better job, people who take care of their children, those who retire early.

285 str. natural rate of unemployment

Costs of unemployment:

  • personal cost like stress, loe self-esteem, poverty, family breakdowns
  • social costs like crime and anti-social behaviour, indebtedness (unaffordable credit), social depravation (structural unemployment in specific regions cause crime, poverty and fallin hosue prices)
  • economic costs like loss of GDP, loss off tax revenue, increased cost of unemployed benefits, loss of income for individuals, greater disparities in distribution of income.

Disequilibrium unemployment occurs when there is a fall in demand for or quantity demanded of labour. This happens either in a recession, when wages are prevented from falling because of labour contracts, or when a minimum wage is implemented.

Disadvantages of unemployment :

  • less money from taxes
  • more government spendings
  • less efficiency of factors of production
  • lower GDP thus slower economic growth
  • increase of crime
  • depression