Employment & Unemployment Syllabus Requirement: Employment/unemployment: Define, Trends in (inc...
Embed Size (px)
Transcript of Employment & Unemployment Syllabus Requirement: Employment/unemployment: Define, Trends in (inc...
- Slide 1
Employment & Unemployment Syllabus Requirement: Employment/unemployment: Define, Trends in (inc international comp) Explore causes Explore consequences Understand objectives of government economic policy Questions for Exploration: What is unemployment? How can we measure unemployment? Why is unemployment an economic issue? What causes people to be unemployed? What can be done to reduce unemployment? What have the trends in unemployment been over the last 20 years? How successful have polices to reduce unemployment been? Slide 2 Employment & Unemployment http://www.bbc.co.uk/news/ business-26255696 Slide 3 Employment & Unemployment http://www.bbc.co.uk/news/ business-26255696 Slide 4 Employment & Unemployment http://www.bbc.co.uk/news/10604117 Slide 5 Employment & Unemployment Unemployment in Britain: Use this link to build up a picture of unemployment in the UK over previous years Make a few key notes on: What is happening to unemployment overall Which regions have had high or low unemployment throughout Which regions have changed most Try to find out which groups of people are most affected by current unemployment. http://www.bbc.co.uk/news/10604117 Slide 6 Employment & Unemployment http://www.bbc.co.uk/news/uk/ http://www.bbc.co.u k/search/news/?q=U nemployment http://www.tradingeconomics.com/united- kingdom/unemployment-rate http://www.ft.com/cms/s/0/b238b 43e-6dbd-11e1-b9c7- 00144feab49a.html#axzz1p7Vb QScO http://www.statistics.gov. uk/hub/labour- market/index.html Slide 7 Employment & Unemployment Slide 8 Reading Refs: Smith, Pgs 119-120 & 159-162 Grant, Pgs 227-229 & 270-275 Objectives: Be clear about the extent of your understanding of the basic definitions: Labour Market Labour Supply Working Age Population Labour Force Unemployed Understand the meaning of other key terms in relation to unemployment Understand there are different causes of unemployment leading to different types of unemployment Slide 9 Employment & Unemployment Work in Pairs. Use your knowledge of key terms you know to suggest what the following terms mean: Labour Market Labour Supply Working Age Population Labour Force Participation Rate Unemployment Unemployment Rate Economically Active Economically inactive Seasonal adjustment Voluntary Unemployment Involuntary Unemployment Slide 10 Employment & Unemployment Work in Pairs. Use your knowledge of key terms you know to suggest what the following terms mean: Labour Market: Is made up of firms willing to employ workers and labour seeking employment. The demand for labour by firms is downward sloping with respect to wage (price of labour), while the supply of labour by households is upward sloping with respect to wage. Labour Supply: Availability of suitable human resources, both physical and mental, either in total or for in a particular labour market. The supply of workers with the specific skills or qualifications needed for particular types of work is affected by a country's education and training systems, and any past restrictions on entry to particular occupations Slide 11 Employment & Unemployment Population of Working Age: Everyone between 16-60/65 who is eligible and willing to work Labour Force: The potential suppliers of labour, who are participating workers or seeking employment People not counted include students, retired people, stay-at-home parents, people in prisons or similar institutions, as well as people not actively seeking work Participation Rate The proportion of the Population of Working Age who form the Labour Force ie decide to seek work, rather than staying at home or dropping out. This is affected by rates of pay, the availability of jobs, and the rules of the social security system, which determine how much income is available without working Slide 12 Employment & Unemployment Unemployment: is measured through the Labour Force Survey (an internationally agreed definition recommended by the International Labour Organisation - ILO) Unemployed people are those: 1. without a job, want a job, have actively sought work in the last four weeks and are available to start work in the next two weeks or; 2. out of work, have found a job and are waiting to start it in the next two weeks. Unemployment Rate: The headline unemployment rate is calculated by dividing the unemployment level for those aged 16 and over by the total number of economically active people aged 16 and over. Economically active is defined as those in employment plus those who are unemployed. Rate of Unemployment (%) = Number of Unemployed/labour force x 100 Slide 13 Employment & Unemployment Some further definitions: Economically Active: People aged 16 and over who are either in employment or unemployed. Economically inactive: People who are neither in employment nor unemployed. This includes those who want a job but have not been seeking work in the last four weeks, those who want a job and are seeking work but not available to start work, and those who do not want a job. Seasonal adjustment: A process of estimating regularly occurring seasonal effects and removing them from the raw data. Slide 14 Employment & Unemployment Voluntary Unemployment Caused when people choose not to accept a job at the going wage rate (this might be because they are better off on benefits and or working illegally Involuntary Unemployment Caused when unemployed people would accept jobs at the going wage rate but are not able to find jobs Slide 15 Employment & Unemployment Lesson 2 Objectives: Know the different types of unemployment Understand there are different causes of unemployment leading to different types of unemployment Relate types of unemployment to current economic climate Appreciate why unemployment is an issue for the government & economy but some more of a concern than others Slide 16 Employment & Unemployment What are the different reasons people might become unemployed? These form the different types of Unemployment : Voluntary Hidden Regional Seasonal Real Wage Demand Deficient/ Cyclical Structural Frictional Types of Unemployment Slide 17 Employment & Unemployment Frictional Unemployment: Occurs when members of the labour force are moving from one job to another or seeking a new job It reflects a natural part of job turnover in the labour market It takes time to search and find new employment and workers, even when there are plenty of vacancies and unemployed workers available How natural or normal is this type of unemployment in an economy? How much of a concern is this to the Government/Economy? What could the Government do to reduce the level of this unemployment? Slide 18 Employment & Unemployment Structural Unemployment: Occurs as a result of a mismatch between the skills of the unemployed and the requirements of the existing vacancies People do not always have the qualifications, skills or training to move to a different job It is linked to occupational immobility of labour Often occurs more heavily in certain regions because of the long-run decline of traditional industries Simply raising the level of aggregate demand in the economy will do little to alleviate the problem of structural unemployment How natural or normal is this type of unemployment in an economy? How much of a concern is this to the Government/Economy? What could the Government do to reduce the level of this unemployment? Slide 19 Employment & Unemployment Demand Deficient Unemployment/Cyclical: Associated with an economic recession or a sharp economic slowdown. Caused by lack of Aggregate Demand Also known as cyclical unemployment Occurs due to a fall in the level of national output in the economy causing firms to lay-off workers to reduce costs and protect profits. Although usually associated with recession it can also exist in the long run when the economy is constantly run below capacity Mainly a Keynesian view How natural or normal is this type of unemployment in an economy? How much of a concern is this to the Government/Economy? What could the Government do to reduce the level of this unemployment? Slide 20 Employment & Unemployment Hidden Unemployment: people who are interested in taking paid work but who are not classified as unemployed can occur when people have been unemployed long term and become so disillusioned they stop looking for work the poverty trap and the tax/welfare system can also increase hidden unemployment people would work but better off on welfare benefits How natural or normal is this type of unemployment in an economy? How much of a concern is this to the Government/Economy? What could the Government do to reduce the level of this unemployment? Slide 21 Employment & Unemployment Real Wage Unemployment: a form of dis-equilibrium unemployment that occurs when real wages for jobs are forced above the market clearing level traditionally, trade unions and wages councils are seen as the institutions causing this type of unemployment although evidence of this is limited How natural or normal is this type of unemployment in an economy? How much of a concern is this to the Government/Economy? What could the Government do to reduce the level of this unemployment? Slide 22 Employment & Unemployment Seasonal Unemployment: some jobs are only available on a seasonal basis, eg fruit picking it may however be the case that during the remaining months workers are not looking for alternative work and therefore are not unemployed those who are looking for work the rest of the year are therefore likely to be classified under another type of unemployment How much of a concern is this to the Government/Economy? How natural or normal is this type of unemployment in an economy? What could the Government do to reduce the level of this unemployment? Slide 23 Employment & Unemployment Regional Unemployment: Occurs when a significant concentration of