Economy and unemployment

Meet Sven. He just graduated from university. Now, he’s actively looking for a job, but so far… he hasn’t been able to find one. Sven is unemployed. Even when Sven finds a job he's qualified for and sends in an application, it takes a few weeks or months to get an interview, hear the results, and then sign a contract.

Getting a job takes time, so this is normal! As Sven transitions from being a student to being a worker, he is in a period of frictional unemployment. Other people who experience frictional unemployment include people reentering the labour market after taking time off, or people leaving an old job before starting a new one. This is Yuki. She worked at a small company, but then the economy slowed down and entered into a recession.

Her company lost a lot of business and reduced their workforce to save costs. A few months later, the company shut down completely. As a result of bad times in the economy, Yuki is now unemployed. She is experiencing cyclical unemployment. Fortunately for Yuki, the economy should soon bounce back, and cyclical unemployment will decrease.

And here is Carlos. He used to pick blueberries until one day his farm bought a mechanical harvester. Machinery replaced his job, and Carlos became unemployed. As technology advances and businesses change, old jobs disappear and new ones are created. People's skills do not always match the needs of the new demand.

This creates structural unemployment. People experiencing structural unemployment often need to find an entirely different type of work. They may need to go back to school or complete retraining. As a result, structural unemployment can last for long periods of time. Frictional, cyclical, and structural are the three main types of unemployment.

When too many people are unemployed for long periods, it can create problems in a society. When a person does not earn money, they may be at risk of poverty. And unemployment causes stress, which can have long-term impacts on a person’s physical and mental health. Unemployment also affects a country’s economy. When people aren’t working, the government cannot collect taxes from their wages.

This means there is less money available for social services in communities. Instead, the government must spend money supporting the unemployed. And when people aren't earning, they usually aren't spending. Demand for goods and services goes down, and this has a negative impact on the economy. Unemployment can be a serious issue, but there will always be some unemployment in society.

In fact, a certain amount is actually good for the economy! It’s a positive thing that people have the option to change their job if they want to! And many people who are frictionally unemployed are moving toward better, higher-paying jobs. Governments can lower levels of frictional or cyclical unemployment through economic plans. They can, for example, support the creation of new jobs by giving employers money to hire more workers.

As for structural unemployment, the only way a country could ever stop it would be to eliminate all technological advancement. That... isn’t realistic, and it would be harmful to jobs that rely on technology. It is unlikely that any society will ever reach zero unemployment. Instead, countries aim to have the lowest possible unemployment rate.

Many countries have systems in place to help support people who have become unemployed, such as providing them with temporary financial assistance. By supporting unemployed individuals in their job hunting and ensuring that everyone who needs a job is able to have one, the harmful effects of unemployment can be reduced.