UNEMPLOYMENT.FINAL 1.doc

7/24/2019 UNEMPLOYMENT.FINAL 1.doc

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MACRO ECONOMICS

PROJECTANALYSIS REPORT

TOPIC: UNEMPLOYMENT

SUBMITTED TO: MR.AKMAL PASHA

GROUP MEMBERS: 1) SPOGMAY

SARDAR

2) TOOBA

USMANI

3) SHUMAILA

HUSSAIN ASIM

4) DARAKSHAN

WAJID

5) M.SHOAIB

6) HAIDER ALI

) WALEED


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A!"AL

CLASS: BBA#II $A)

DATE: 22%& DEC 2'1'

NEMPLOYMENT

Unemployment is a very complex phenomenon. It is rather easy to notice but

difcult to dene. Broadly, unemployment may mean lack o employment. Thus,

anybody who ails to work may be considered as bein unoccupied and thereoreunemployed or the concerned period. !rdinarily, the term unemployment denotes

a condition o "oblessness.

But it is not a comprehensive expression. Unemployment may be either #voluntary#

or involuntary#. $ases o voluntary idleness do not come under unemployment in

the true sense o the term. %irst, there are some unemployable who cannot work

due to old ae, disease or any other physical disablement &econdly, some people

may avoid work due to la'iness. They are unemployed not rom necessity but rom

choice. In this cateory we may include both the (idle rich( as well as the (idle

poor(, who may not like to work. Thirdly, there are some social parasites, like

thieves or pickpockets, who also may be voluntarily unemployed. It will be amisnomer to brin such cases o voluntary unemployment under #unemployment#.

Thereore, in modern times, by unemployment we usually mean cases o

involuntary idleness only. )ccordin to *eynes, (men are involuntarily unemployed,

i.........both the areate supply o labour willin to work or the current money

wae and the areate demand or it at that wae +ould be reater than the

existin volume o employment.( Unemployment has been more comprehensively

dened by ).. +auh. -e mentions ()n unemployed person is one who is able to

nd work or which he is ualied, under condition that are reasonable as "uded by

local standards.( Unemployment thus is a case o involuntary ailure to et income/

yieldin, ainul work.

The meanin o unemployment varies rom country to country. Unemployment in

the developed countries is di0erent rom the unemployment in this developin

countries. )s has been aptly observed by 1ro. 1.$. 2ahalanobis, (the concepts o

employment and unemployment as used in the advanced industriali'ed countries

are not meaninul in the case o household enterprises which constitute an


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overwhelmin proportion o productive activities in rural areas, in India and other

underdeveloped countries.

) sel/employed person helpin the household enterprise can never be unemployed

in the sense in which this, concept is used in the industriali'ed countries.( Thus in

the predominantly aricultural economies, where work is seasonal, intermittent andirreular, and a lot o unpaid amily labour is enaed, the traditional concept o

unemployment becomes a little vaue.

ver since the beinnin o the 34th century the concept o (ull/employment has

drawn the attention o economists, politicians and social reormers. But the

meanin o the term has been as controversial as that o unemployment. It is

indeed most difcult to say precisely, what is meant by ull/employment in di0erent

ways. But it was *eynes, who was mainly responsible or populari'in the concept o

ull/employment. &ome o these denitions may be uoted here.

In the words o Beveride, ull employment means (havin always more vacant "obsthan unemployed men, not slihtly ewer "obs It means that the "obs are at air

waes, o such a kind and so located that the unemployed man can reasonably be

expected to take them 5 it means by conseuence that the normal la between

losin one "ob and ndin another will be very short.(

Types of nemployment:

Economistsdistinguish between various overlapping types of and theories of unemployment,including cyclical or Keynesian unemployment, frictional unemployment, structuralunemployment and classical unemployment.Some additional types of unemployment that are

occasionally mentioned are seasonal unemployment, hardcore unemployment, and hidden

Though there have been several definitions of voluntaryand involuntaryunemployment in theeconomics literature, a simple distinction is often applied. Voluntary unemployment is attributed

to the individual's decisions, whereas involuntary unemployment exists because of the socio

economic environment !including the mar"et structure, government intervention, and the level ofaggregate demand# in which individuals operate. $n these terms, much or most of frictional

unemploymentis voluntary, since it reflects individual search behavior. Voluntary unemployment

includes wor"ers who re%ect low wage %obs whereas involuntary unemployment includes wor"ers

fired due to an economic crisis, industrial decline, company ban"ruptcy, or organi&ationalrestructuring unemployment.

n the other hand, cyclical unemployment, structural unemployment, and classical

unemployment are largely involuntary in nature. (owever, the existence of structuralunemployment may reflect choices made by the unemployed in the past, while classical !natural#

unemployment may result from the legislative and economic choices made by labour unions or

political parties. So, in practice, the distinction between voluntary and involuntary
http://en.wikipedia.org/wiki/Economicshttp://en.wikipedia.org/wiki/Unemployment#Cyclical_or_Keynesian_unemploymenthttp://en.wikipedia.org/wiki/Unemployment#Cyclical_or_Keynesian_unemploymenthttp://en.wikipedia.org/wiki/Frictional_unemploymenthttp://en.wikipedia.org/wiki/Structural_unemploymenthttp://en.wikipedia.org/wiki/Structural_unemploymenthttp://en.wikipedia.org/wiki/Classical_unemploymenthttp://en.wikipedia.org/wiki/Classical_unemploymenthttp://en.wikipedia.org/wiki/Frictional_unemploymenthttp://en.wikipedia.org/wiki/Frictional_unemploymenthttp://en.wikipedia.org/wiki/Political_partyhttp://en.wikipedia.org/wiki/Economicshttp://en.wikipedia.org/wiki/Unemployment#Cyclical_or_Keynesian_unemploymenthttp://en.wikipedia.org/wiki/Frictional_unemploymenthttp://en.wikipedia.org/wiki/Structural_unemploymenthttp://en.wikipedia.org/wiki/Structural_unemploymenthttp://en.wikipedia.org/wiki/Classical_unemploymenthttp://en.wikipedia.org/wiki/Frictional_unemploymenthttp://en.wikipedia.org/wiki/Frictional_unemploymenthttp://en.wikipedia.org/wiki/Political_party


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unemployment is hard to draw. The clearest cases of involuntary unemployment are those where

there are fewer %ob vacancies than unemployed wor"ers even when wages are allowed to ad%ust,

so that even if all vacancies were to be filled, some unemployed wor"ers would still remain. Thishappens with cyclical unemployment, as macroeconomic forces cause microeconomic

unemployment which can boomerang bac" and exacerbate these macroeconomic forces.

The nature, intensity, implications and dimensions o that problem o

unemployment in an advanced industrial country are not the same as in India. ven

within a country the problem will vary rom one reion to another reion, and be/

tween the urban and rural areas. &uch a classication, conseuently, helps us to

understand the nature o unemployment, pinpoint on the several issues involved

and suest appropriate policy measures.

Unemployment thus may be discussed broadly under several heads 5 678 &easonal

unemployment, 638 %rictional unemployment, 698 :isuised unemployment, 6;8

&tructural unemployment, 6isible or openemployment, 6b8 ducated unemployment, 6c8 %emale unemployment, etc.

1. S(*+%, U%(-,+/-(%0:

&easonal unemployment is o a amiliar and common type. It is caused by the time

pattern o a particular occupation. )ccordin to Beveride, (&easonal

unemployment means the unemployment arisin in particular industries throuh

seasonal variations in their activity brouht about by climatic chanes.( &easonal

unemployment occurs due to lack o productive work durin certain periods o the

year. $ertain industries or occupations are seasonal in character.

Take the case o ice/cream production, which has a peak demand durin the

summer. In the winter season, with a all in the demand or ice/cream, the demand

or labour enaed in its production also alls, and seasonal unemployment takes

place. &imilarly in the case o house buildin, bad weather causes a suspension o

work throwin the masons out o work. ) suar mill may be closed or a number o

months in a year, as the supply o suarcane stops. &easonal unemployment may

also be witnessed in the case o traditional and underdeveloped ariculture. %or

instance, in India, the cultivators tillin the unirriated lands very oten remain idleor 734 to 7


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unemployment is completely independent o the wishes o the workers or

employers a0ected.

Throuh the development o complementary and subsidiary industries and the

moderni'ation o ariculture that such unemployment can be controlled.

2. !0+%, U%(-,+/-(%0:

%rictional unemployment takes place due to the presence o economic rictions, or

bottlenecks. In a dynamic rowin economy constant chanes are takin place. &o

the actors o production have to adapt themselves with chanin circumstances. I

the actors o production includin labour were perectly mobile rom one mode o
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employment to another, there would be no unemployment. But in practice, there is

lack o eoraphical and occupational mobility. ?abour ails to adapt and ad"ust with

the chanes in the economy immediately. This leads to a malad"ustment between

supply and demand or labour. )s a conseuence o this there is unemployment.

%rictional unemployment is (due to the rictions that prevent the maintenance operect euilibrium in an ever/chanin world, and to the inevitable la that retards

the process o read"ustment.

%rictional unemployment may take place due to several reasons. %or example, it

may occur due to a chane in demand. &uch chanes in demand may take place

either due to a mere chane o consumer taste or ashion. It may also occur due to

economic proress, or introduction o new machinery and techniues. Thus when

computers are introduced to do the "ob o the accountants, the present accountants

would lose their "obs temporarily, till they learn how to operate the computers. Thus

as labour could not be immediately shited rom the #declinin@ to the #expandin@

industry, rictional unemployment may also occur when workers uit their present"obs to search or better "obs.

%rictional unemployment occurs or a temporary period only. -ence the presence o

rictional unemployment should not be considered as an unhealthy sin o the

economy. )ccordin to economists like *eynes and ?erner, etc. rictional

unemployment is compatible with the concept o ull employment, it 6rictional

unemployment8 is not a ma"or problem because employable persons seekin work

will not, as a rule, remain unemployed or rictional reasons or more than a ew

weeks or months.

3. D**(& U%(-,+/-(%0:

)s the word suests, disuised unemployment reers to a situation when a person

is apparently employed, but in e0ect unemployed. At is a phenomenon o concealed

unemployment, not visible to the open eyes. -ere it is not possible to identiy as to

who are unemployed, as all (appear to be workin.( )s urkse has remarked, (In an

overpopulated peasant economy, we cannot point to any person and say he is

unemployed in disuise. The people may all be occupied and no one may consider

himsel idle.(

The concept o disuised unemployment was oriinally conceived by 2rs. Coan

Dobinson. -er concept o disuised unemployment is more applicable to the

advanced developed countries. )ccordin to her, (a decline in demand or the

product o the eneral run o industries leads to a diversication o labour rom

occupations in which productivity is hiher, to others where it is lower. The cause o

this diversion, a decline in e0ective demand, is exactly the same as the cause o


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unemployment in the ordinary sense and it is natural to describe the adoption

occupations by dismissed workers as disuised unemployment.(

4. S00, U%(-,+/-(%0:

&tructural unemployment takes place because o a chane or deect in the

economic structure o a country. It occurs as a result o chanes in demand and

supply conditions or certain cateories o labour. )ccordin to Beveride, structural

unemployment means (the unemployment arisin in particular industries or

localities throuh a chane o demand so# reat that it may be rearded as a0ectinthe main economic structure o a country.(

?ipsey says, ()s economic rowth proceeds the mix o reuired inputs between

skilled and unskilled labourers chanes as do the proportions in which nal oods

are demanded. These chanes impose considerable demands or read"ustment on

the economy. +hen the ad"ustment does not occur ast enouh so that severe

pockets o unemployment occur in areas, industries and occupations in which the

demand or actors o production is allin aster than the supply, we speak o

(structural employment(. )ckley speaks in a similar vein, (The term #structural

unemployment# usually reers to the more serious and endurin limitations o

worker mobilityEusin the term mobility in the broadest sense to include mobilityas amon eoraphical locations as amon employers and industries and as amon

skills and occupations.

I the people would start sportin lon hair, the demand or hair cuts would

drastically decline. This would lead to lare/scale unemployment amon the

barbers. The aitation amon the barbers in the Indian metropolitan cities a ew

years ao is a case in point. &imilarly at present iron ore is exported to Capan


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throuh 1aradip port. &o an elaborate export industry has come up in the

neihbourhood. !nce this export is stopped, many people associated with export o

iron ore would be thrown out o employment.

&tructural unemployment may also be caused due to the absence o adeuate

ability, skill, or trainin on the part o workers, althouh there may by vacant "obsaround. &ometimes structural unemployment may occur due to relocation o

industries. 2yrdal has observed, lare/scale structural unemployment in the United

&tates is caused by the absence o "obs that could easily be done by such workers

as are released durin the process o technoloical development and by a la in the

ad"ustment o a hih percentae o youn and older workersEad"ustment in the

point o uality to the chaned labour demanded.

&tructural unemployment may also be seen in the overpopulated underdeveloped

countries. (This larely arises owin to disproportionate rowth o population in the

past 6thereby a continuous rise in labour orce in absence o mass/scale emiration8

in relation to capital ormation and employment opportunities in non/ariculturalpursuits. %rom this point o view even disuised unemployment may be considered

as a case o structural unemployment.

There are some distinct similarities between rictional and structural unemployment,

as both arise due to a malad"ustment between the demand or and supply o labour.

-owever, there are certain important di0erences between the two. %rictional

unemployment is o a shorter duration and takes place because o temporary

actors. -ence althouh the demand or labour may decline in certain industries this

all in demand is counterbalanced by a rise in demand in some other industries. In

case o structural unemployment, the deciency in demand or labour is more

permanent, extensive and deep rooted. The barriers to mobility are rather moreormidable.

)ccordin to Thomas :. &impson structural unemployment is more heavily

concentrated amon certain employment and demoraphic roups. It a0ects a

sinicant number o workers in certain occupations, industries, racial, and ae

roups, whereas rictional unemployment tends to occur more widely. &econdly,

structural unemployment is less voluntary than rictional unemployment. -owever,

as )ckley observes (structural unemployment di0ers rom rictional more in deree

than in kind.(

5. C/,, U%(-,+/-(%0:


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$yclical unemployment happens to be the most common type o unemployment in

an industrially developed capitalist economy. )ccordin to the classical economists,

in the lon run there would be a ull employment euilibrium. But in reality we nd

that a capitalist economy is characterised by alternate periods o prosperity and

depression, risin economic activity and employment and sluish business

conditions and allin employment opportunities. $yclical unemployment is also

popularly known as *eynesian unemployment, ollowin *eynes. *eynes has culled

this type o unemployment as involuntary unemployment. ?erner has termed this

unemployment durin an economic depression s deFationary unemployment.

6. T(%+,+, U%(-,+/-(%0:

Technoloical unemployment takes place because o rapid technoloical

improvements. Introduction o improved machinery and labour savin know/howhas a tendency to displace labour orce. 2yrdal cites the example o technoloical

unemployment in the )merican aricultural sector in the ties, when due to the

introduction o labour/savin techniues, the aricultural workers as part o the total

civilian labour orce declined rom 73#= to G#< per cent.

Introduction o improved technoloy in production will lower the capital/output ratio

and the labour/output ratio. This will increase the productivity o capital and labour,

causin technoloical unemployment. 1robably due to this reason, even now

introduction o electronic computers has always been viewed with suspicion by the

workers. In the initial periods ater the industrial revolution in nland, sometimes

labour riots broke out and machines used to be destroyed by the labourers, resistin

the introduction o machinery.

But is it necessarily true that mechanical improvements lead to displacement o

labour in the lon run H &ince the days o Dicardo, the e0ects o technoloical

advance on employment have led to a lot o controversy amon the economists.

2yrdal, however, observes (But it is perhaps worth statin as a well established
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historical experience that, takin the lon/term view and disreardin short

time and isolated exceptions, technoloical advance in the proressive

economies o the western countries has not enerally caused mass

unemployment.(

Thus durin a period o transition there may be unemployment. But acountry can ill/a0ord to ree'e the existin technoloical situation.

!ULL EMPLOYMENT:

&hort/Dun 1hillips $urvebeore and ater xpansionary 1olicy, with ?on/Dun

1hillips $urve 6)IDU8

In demand/based theory, it is possible to abolish cyclical unemployment byincreasin the areate demand or products and workers. -owever,eventually the economy hits an (inFation barrier( imposed by the our other

kinds o unemployment to the extent that they exist.

&ome demand theory economists see the inFation barrier as correspondinto the natural rate o unemployment. The (natural( rate o unemployment isdened as the rate o unemployment that exists when the labour market is ineuilibrium and there is pressure or neither risin inFation rates nor allininFation rates. )n alternative technical term or this rate is the )IDUor theon/)cceleratin InFation Date o Unemployment.
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o matter what its name, demand theory holds that this means that i theunemployment rate ets (too low,( inFation will et worse and worse6accelerate8 in the absence o wae and price controls 6incomes policies8.

!ne o the ma"or problems with the )IDU theory is that no one knows

exactly what the )IDU is 6while it clearly chanes over time8. The marin oerror can be uite hih relative to the actual unemployment rate, makin ithard to use the )IDU in policy/makin.

)nother, normative, denition o ull employment miht be called the idealunemployment rate. It would exclude all types o unemployment thatrepresent orms o inefciency. This type o (ull employment( unemploymentwould correspond to only rictional unemployment 6excludin that partencourain the 2cCobsmanaement stratey8 and would thus be very low.-owever, it would be impossible to attain this ull/employment taret usinonly demand/side *eynesianstimulus without ettin below the )IDUand

su0erin rom acceleratin inFation 6absent incomes policies8. Traininprorams aimed at htin structural unemployment would help here.

To the extent that hidden unemployment exists, it implies that ofcialunemployment statistics provide a poor uide to what unemployment ratecoincides with (ull employment(.

C*(* +7 %(-,+/-(%0

U%(-,+/-(%0 C*(* %& C+%*(8(%(*

There remains considerable theoretical debate reardin the causes, conseuences

and solutions or unemployment. $lassical, neoclassical and the )ustrian &chool o

economics ocus on market mechanisms and rely on the invisible hand o the

market to resolve unemployment.citation neededJ These theories arue aainst

interventions imposed on the labour market rom the outside, such as unioni'ation,

minimum wae laws, taxes, and other reulations that they claim discourae the

hirin o workers. *eynesian economics emphasi'es the cyclical nature o

unemployment and potential interventions to reduce unemployment durin

recessions. These aruments ocus on recurrent supply shocks that suddenly reduceareate demand or oods and services and thus reduce demand or workers.

*eynesian models recommend overnment interventions desined to increase

demand or workersK these can include nancial stimuli, "ob creation, and

expansionist monetary policies. 2arxism ocuses on the relations between the

controllin owners and the subordinated proletariat whom the owners pit aainst

one another in a constant strule or "obs and hiher waes. This strule and the

unemployment it produces benet the system by reducin wae costs or the
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owners. %or 2arxists the causes o and solutions to unemployment reuire

abolishin capitalism and shitin to socialism or communism.

)ccordin to the *eynesian economic theory, unemployment results rom

insufcient e0ective demand or oods and services in an economy. &ome believe

that structural problems and inefciencies in the labor market causeunemployment. !thers believe that reulations like minimum wae laws imposed

on the labor market lead to unemployment. &ome thinkers believe that

unemployment is a result o the law o demand and supply not bein applied in case

o employin people. ) decline in the demand or products or services o a company

does not result in the decrease in waes o the company employees. )nd this may

strike an imbalance in the economy.

Unemployed individuals have to o throuh a tiht economic crunch. They are

unable to meet their nancial obliations. This may lead to a decline in their

standard o livin. ?ack o unds is sure to have a deep impact on their expenses.

The conseuences o employment can be as rave as homelessness due to ailureo the unemployed individuals to repay home loans or pay house rents.

Underemployment is one o the serious conseuences o unemployment. !n losin

"obs, people are orced to take up "obs that do not bet their skills, experience and

educational ualication. The other ma"or conseuence o unemployment is anxiety

in the minds o the unemployed people. Unemployed individuals become

pessimistic about lie and may have to ace psycholoical problems resultin rom

mental stress.

?ord Cohn 2aynard *eynes wrote the Leneral Theory o mployment, Interest and

2oney as a solution to the problem o periodic unemployment aced by developed

industrial nations o the +est durin the reat depression o the thirties. *eynesiantheory sinles out deciency o e0ective demand as the ma"or cause o

unemployment and low level o income in industrial economy operations under a

laisse' aire system. :eciency o e0ective demand is a prominent eature o

economies underoin depression and in order to improve the level o e0ective

demand in an economy. *eynes suested policy measures like cheap money

policy, overnmentMs compensatory investment spendin, decit nancin and

other scal methods. In essence, thereore, *eynesian economics turn out to be

economics o depression applicable to developed countries. Its applicability in

underdeveloped countries is very limited. To uote Coan Dobinson5 N *eynesMs theory

has little to say directly, to the underdeveloped countries, or it was ramed entirelyin the context o an advanced industrial economy, with hihly developed nancial

institutions and a sophisticated business class.

Thouh *eynesian conomics has revolutioni'ed modern economic thinkin, it has

inherent weaknesses5

It is undamentally a capitalistic theory. It basically examines the determinants o


13/45

employment in a ree enterprise economy. Thouh *eynes suests overnment

intervention and controlled capitalism his theory ails to deal with the socialist

economic system. In communism, *eynes is as Dicardo.

*eynesian economics is, by and lare, characteri'ed as depressionary economics. It

was the outcome o the Lreat :epression o the Thirties. It suested policymeasures like decit nancin to solve the problem o unemployment in a

depressionary phase o the capitalist economy. In the era o inFationary situation,

the theory has not much validity.

*eynesMs theory deals with short/run phenomena only. It pays little attention to the

lon/run problems o a dynamic economy.

*eynesian theory is not strictly applicable to underdeveloped countries. *eynes

deals with the problem o cyclical unemployment. Underdeveloped countries have

the problem o chronic unemployment and disuised unemployment. *eynes

encouraed spendin and condemned savins.ButK poor countries need curbs onspendin and increase in savins or capital ormation and wide/scale investment to

break the vicious circle o poverty. In short, *eynesMs theory is not really NeneralO in

application as *eynes claimed.

!ne danerous practice is that the solution to lobal economic crisis and depression

in advanced capitalism was souht to be applied or solvin the economic crisis o

less developed countries. In act in the west there are aruments aainst *eynesMs

economics that it is not *eynesian economics but the &econd +orld war revived the

world economy. *eynesian revolution succeeded the industrial revolution as an

adhoc theory o counterin the industrial depression in Britain durin the thirties,

"ust beore the &econd +orld +ar, became the all/encompassin theory odevelopment. :ennis Dobertson at the out set o his $ambride lecturers, delivered

between 7P;


14/45

plans on the basis o these economic laws has created serious imbalances in their

economy and has kept them perpetually indebted, leadin to erosion o their

economic independence.

?ord Cohn 2aynard *eynes 6C.2. *eynes8 was a reat advocate o easy money policy

and abundance o credit or economic prosperity. *eynesian prescriptions ailed indevelopin countries due to inelastic nature o ariculture sector and hih inFation.

*eynes ound :.DobertsonMs ideas inconvenient and chose to inore it. )n

academically and theoretically sound thesis will not shy away rom an academic

debate. The relation between ariculture and industry does not orm a part o the

theoretical rame work o the Leneral Theory o *eynes. *eynes was hihly

intolerant o his critics and he had hih hope in capitalism and he could avoid

economists "umped into 2arxist band waon. Indian plannin was over inFuenced

by *eynesian school because o the economic experts trained in British Universities

or )nlo/&axon schools. In India :r.B.&.2inhas resined rom 1lannin $ommission

protestin aainst hih inFationary practice 6*eynesian model o decit

nancin8.But no one rom the academic world or 1lannin $ommission came to hissupport. It is o importance to note that decit nancin started with the

recommendation o the I2% in its report in 7P


15/45

by new machinery, then a all in ational !utput may not necessarily result.

Loss of personal income -Those not workin will encounter a allin their livin standards, as their income alls. The unemployed will have lesspurchasin power, and less disposable income. ! course, the dole may in

act provide more income than workin, and the increased ree time may beconsidered more valuable than workin, thouh this is in the extrememinority

I%&(0 E9(0*

* Negative Multiplier Eect - Unemployed individuals, asmentioned above, are not able to spend as much money on oods andservices, so a neative multiplier e0ect may result. %or example, localbusinesses may su0er as a result o recent "ob losses in an area, meaninthat purchases rom suppliers will all, and so on. 2any areas where lare "oblosses have occurred experience this e0ect, unless overnments intervene.

* Loss of tax revenue / ) all in income results in a all both indirect and indirect taxes. +hyH :irect taxes come rom waes, whilst indirecttaxes come rom the products those waes would have been spent on. )s aresult, overnments must either raise the level o tax on existin waeearners, or reduce overnment spendin 6or borrow, which is unpopular butnot necessarily always a bad idea8. Both policies have a depressive e0ect onthe economy.

* Society - Ineualities in wealth and income, and hih unemploymenthave been shown to be linked to neative social e0ects, such as hih crimerates in these areas. The lack o money to spend on private health care,healthy oods and livin, means that those who are unemployed oten leadless healthy liestyles and have less backup when thins o wron. )lso,children rom unemployed households oten have had poorer education andhold ewer skills than averae, upon enterin work, meanin that hihunemployment levels can be sel/perpetuatin throuh time.

E!!ECTS

COSTS:

Individual


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Unemployed individuals are unable to earn money to meet nancialobliations. %ailure to pay mortae payments or to pay rent may lead tohomelessness throuh oreclosure or eviction.G3J )cross the United &tatesthe rowin ranks o people made homeless in the oreclosure crisis are

eneratin tent cities.G9J Unemployment increases susceptibility tomalnutrition, illness, mental stress, and loss o sel/esteem, leadin todepression. )ccordin to a study published in &ocial Indicator Desearch, eventhose who tend to be optimistic nd it difcult to look on the briht side othins when unemployed. Usin interviews and data rom Lermanparticipants aed 7= to P; R includin individuals copin with the stresses oreal lie and not "ust a volunteerin student population R the researchersdetermined that even optimists struled with bein unemployed.G;J

:r. 2. Brenner conducted a study in 7PQP on the (InFuence o the &ocialnvironment on 1sycholoy.( Brenner ound that or every 74S increase in

the number o unemployed there is an increase o 7.3S in total mortality, a7.QS increase in cardiovascular disease, 7.9S more cirrhosis cases, 7.QSmore suicides, ;.4S more arrests, and 4.GS more assaults reported to thepolice.G


17/45

them to use their talents. Unemployment can cause underemployment, andear o "ob loss can spur psycholoical anxiety.

Social

)n economy with hih unemployment is not usin all o the resources,specically labour, available to it. &ince it is operatin below its productionpossibility rontier, it could have hiher output i all the workorce wereuseully employed. -owever, there is a trade/o0 between economicefciency and unemployment5 i the rictionally unemployed accepted therst "ob they were o0ered, they would be likely to be operatin at below theirskill level, reducin the economy#s efciency.

:urin a lon period o unemployment, workers can lose their skills, causina loss o human capital. Bein unemployed can also reduce the lie

expectancy o workers by about Q years GPJ

-ih unemployment can encourae xenophobia and protectionism asworkers ear that oreiners are stealin their "obs.P4J 0orts to preserveexistin "obs o domestic and native workers include leal barriers aainst(outsiders( who want "obs, obstacles to immiration, andor tari0s andsimilar trade barriers aainst orein competitors.-ih unemployment can also cause social problems such as crimeK i peopledon#t have as much disposable income as beore, then it is very likely thatcrime levels within the economy will increase.

Socio-!olitical

-ih levels o unemployment can be causes o civil unrest, in some casesleadin to revolution, and particularly totalitarianism. The all o the +eimarDepublic in 7P99 and )dol -itler#s rise to power, which culminated in +orld+ar II and the deaths o tens o millions and the destruction o much o thephysical capital o urope, is attributed to the poor economic conditions inLermany at the time, notably a hih unemployment rateP7J o above 34SKsee Lreat :epression in $entral urope or details.

ote that the hyperinFation in the +eimar republic is not directly blamed orthe a'i rise R the InFation in the +eimar Depublic occurred primarily in theperiod 7P37R39, which was contemporary with -itler#s Beer -all 1utsch o7P39, and is blamed or damain the credibility o democratic institutions,but the a'i party only assumed overnment in 7P99, 74 years ater thehyperinFation but in the midst o hih unemployment.


18/45

BENE!ITS5

Unemployment may have advantaes as well as disadvantaes or theoverall economy. otably, it may help avert inFation, which is arued to have

damain e0ects, by providin 6in 2arxian terms8 a reserve army o labour,which keeps waes in check.

-owever the direct connection between ull local employment and localinFation has been disputed by some due to the recent increase ininternational trade that supplies low/priced oods even while localemployment rates rise to ull employment.P3J

The inFation/htin benets to the entire economy arisin rom a presumedoptimum level o unemployment has been studied extensively. Beorecurrent levels o world trade were developed, unemployment was

demonstrated to reduce inFation, ollowin the 1hillips curve, or todecelerate inFation, ollowin the )IDUnatural rate o unemploymenttheory, since it is relatively easy to seek a new "ob without losin one#scurrent one. )nd when more "obs are available or ewer workers 6lowerunemployment8, it may allow workers to nd the "obs that better t theirtastes, talents, and needs.

)s in the 2arxist theory o unemployment, special interests may also benet5some employers may expect that employees with no ear o losin their "obswill not work as hard, or will demand increased waes and benet. )ccordinto this theory, unemployment may promote eneral labour productivity and

protability by increasin employers# monopsony/like power 6and prots8.

!ptimal unemployment has also been deended as an environmental tool tobrake the constantly accelerated rowth o the L:1 to maintain levelssustainable in the context o resource constraints and environmentalimpacts. -owever the tool o denyin "obs to willin workers seems a bluntinstrument or conservin resources and the environmentEit reduces theconsumption o the unemployed across the board, and only in the short term.%ull employment o the unemployed workorce, all ocused toward the oal odevelopin more environmentally efcient methods or production andconsumption miht provide a more sinicant and lastin cumulativeenvironmental benet and reduced resource consumption.P9J I so theuture economy and workorce would benet rom the resultant structuralincreases in the sustainable level o L:1 rowth.

&ome critics o the (culture o work( such as anarchist Bob Black seeemployment as overemphasi'ed culturally in modern countries. &uch criticsoten propose uittin "obs when possible, workin less, reassessin the cost


19/45

o livin to this end, creation o "obs which are (un( as opposed to (work,(and creatin cultural norms where work is seen as unhealthy. These peopleadvocate an (anti/work( ethic or lie.

P+,(* 0+ (&( U%(-,+/-(%0:Lovernment policies to reduce unemployment must be based upon the typesand causes o unemployment that are prevalent. It may be worth lancinback to that section to remind yoursel o the ma"or kinds o unemploymentKhowever, we will o into more detail in this section. Leneral policies such ascuts in direct taxes so should be e0ective across any kind o unemployment,as it increases the appeal o any "ob to any potential employee. Deal +aeUnemployment

This is unemployment as a result o a kind o market ailure, a ailure o thelabour market to respond to chanes in demand. I demand or workers rises,it is loical that they will demand reater real waes 6diaram8. &imilarly, idemand alls, workers should expect to su0er lower real waes or the samework. Unortunate thouh it may seem, that is the way the market worksADeal wae unemployment is usually caused by a combination o5

S0+% 0&( %+%* / ivin employees reater power overdecidin wae conditions with the threat o industrial action 6strikes etc.8+ith stron unions, rms will not be able to reduce waes when demand islow, leadin to bankruptcy 6unemployment8 or layo0s o workers

6unemployment8 @ W( ;*0


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!0+%, U%(-,+/-(%0

Demember, this is unemployment enerated throuh incomplete inormationo the labour market. This can be solved in two main ways. %irstly, increasin

the knowlede o the local vacancies throuh overnment unded #"obcentres# could reduce time between "obs. &econdly, increasin the incentiveto search or suitable "obs 6such as reducin unemployment benets andlower taxes on waes8 could serve the dual purpose o increasin incentivesto search or work, and makin more vacancies acceptable to theunemployed individuals.

C/,, U%(-,+/-(%0

It is worth notin that this orm o unemployment can also be known as*eynesian or demand/decient unemployment. !ver the economic cycledemand chanes, and reardless o how Fexible waes are, unemploymentwill rise o all 6diaram8. There are clear links between the rate o economicrowth and the level o unemployment. It is clear that in a depression,unemployment will rise, as demand or ood and services alls. This couldresult in a neative multiplier e0ect, without overnment intervention.1olicies to reduce the impact o *eynesian unemployment include5

I%(*(& +>(%-(%0 *(%&% #this includes reductions in taxes.Increased L will cause an outward shit in ):, and may create a multipliere0ect. Theoretically, overnment spendin to pay workers to di huetrenches and ll them in aain will help, as it increases national income.-owever, tareted policies to increase the uality o inrastructure or levelso investment will be more e0ective. )lso, reductions in direct taxes willencourae more people into work, and also increase the level o disposableincome, hopeully leadin to a positive multiplier e0ect @ Deduction o interest rates / remember that a all in interest rates canalso stimulate ):. Deturn to that section to remind yoursel that a all ininterest rates encouraes consumption and investment

G(+, U%(-,+/-(%0:

aturally, policies to reduce eoraphical unemployment will seek todecrease eoraphical immobility o labour. This is the inability o people torelocate rom areas with low demand or labour, to areas with hih demandor labour. 1olicies to reduce eoraphical unemployment include5

@ R(+%, I%(%0>(* #this is reional policy to increase the incentivesor new businesses to locate in areas o hih unemployment, thus reducinreional variations in unemployment caused by eoraphical immobility


21/45

R(&% (+, --+?,0/ #is the second and more directmethod o combattin eoraphical unemployment. It aims to reduceeoraphical immobility by reducin barriers to ree movement o workers6such as no border controls and cheap housin8. This is more difcult within acountry as the barriers are oten social in nature, such as amily ties.

S00, U%(-,+/-(%0

This is the inability o workers to chane the kind o employment 6orexample rom manuacturin to IT8 they are in. ?et without intervention, thiscould lead to danerous lon term unemployment, whereby workers nd itincreasinly difcult to nd "obs as they become less desirable the lonerthey are unemployed. 1olicies to reduce occupational unemploymentinclude5

R(0%% # incentives or both companies to retrain and employees to

take part in trainin to make them more attractive and useul to rms.Lovernments may also directly take part in retrainin pro"ects whereunemployment levels as a result o structural unemployment are very hih R(&% (+, --+?,0/ #could result in no need or

retrainin prorams, as worker could simply move to an area in which their

skills are in hih demand. This works providin the costs associated with

reducin eoraphical immobility are lower than those reuired or

occupational/orientated pro"ects such as retrainin, and that their skills are

in demand somewhere.

H+= * U%(-,+/-(%0 M(*(&@

2acroeconomic unemployment is typically measured and comes to be knownrepeatedly as unemployment rate. But what exactly is unemployment rateH-ow is it measureH

The unemployment rate 6UD8 expresses the number o people unemployedas a percentae o the labor orce 6?%8.

+ith labor orce 6?%8 comprisin o all unemployed 6U8 and employed 68people, that is,

?% U V

we have unemployment rate or UD, expressed as

UD U ?% @ 744S


22/45

In a case o 744,444 people in the labor orce and 74,444 o whom areunemployed 6lost "obs and actively seekin one8, the unemployment ratewould be calculated as

UD U ?% @ 744S 74,444 744,444 @ 744S 74S

In addition to labor, land and capital can also be unemployed. +ith a littlecommon sense, we would expect that a hih unemployment rate o laborwould result in a low level o utili'ation o capital, land and other orms oproduction actors, simply because men are the operators that make thesethins work or the economy and produce economic value. I more men arelaid o0 their work, more resources are let to rot rather than utili'ed inproduction.

In case you are conused with concepts like labor orce, not in labor orce,

employed or unemployed used in this section, please reer back to thebeinnin section +hat is unemployment anywayH or clarication. )nd ithereMs no problem we will have a look at the compositions o both the adultpopulation and the labor orce o United &tates in 344= below to have abetter rip o where unemployment stands in the economy.


23/45

U%(-,+/-(%0 % D(>(,+(& %&

D(>(,+% +%0(*

The developedadvanced countries have developed economies. They havetechnoloical improvements, excellent roads, a steady overnment etc. Thislevel o economic development usually translates into a -ih L:1 per capita6averae income8, Lood education, Lood health/care, and :eath W birth rateare almost the same.Those countries with well developed industries,hih proportion o theirpopulations livin in urban areas and ariculture which is likely to be hihlymechanised and with little or no subsistence armin is called :evelopedcountries.

+e took Capan as a developed country or unemployment.

ECONOMY O! JAPAN:

The (+%+-/ +7 J% is the third larest in the world ater the United&tates and the 1eople#s Depublic o $hina but ahead o Lermany at ;th.)ccordin to the International 2onetary %und, the country#s per capita L:1was at X93,=4Gor the 39rd hihest in 344P.

%or three decades rom 7P=4, Capan experienced rapid economic rowth,which was reerred to as the Capanese post/war economic miracle. +ithaverae rowth rates o 74S in the 7P=4s,


24/45

&ubseuently, the lobal nancial crisis and a collapse in domestic demandsaw the economy shrunk 7.3S in 344G and


25/45

T&(

+%*0+%*

)1$, +T!, !$:, L/34, LGand

others

S00*0*

GDPX


26/45

0%(* *oreaG.79S,Taiwan=.3QS, -on

*on


27/45

) developin country normally has comparatively low level o aZuence andmore unemployment rate. In developin countries, there is low per capitaincome, poverty, less education level and low capital ormation. &uchcountries are htin to et these thins, but miht not have reached them.These countries are usually su0ered rom war, disease, poverty, natural

disasters, etc.

+e took 1akistanas our developin country or unemployment.

ECONOMY O! PAKISTAN:

The unemployment rate in 1akistan was last reported at


28/45

Unemployment is one o the biest problems o 1akistan. That person isunemployed who has ability to do work and is willin to do work but is unable to et

"ob opportunity. In the current situation more than 94 lakh people are unemployed

in 1akistan and unemployment ratio is more than 73S.

REASONS !OR UNEMPLOYMENT:. The biest reason o unemployment in 1akistan is concerned with thebackwardness o ariculture sector. )riculture is the biest sector o our economy

that contributes 34.PS to L:1 and ;;S people et "obs rom this sector directly or

indirectly. Unemployment in this sector is rom two sides.

%irst is due to the adoption o latest machinery and capital intensive technoloy.

:ue to this, demand or labour has been decreased. &econd is the backwardness o

this sector. There is less availability o ertilisers, pesticides, uality seeds, absence

o land reorms and lack o ariculture education. :ue to all these actors

ariculture sector is not expandin and there is eneral and disuisedunemployment.

.Industrial sector is the second larest sector o our economy and contributes7PS to national income. This sector should employ a lare number o labor. But due

to backwardness it is employin a small number o people. :ue to electricity


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breakdown already established industry is deterioratin, resultin in the prevailin

unemployment ratio.

.-ih cost and low uality are responsible or less demand or our ari andindustrial items. Because o less demand o such kinds o oods both the domesticand international producers are losin their interest in production. ThatMs why

people are becomin unemployed.

>. In 1akistan education system is deective. There is no educational plannin. Thissystem is producin the stu0, which is useless in technical elds o the country.

There is lack o technical and vocational institutions. 1ublic attitude towards

education is wron, they want to et their derees in eneral and arts sub"ects.

obody can set up his own business without technical education.

>. 2illions o people in 1akistan are poor. :ue to poverty people are overburdenedwith expenditures and their savins are very low. It is said that or the reasonable

rowth o economy savin rate should be at least 3.In 1akistan ma"ority o the businessmen are less educated. They do not knowhow to run their businesses properly. &o they become bankrupt. This actor

enerates unemployment on a massive level.

>. In 1akistan there is lack o every kind o plannin. There is a hue di0erencebetween the demand and supply or labor. There is absence o such kind o plannin

to produce doctors, enineers, technical experts scientists etc, accordin to theneed o di0erent sectors o the economy.

>.?oad sheddin o electricity is disturbin economy, especially the industrialsector. :ue to less availability and hih rates o basic inputs like electricity, as and


30/45

oil etc, many industries have been closed.

. In 1akistan, tax system is not satisactory. Datio o direct taxes is more than

indirect taxes. Tax evasion is common. :ue to less income rom the taxes,overnment cannot start developmental pro"ects. I there is no investment, then

rom where public would nd "obs. !n the other side i overnment takes step to

increase indirect taxes, it would also a0ect investment and ultimately employment

level.

. $urrent international nancial crisis is one o the biest reason ounemployment in 1akistan and in the whole world. This crisis oriinated rom the

bankin sector o U&), U* and some uropean countries and is now a lobal

phenomena.

.1akistanMs population rowth rate is 7.GS which is the hihest in the reion.!ur resources are limited. :i0erent sectors o economy are unable to provide "obs

to the rowin population. &o there is unemployment.

. %iscal and monetary policies are also responsible or unemployment. In view oscal policy, 1akistan has less unds to invest in "ob providin pro"ects. very annualbudet shows decit. Throuh the monetary policy i the overnment increases the

rate o interest, it discouraes the investors rom ettin loans.

.1olitical instability, bad law and order situation, armyMs intererence, bombblasts, terrorism, inconsistent economic policies etc are the actors which are

disturbin domestic and orein investment. 1akistan investors are takin away

their money to :ubai and other countries o the world.

>. :ue to P77 incident, Lul war and the baseless alleations o terrorism theimae o 1akistan has been a0ected very badly at international level. &o in the

current scenario 1akistan has limited "ob opportunities in other countries o the

world.


31/45

>. $ra'e or work only in overnment sector, instead o private sector andseasonal rms, industries are also responsible or unemployment.

>. &ince 7P;Q, 1akistani rulers ot loans rom I2%, +orld Bank and many othersources. &uch loans were not utilised honestly. $urrent external debt o 1akistan is

more than


32/45

reerred to as under/employment, in our ariculture. ?astly, the uncertainty and

vaaries o 1akistani 2onsoons render the ariculturist unemployed whenever the

crops ail. That is why the 1akistani ariculture is said to be a amble o the

2onsoon. :ue to all the above reason, the state o unemployment in ariculture is

rowin worse every day.

)s ar as the causes o industrial unemployment are concerned, rstly our industrial

system is unable to absorb the rowin population, because the industrial

development is not commensurate either with the vast resources o the country or

with the rowth o its population. &econdly, the location o industries is deective

and uneconomic. There is overcrowdin in certain areas which results in the rise o

cost o production. I the eoraphic distribution o the industries had been

rationally planned, the industrial structure would have been more economical and

its capacity or employment would have increased tremendously. Thirdly, the

periodic occurrence o depressions in the industry brins about unemployment.

%ourthly, the export industries have not been able to maintain their hold on orein

markets. Thus there has been a decrease in employment in the export industrieswhich is transmitted to other industrial sectors.

The remedy or industrial unemployment lies in steppin up industrial efciency.

)lso the scope or the developin various industries is immense. )riculture is

already over crowded and so are the liberal proessions. Thus industry is the only

hope or rootin out unemployment rom the country. To achieve this, a complete

overhaulin, re/orientation and rationali'ation our industrial system is needed.

-abib/ Ur/rehman is a career adviser and helpin 1akistani students about $areer

!pportunities in 1akistan.

UNEMPLOYMENT IN GERMANY:

The unemployment rate in Lermany is expected to rise steeply in 3474, even as the

business elite and the overnment prepare lare/scale cuts in social spendin and

other attacks on the workin class.

)s the %ederal mployment )ency 6B)8 reported in urember last Tuesday, the

number o unemployed in Lermany rose slihtly to 9.9 million people in :ecembero 344P. But the ederal overnment and labour market experts oresee a climb to

;.7 million this year as the overnmentMs extension o its short/time work allowance

scheme, which has enabled rms to avoid sackin workers, expires.

&hort/time workEthrouh which companies compel employees to take holidays


33/45

while the rms receive subsidies rom the ederal labour ofceEtoether with the

"ettisonin o overtime and the imposition o Fexible work schemes prevented

unemployment rom risin dramatically last year. In 2ay 344P, the B) calculated

there were 7.< million short/time workers. )t the end o the year, it estimated there

were still about a million. The B) expects the number to be halved to


34/45

6&1:8, oblies the current overnment to reduce new debt rom almost ]744 billion

this year to ]74 billion by 347=.

%inance 2inister +olan &ch^uble 6$:U8 is soon to launch a riorous austerity

proram. In an interview with the )1: news aency, he said that Lermany needs to

adopt a Nundamental chane o course towards a robust and sustainable nancial

policy that takes into account the reuirements o uture enerations.O -e stressed,

NThat wonMt happen without spendin cuts.O

)lthouh the $:U/$&U is reluctant to speak about the planned attacks openlyEat

least until the state elections in orth Dhine +estphalia in 2ay this yearEother

parties and interest roups are already oin on the o0ensive.

The %:1 is insistin on urther tax reductions, especially or top earners. It calls or

compliance with the overnin coalitionMs accord, which settled on annual tax relie

o about ]3; billion. )s the NliberalsO 6%:18 cater openly to bi business and top

earners and were elected by wealthier layers, they do not eel oblied to conceal

their aenda rom the unemployed and the poor.

In an interview with -amburMs )bendblatt newspaper at the beinnin o this

month, %:1 parliamentary raction head Birit -omburer demanded adherence to

the planned tax reduction, stressin at the same time, N+e will maintain the debt/

brake.O To achieve this, she said, permanent cost/cuttin measures would have to

be incorporated into the ederal budet.

&he suested that cuts be made Nor example, in the budet o the %ederal

mployment )ency or the 2inistry or %amilies.O The %:1 is proposin a Nper capitapremiumO or health insurance, i.e., the same ee or every contributor. ) manaer

will pay exactly same amount as his servant or chau0eur, and members o a

contributorMs amily will no loner be included in his or her insurance ree o chare.

+olan %ran', chairman o the ederal overnmentMs council o experts or the

assessment o overall economic development 6the so/called Nve wise menO8, was

already demandin at the end o last year a reduction o the basic Unemployment

Benet II payment 6the combined unemployment and eneral social support

entitlement8 rom the current ]9


35/45

retention on the council, which he has headed since last year.

)n interview in the &_ddeutsche \eitun with Inrid &chmidt, president o the

%ederal ?abour $ourt, in which &chmidt deends sackins or trivial o0ences, should

also be seen as preparation or new attacks on social welare. &chmidt sinalled to

the business community that the hihest court o industrial law was on its side.

The heads o business personnel departments will be pleased to hear such clear

words rom the mouth o the president o %ederal ?abour $ourt. +hen they sack a

worker in the comin months, they will be able to do so without havin to pay

compensation. )ccordin to &chmidtMs remarks, reason or dismissal will be easy to

nd5 a screw or biro taken homeK a photocopy, telephone call or ax made or

private purposesK the NstealinO o electricity used to listen to a radio or chare a

mobile phone battery.

The "udiciary has lon done its best to maintain the appearance o non/partisanship.

But the more the social and political crisis sharpens, the more openly it reveals its

class characterEas it did durin the +eimar Depublic.

+hen it comes to its own o0ences, the corporate elite are not so severe. &pieel

!nline reported a "udment handed down by the -iher Deional $ourt o $elle that

Nuashed the dismissal without notice o a business executive suspected o havin

used a company credit card to pay or private purchases amountin to about ]G9.

The reason or this5 &uch an insinicant amount cannot "ustiy an irreular

dismissal.O

2eanwhile, compensation or outoin manaers in 344P reached record heihtsdespite the economic crisis. +endelin +iedekin, the retirin head o the 1orsche

auto concern, whose business and stock market speculation almost ruined the

sports car producer, received a record compensation o ]olkswaen.

The railway executive -elmet 2ehdorn was iven compensation amountin to ];.Pmillion when he was compelled to resin or abusin his employeesM riht to data

protection.

2illions o workers are bein made to eel the painul e0ects o the economic

downturn rst hand. )t the same time, the political parties and bi business lecture

workers on the need to economise and tihten their beltsEa classic example o the

Lerman proverb5 N1reachin water, while drinkin wine.O )s the crisis mounts,


36/45

society is showin its true class character.

WHY IS IT LOWER IN GERMANY@

The administration has arued that the more enerous unemployment/insurance

proram could not have had much impact on the unemployment rate because therecession is so severe that "obs are unavailable or many people. This perspective is

odd on its ace because, even at the worst o the downturn, the U.&. labor market

eatured a tremendous amount o turnover in the orm o lare numbers o persons

hired and separated every month.

%or example, the Bureau o ?abor &tatistics reports that, near the worst o the

recession in 2arch 344P, 9.P million people were hired and ;.Q million were

separated rom "obs. This net loss o G44,444 "obs in one month indicates a very

weak economy // but nevertheless one in which 9.P million people were hired. )proram that reduced incentives or people to search or and accept "obs could

surely matter a lot here.

+hile the )merican labor orce strules with nearly 74 percent unemployment,

Lermany#s most recent ure o Q.= percent unemployment sinals more ood

news or the larest economy in urope5

The Lerman unemployment rate was stable in )uust at Q.= percent o the

workorce, ofcial ures showed on Tuesday as the number o people seekin work

eded slihtly lower to 9.7GG million people.

(The clear rebound o the Lerman economy continues to translate positively onto

the "obs market,( a labour aency statement said.


37/45


38/45

H+= %(-,+/-(%0 -* + &,/ ,>(* %&0( (+%+-/@

&imple with this one. ?ost o income or individuals and outputs or economywould come up rst as the costs o unemployment.

%or individuals and households, unemployment orces them to curtail theirconsumption drastically and perhaps liuidate some o the assets R oten at aloss R to meet nancial obliations. )ll these have neative impact on thewhole economy.

%or economy as a whole, unemployment reduces the output o oods andservices that could otherwise have been produced by unemployed labororce. )n economy is producin substantially below its potential iunemployment rate is extremely hih, thus everybody in the society loses byconsumin and en"oyin less because less is produced or distribution.

The economic loss caused by unemployment can be measured as a loss in


39/45

areate supply 6total output8 or areate demand 6total income8, morespecically, the di0erence o potential L:1 minus actual L:1.

$osts are not always economic, thouh, and itMs true. In non/economicaspects, unemployed individuals miht be very much discouraed or their

inability to secure "obs, and the eelins o rustration and dismay usuallylead to anti/social activities5 indulence, thet, violence, sabotae and otherorms o crime, which would pose serious problems especially i theunemployment rate is unbearable.

Unemployment ruins amily happiness also5 uarrel, ht, divorce, childrenlosin their education and ood health that would have an endurin e0ectover their lives. The misery and su0erin cannot be measured by economicstatistics, but they sinicant and as real as it ets.

COMPARABLE UNEMPLOYMENT RATE

)ecause international comparisons of unemployment rates can be misleading severalorgani&ations ad%ust unemployment rates to a common concept to allow accurate international

comparisons. These comparisons generally pertain to developed countries and are prepared by

the *ivision of $nternational +abor omparisons, Eurostat, and the statistical division of theE*.

Unemployment rate !y "ountry

Country # Re$ion Unemployment rate %&' (our"e # date of information

-fghanistan /.0 1002

-lgeria 30.1 1004

American Samoa(UnitedStates)

14.2 100/

-ndorra 0.0 1004 !5une#

Anguilla(United Kingdom) 6.2 1001 !5uly#

-ntigua and )arbuda 33.0 1003-rgentina 6.0 1030

-rmenia 6.1 1030 !-pril#

Aruba(Netherlands) /.6 1006

-ustralia /.3 1030 !-ugust#

-ustria 7. 1030 !-ugust#

-&erbai%an 8.0 1004
http://en.wikipedia.org/wiki/Division_of_international_labor_comparisonshttp://en.wikipedia.org/wiki/Eurostathttp://en.wikipedia.org/wiki/Eurostathttp://en.wikipedia.org/wiki/OECD#Statisticshttp://en.wikipedia.org/wiki/Afghanistanhttp://en.wikipedia.org/wiki/Algeriahttp://en.wikipedia.org/wiki/American_Samoahttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Andorrahttp://en.wikipedia.org/wiki/Anguillahttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Antigua_and_Barbudahttp://en.wikipedia.org/wiki/Argentinahttp://en.wikipedia.org/wiki/Armeniahttp://en.wikipedia.org/wiki/Arubahttp://en.wikipedia.org/wiki/Netherlandshttp://en.wikipedia.org/wiki/Australiahttp://en.wikipedia.org/wiki/Austriahttp://en.wikipedia.org/wiki/Azerbaijanhttp://en.wikipedia.org/wiki/Division_of_international_labor_comparisonshttp://en.wikipedia.org/wiki/Eurostathttp://en.wikipedia.org/wiki/OECD#Statisticshttp://en.wikipedia.org/wiki/Afghanistanhttp://en.wikipedia.org/wiki/Algeriahttp://en.wikipedia.org/wiki/American_Samoahttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Andorrahttp://en.wikipedia.org/wiki/Anguillahttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Antigua_and_Barbudahttp://en.wikipedia.org/wiki/Argentinahttp://en.wikipedia.org/wiki/Armeniahttp://en.wikipedia.org/wiki/Arubahttp://en.wikipedia.org/wiki/Netherlandshttp://en.wikipedia.org/wiki/Australiahttp://en.wikipedia.org/wiki/Austriahttp://en.wikipedia.org/wiki/Azerbaijan


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)ahrain .6 1030 !9ebruary#

)angladesh /.0 1004

)arbados 4.7 1004

)elarus 0.4 1004 !*ecember#

)elgium 2.6 1030 !-ugust#

)eli&e 2.1 1002 !:ay#

)ermuda 7./ 1004 !:ay#

)hutan 7.0 1004

)olivia 6.7 1004

)osnia and (er&egovina 7.7 1030 !-ugust#

)otswana 6./ 1006

)ra&il 8.3 1030 !ctober#

British Virgin Islands

(United Kingdom).3 1006

)runei .6 1002)ulgaria 30.3 1030 !-ugust#

)urma 7.4 1004

ambodia 3.82 1002

ameroon7.7 !underemployment 6/.2#

0.0 !$- estimate#100/

anada 6.8 1030 !;ovember#

Canary Islands(Spain) 16.82 1030 !eople's =epublic of 7.3 1030 !September#

Cocos (Keeling) Islands(Australia)

80.0 1000

olombia 31.1 1030 !-pril#

omoros 10.0 3448

Cook Islands(Ne !ealand) 3.3 1003

osta =ica 6.2 1004 !ctober#

roatia 31.7 1030 !-ugust#uba 3.8 1004

yprus 6.1 1030 !-ugust#

&ech =epublic 6.0 1030 !-ugust#

*enmar" 8.4 1030 !-ugust#

*%ibouti /4.0 1006

*ominica 1.0 1000
http://en.wikipedia.org/wiki/Bahrainhttp://en.wikipedia.org/wiki/Bangladeshhttp://en.wikipedia.org/wiki/Barbadoshttp://en.wikipedia.org/wiki/Belarushttp://en.wikipedia.org/wiki/Belgiumhttp://en.wikipedia.org/wiki/Belizehttp://en.wikipedia.org/wiki/Bermudahttp://en.wikipedia.org/wiki/Bhutanhttp://en.wikipedia.org/wiki/Boliviahttp://en.wikipedia.org/wiki/Bosnia_and_Herzegovinahttp://en.wikipedia.org/wiki/Botswanahttp://en.wikipedia.org/wiki/Brazilhttp://en.wikipedia.org/wiki/British_Virgin_Islandshttp://en.wikipedia.org/wiki/British_Virgin_Islandshttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Bruneihttp://en.wikipedia.org/wiki/Bulgariahttp://en.wikipedia.org/wiki/Burmahttp://en.wikipedia.org/wiki/Cambodiahttp://en.wikipedia.org/wiki/Cameroonhttp://en.wikipedia.org/wiki/Canadahttp://en.wikipedia.org/wiki/Canary_Islandshttp://en.wikipedia.org/wiki/Canary_Islandshttp://en.wikipedia.org/wiki/Spainhttp://en.wikipedia.org/wiki/Cape_Verdehttp://en.wikipedia.org/wiki/Cayman_Islandshttp://en.wikipedia.org/wiki/Cayman_Islandshttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Central_African_Republichttp://en.wikipedia.org/wiki/Chilehttp://en.wikipedia.org/wiki/People's_Republic_of_Chinahttp://en.wikipedia.org/wiki/Cocos_(Keeling)_Islandshttp://en.wikipedia.org/wiki/Australiahttp://en.wikipedia.org/wiki/Colombiahttp://en.wikipedia.org/wiki/Comoroshttp://en.wikipedia.org/wiki/Cook_Islandshttp://en.wikipedia.org/wiki/New_Zealandhttp://en.wikipedia.org/wiki/Costa_Ricahttp://en.wikipedia.org/wiki/Croatiahttp://en.wikipedia.org/wiki/Cubahttp://en.wikipedia.org/wiki/Cyprushttp://en.wikipedia.org/wiki/Czech_Republichttp://en.wikipedia.org/wiki/Denmarkhttp://en.wikipedia.org/wiki/Djiboutihttp://en.wikipedia.org/wiki/Dominicahttp://en.wikipedia.org/wiki/Bahrainhttp://en.wikipedia.org/wiki/Bangladeshhttp://en.wikipedia.org/wiki/Barbadoshttp://en.wikipedia.org/wiki/Belarushttp://en.wikipedia.org/wiki/Belgiumhttp://en.wikipedia.org/wiki/Belizehttp://en.wikipedia.org/wiki/Bermudahttp://en.wikipedia.org/wiki/Bhutanhttp://en.wikipedia.org/wiki/Boliviahttp://en.wikipedia.org/wiki/Bosnia_and_Herzegovinahttp://en.wikipedia.org/wiki/Botswanahttp://en.wikipedia.org/wiki/Brazilhttp://en.wikipedia.org/wiki/British_Virgin_Islandshttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Bruneihttp://en.wikipedia.org/wiki/Bulgariahttp://en.wikipedia.org/wiki/Burmahttp://en.wikipedia.org/wiki/Cambodiahttp://en.wikipedia.org/wiki/Cameroonhttp://en.wikipedia.org/wiki/Canadahttp://en.wikipedia.org/wiki/Canary_Islandshttp://en.wikipedia.org/wiki/Spainhttp://en.wikipedia.org/wiki/Cape_Verdehttp://en.wikipedia.org/wiki/Cayman_Islandshttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Central_African_Republichttp://en.wikipedia.org/wiki/Chilehttp://en.wikipedia.org/wiki/People's_Republic_of_Chinahttp://en.wikipedia.org/wiki/Cocos_(Keeling)_Islandshttp://en.wikipedia.org/wiki/Australiahttp://en.wikipedia.org/wiki/Colombiahttp://en.wikipedia.org/wiki/Comoroshttp://en.wikipedia.org/wiki/Cook_Islandshttp://en.wikipedia.org/wiki/New_Zealandhttp://en.wikipedia.org/wiki/Costa_Ricahttp://en.wikipedia.org/wiki/Croatiahttp://en.wikipedia.org/wiki/Cubahttp://en.wikipedia.org/wiki/Cyprushttp://en.wikipedia.org/wiki/Czech_Republichttp://en.wikipedia.org/wiki/Denmarkhttp://en.wikipedia.org/wiki/Djiboutihttp://en.wikipedia.org/wiki/Dominica


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*ominican =epublic 37.7 1030 !-pril#

East Timor 10.0 1008

Ecuador 6.6 1030

Egypt 4.7 1004

El Salvador 6.1 1004

E?uatorial @uinea 0.0 3442

Estonia 34.2 1030 !:ay#

"uropean Union 4.6 1030 !-pril#

#aroe Islands($enmark) /.4 1030 !:ay#

9i%i 2.8 1006

9inland 2./ 1030 !-ugust#

9rance 30.3 1030 !-ugust#

#rench %olynesia(#rance) 33.6 1006

@abon 13.0 1008

@a&a Strip .4 1030 !:arch#@eorgia 38.4 1004

@ermany 8.6 1030 !September#

@hana .8 1002 !September#

&ibraltar(United Kingdom) . 100/

@reece 33 1030 !:arch#

&reenland($enmark) 6.2 1004

@renada 17./ 1004 !5une#

&uam(United States) 4.8 1030 !-ugust#

@uatemala .1 100/

&uernsey(United Kingdom) 3./ 1030

@uyana 4.0 1004 !5uly#

(onduras 16.2 1006

'ong Kong(China) 7.1 1030 !5uly#

(ungary 30.4 1030 !-ugust#

$celand 6.8 1030 !5une#

$ndia 30.6 1004

$ndonesia 6.37 1030 !9ebruary#

$ran 37.8 1004 !


42/45

ersey(United Kingdom) 1.6 1004 !5uly#

5ordan 31.1 1030 !


43/45

;etherlands 7.7 1030 !September#

Netherlands Antilles

(Netherlands)30.0 1002

Ne Caledonia(#rance) 36.3 1007

;ew ealand 8.2 1030 !5une#

;icaragua /.4 1004

;igeria 34.6 1004 !:arch#

Niue(Ne !ealand) 30.6 1008

>a"istan /.1 !official# 3/.1 !estimate# 1002

>alau 7.1 100/

>anama 6.3 1004

>apua ;ew @uinea 3.2 1007

>araguay 6.4 1004

>eru 6.6 1030 !:ay#

>hilippines 2.0 1030 !-pril#>oland 4.7 1030 !-ugust#

>ortugal 30.6 1030 !-ugust#

%uerto *ico(United States) 3/.8 1030 !-ugust#


44/45

Sudan 32.6 1001

Suriname 4./ 1007

Swa&iland 70.8 1006

Sweden 2./ 1030 !September#

Swit&erland7.0 1030 !:ay#

Syria 4.1 1004

=epublic of hina!Taiwan# /.37 1030 !:ay#

Ta%i"istan 80.0 1002 !-ugust#

Thailand 3.1 1004 !September#

The )ahamas 31.8 1004 !September#

Tonga 3.3 1008

Trinidad and Tobago /.2 1004

Tunisia 3. 1004

Tur"ey 30./ 1030 !:ay#

Tur"menistan 60.0 1002 !;ovember#,urks and Caicos Islands /.7 1006

F"raine 4.1 1004 !*ecember#

Fnited -rab Emirates 31.6 1002

Fnited Kingdom 6.6 1030 !;ovember#

Fnited States 4.2 1030 !;ovember#

Fruguay 8.4 1030 !-pril#

F&be"istan 2.0 1002 !*ecember#

Vanuatu 62.13 3444

Vene&uela 2.1 1030 !-pril#

Vietnam 1.4 1004 !-pril#

U-S- Virgin Islands(United

States)6.4 1030 !-pril#

.allis and #utuna(#rance) 31.1 1002

Gest )an" 38./ 1030 !:arch#

Hemen /.0 1004 !5une#

ambia 38.0 100/

imbabwe 4/.0 1004 !5une#

RE!ERENCES:

5 http5'ine)rticles.comHexpert-abibur`U`Dehman

http5www.mbaknol.commanaerial/economicskeynesian/theory/and/underdeveloped/countries
http://en.wikipedia.org/wiki/Sudanhttp://en.wikipedia.org/wiki/Surinamehttp://en.wikipedia.org/wiki/Swazilandhttp://en.wikipedia.org/wiki/Swedenhttp://en.wikipedia.org/wiki/Switzerlandhttp://en.wikipedia.org/wiki/Syriahttp://en.wikipedia.org/wiki/Republic_of_Chinahttp://en.wikipedia.org/wiki/Taiwanhttp://en.wikipedia.org/wiki/Tajikistanhttp://en.wikipedia.org/wiki/Thailandhttp://en.wikipedia.org/wiki/The_Bahamashttp://en.wikipedia.org/wiki/Tongahttp://en.wikipedia.org/wiki/Trinidad_and_Tobagohttp://en.wikipedia.org/wiki/Tunisiahttp://en.wikipedia.org/wiki/Turkeyhttp://en.wikipedia.org/wiki/Turkmenistanhttp://en.wikipedia.org/wiki/Turks_and_Caicos_Islandshttp://en.wikipedia.org/wiki/Ukrainehttp://en.wikipedia.org/wiki/United_Arab_Emirateshttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Uruguayhttp://en.wikipedia.org/wiki/Uzbekistanhttp://en.wikipedia.org/wiki/Vanuatuhttp://en.wikipedia.org/wiki/Venezuelahttp://en.wikipedia.org/wiki/Vietnamhttp://en.wikipedia.org/wiki/United_States_Virgin_Islandshttp://en.wikipedia.org/wiki/United_States_Virgin_Islandshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Wallis_and_Futunahttp://en.wikipedia.org/wiki/Francehttp://en.wikipedia.org/wiki/West_Bankhttp://en.wikipedia.org/wiki/Yemenhttp://en.wikipedia.org/wiki/Zambiahttp://en.wikipedia.org/wiki/Zimbabwehttp://ezinearticles.com/?expert=Habibur_U_Rehmanhttp://www.mbaknol.com/managerial-economics/keynesian-theory-and-underdeveloped-countries/http://www.mbaknol.com/managerial-economics/keynesian-theory-and-underdeveloped-countries/http://en.wikipedia.org/wiki/Sudanhttp://en.wikipedia.org/wiki/Surinamehttp://en.wikipedia.org/wiki/Swazilandhttp://en.wikipedia.org/wiki/Swedenhttp://en.wikipedia.org/wiki/Switzerlandhttp://en.wikipedia.org/wiki/Syriahttp://en.wikipedia.org/wiki/Republic_of_Chinahttp://en.wikipedia.org/wiki/Taiwanhttp://en.wikipedia.org/wiki/Tajikistanhttp://en.wikipedia.org/wiki/Thailandhttp://en.wikipedia.org/wiki/The_Bahamashttp://en.wikipedia.org/wiki/Tongahttp://en.wikipedia.org/wiki/Trinidad_and_Tobagohttp://en.wikipedia.org/wiki/Tunisiahttp://en.wikipedia.org/wiki/Turkeyhttp://en.wikipedia.org/wiki/Turkmenistanhttp://en.wikipedia.org/wiki/Turks_and_Caicos_Islandshttp://en.wikipedia.org/wiki/Ukrainehttp://en.wikipedia.org/wiki/United_Arab_Emirateshttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Uruguayhttp://en.wikipedia.org/wiki/Uzbekistanhttp://en.wikipedia.org/wiki/Vanuatuhttp://en.wikipedia.org/wiki/Venezuelahttp://en.wikipedia.org/wiki/Vietnamhttp://en.wikipedia.org/wiki/United_States_Virgin_Islandshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Wallis_and_Futunahttp://en.wikipedia.org/wiki/Francehttp://en.wikipedia.org/wiki/West_Bankhttp://en.wikipedia.org/wiki/Yemenhttp://en.wikipedia.org/wiki/Zambiahttp://en.wikipedia.org/wiki/Zimbabwehttp://ezinearticles.com/?expert=Habibur_U_Rehmanhttp://www.mbaknol.com/managerial-economics/keynesian-theory-and-underdeveloped-countries/http://www.mbaknol.com/managerial-economics/keynesian-theory-and-underdeveloped-countries/


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