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An overview of the different forms of unemployment in industrialized countries

Some of the most important types of unemployment are: Technological Unemployment and 6. Unemployment has been one of the most persistent and unmanageable problems facing all industrial countries of the world.

At the same time, the goal of public policy has been to remove unemployment and to achieve full employment in such countries. We attempt below the various types of causes of unemployment for an understanding of the meaning of the term full employment.

Before explaining the various types of unemployment, it is necessary to define the term unemployment. Voluntarily unemployed persons who do not want to work like the idle rich, are not considered unemployed.

Frictional unemployment exists when there is lack of adjustment between demand for and supply of labour.

Unemployment Types: 6 Most Important Types of Unemployment

This may be due to lack of knowledge on the part of employers about the availability of workers or on the part of workers that employment is available at a particular place. It is also caused by lack of necessary skills for a particular job, labour immobility, breakdowns of machinery, shortages of raw materials, etc. The period of unemployment between losing one job and finding another is also included under frictional unemployment.

Seasonal unemployment results from seasonal fluctuations in demand. Employment in ice factories is only for the summer.

  • These people are also not included in the labour force of the country;
  • In order to understand the concept of full employment the difference between these types of unemployment needs to be grasped;
  • On being given training in computer operations some of them again got jobs;
  • Technically speaking, unemployment is defined as a state of affairs when in a country there are a large number of able-bodied persons of working age who are willing to work but cannot find work at the current wage levels;
  • Many times, on account of the locational patterns of industries, structural unemployment may have a geographical impact.

Similarly ice-cream sellers remain unemployed during winter and chestnut-sellers during summer. The same is the case with agricultural workers who remain employed during harvesting and sowing seasons and remain idle for the rest of the year. Cyclical unemployment arises due to cyclical fluctuations in the economy. They may also be generated by international forces.

A business cycle consists of alternating periods of booms and depressions.

9 Types of Unemployment found in Modern Societies

It is during the downswing of the business cycle that income and output fall leading to widespread unemployment. Structural unemployment results from a variety of causes. It may be due to lack of the co-operant factors of production, or changes in the economic structure of the society.

More specifically, it refers to changes which are large in the particular area, industry or occupation. There are, however, economists who argue that the higher unemployment in America since 1957 has been due to causes other than inadequate demand: The supporters of the structural transformation thesis hold that the number of vacancies is greater than or equal to the number of displaced workers due to structural changes in a particular area, industry or occupation, and that unemployment is not due to inadequacy of demand.

Keynes failed to take into account technological unemployment that has taken place more rapidly in the post-war period. Modern production process is essentially dynamic where innovations lead to the adoption of new machineries and inventions thereby displacing existing workers leaving behind a trail of unemployment.

When there is automation or displacement of old technology by a new one requiring less workers than before, there is technological unemployment.

  • More specifically, it refers to changes which are large in the particular area, industry or occupation;
  • Shn Mojumdar, in a research study of nine selected villages in Bombay-Karnataka region, estimated that 71 per cent of the farmers have less than normal employment and 52 per cent have less than half the normal employment;
  • At the same time, the goal of public policy has been to remove unemployment and to achieve full employment in such countries;
  • When a worker is disguisedly unemployed in any sector, his marginal productivity is zero.

In all such cases unemployment is bound to decrease. In fact, there is little to distinguish between structural and technology unemployment. One of the causes of structural unemployment is technological change. Technological change itself causes obsolescence of skills thereby leading to structural unemployment. Further, both structural and technological unemployment are related to inadequate demand. Technological change tends to increase output per man-hour which has the effect of raising the potential total output in the economy.

If this potential growth in output is not matched by the actual growth in output, there will be unemployment in the economy due to deficiency in demand.

  • Industrial immobility Industrial immobility occurs when workers do not move between industries, such as moving from employment in motor industry to employment in the insurance industry;
  • The best that can be done is to keep the number of the unemployed as low as possible.

Therefore, modern economists are of the view that unemployment is caused by structural changes, technological changes and by inadequacy of demand taken together. Disguised or concealed unemployment or underemployment is a notable feature of underdeveloped countries. Such unemployment is not voluntary but involuntary. People are prepared to work but they are unable to find work throughout the year due to the lack of complementary factors. Such unemployment is found among rural landless and small farmers due to the seasonal nature of farm operations and inefficient land and equipment to keep them fully employed.

A person is said to be disguised unemployed if his contribution to output is less than what he can produce by working for normal hours per day.

Unemployment types

His marginal productivity is nil or negligible, and by withdrawing such labourers, farm output can be increased. There are also other types of underemployed persons in such countries. A person is considered to be underemployed if he is forced by unemployment to take a job that he thinks is not adequate for his purpose, or not commensurate with his training.

Further, there are those who work full time in terms of hours per day but earn very little to rise above the poverty level.

They are hawkers, petty traders, rickshaw pullers, workers in hotels and restaurants and in repair shops, etc. Open and disguised unemployed in urban and rural areas are estimated at 30-35 per cent of the labour force in underdeveloped countries.