A discussion on unemployment being the most painful consequence of economic recession.

Introduction of Unemployment

There is only one official definition of unemployment—people who are jobless, actively seeking
work, and available to take a job, as discussed above. The official unemployment rate for the nation
is the number of unemployed as a percentage of the labor force (the sum of the employed and
unemployed). (https://www.investopedia.com, n.d.)
Unemployment is the consequence of a recession whereby as economic growing slows, companies
cause less revenue and lay off workers to cut costs. A domino effect ensues, where improved
unemployment leads to a drop in consumer spending, slowing growth even further, which forces
businesses to lay off more workers.

Causes of unemployment
Unemployment is caused by various reasons that come from both the demand side, or employer,
and the supply side, or the worker. From the demand side, unemployment may be caused by high
interest rates, global recession, and financial crisis.
The term “unemployment” can be tricky and often confusing, but it certainly includes people who
are waiting to return to a job after being discharged from it. However, it does not anymore
encompass individuals who have stopped looking for a job in the past four weeks due to various
reasons such as leaving work to pursue higher education, retirement, disability, and personal
issues. Even people who are not actively seeking a job anywhere but actually want to find one are
not considered unemployed.
In the following factors are mainly affect to unemployment such as,
 High population growth.
 Absence of employment opportunities.
 Seasonal employment.
 Increase turnout of students from educations institutes.
 Slow developing of industries.

Types of unemployment
There are basically four types of unemployment: (1) demand deficient, (2) frictional, (3) structural,
and (4) voluntary unemployment.
(1) Demand deficient
This is the biggest cause of unemployment that happens especially during a recession. When there
is a reduction in the demand for the company’s products or services, they will most likely cut back
too on their production, making it unnecessary to retain a wide workforce within the organization.
In effect, workers are laid off.

(2) Structural unemployment

Figure 1

Regional unemployment
When structural unemployment affects local areas of an economy, it is called ‘regional’
unemployment. For example, unemployed coal miners in South Wales and ship workers in the
North East add to regional unemployment in these areas.
Classical unemployment
Classical unemployment is caused when wages are ‘too’ high. This explanation of unemployment
dominated economic theory before the 1930s, when workers themselves were blamed for not
accepting lower wages, or for asking for too high wages. Classical unemployment is also called
real wage unemployment.

Seasonal unemployment
Seasonal unemployment exists because certain industries only produce or distribute their products
at certain times of the year. Industries where seasonal unemployment is common include farming,
tourism, and construction.

Frictional unemployment
Frictional unemployment, also called search unemployment, occurs when workers lose their
current job and are in the process of finding another one. There may be little that can be done to
reduce this type of unemployment, other than provide better information to reduce the search time.
This suggests that full employment is impossible at any one time because some workers will
always be in the process of changing jobs.

Labor market or government failure?

New Classical economists would tend to see structural unemployment as an example

For example, by keeping welfare benefits to a minimum there is an incentive to retrain and look
for paid work? Welfare benefits can trap individuals into a life of unemployment because of the
effects of moral hazard and the disincentive effect it creates. This increases labor immobility, and
hence contributes to structural unemployment.

However, labor immobility can also be addressed from the perspective of labor market failure.
Training and re-training are regarded as merit goods, where individuals under perceive the long
term benefit to themselves. They also fail to appreciate the positive externalities that training and
re-training generate for the wider community. This means that there is a significant role for the
state in providing free or subsidized training and retraining programmes.

In addition, there is the potential situation of labor market poaching. Why should a firm in the
booming service sector provide free training to a displaced worker from the manufacturing sector
if the worker will leave for another job shortly after training? Why should firms do any training
at all if they believe that workers will be poached by higher wages? The poacher can, of course,
afford to pay higher wages because of savings in training costs.

Conclusion

In my point of view unemployment is the bad situation in the country because it is dropped the
development of the country. Some countries always trying to reduce the unemployment situation
in their country. Economic recession is a business cycle contraction when there is a general
decline in economic activity. In the developing countries always maintain the good portfolio in
this unemployment. Some countries governments are take actions to reduce the unemployment in
the country, Such as,

1. Encourage Entrepreneurship

It’s no secret that entrepreneurs are pivotal to creating wealth and driving economic growth,
innovation and employment. With the latest federal budget announcing that it will support small
businesses, there has never been more support for entrepreneurs. Teaching children the skills to
start, manage and operate their own businesses would be the first step in creating a more
independent and driven generation of youth in Australia.

2. Reassessing the Value of Unpaid Internships

While internships can help lay the foundation for a career, unpaid placements can also leave
interns embittered towards the concept of work. Interns must receive high standards of training
and supervision, and organization’s should offer some form of minimal pay to engage young
adults.

3. Reevaluating the distribution of welfare

Care must be taken to avoid promotion of welfare as a viable alternative to work. Youth
allowances can set a dangerous precedent by encouraging the view that welfare is a necessity to
fund their lifestyle. There needs to be a review of the length of time that young job seekers can
claim unemployment benefits, or at least ensure that they are exploring all avenues for work.

4. All secondary schools should have active partnerships with employers

By developing partnerships between schools and employers, schools will be able to align their
curriculum and the skills of students with employer needs.
5. Earlier Career Guidance

Career advisers at schools should be meeting students earlier on in their schooling to tap into
their skills and help steer them on a career path. Students need to be provided with a sense of
direction regarding career pathways and be made aware of the vast opportunities out there for
them.

6. A new standard for work experience

There needs to be an increase in work experience opportunities for students across a variety of
industries. Students should engage in a number of different workplace environments to get a real
feel of what the workforce will be like. This will broaden their minds on the opportunities
available and help provide them with a well-rounded sense of direction for their career path.

7. Modernising apprenticeships

It’s important that there is a continued increase in new and modern apprenticeship opportunities,
particularly for those furthest from the labor market. As part of the process for developing a new
skilled workforce in Australia, there needs to be an emphasis on developing the skills and
knowledge of young Australians.

8. Providing fair opportunities for disadvantaged youth

The Greens have recently announced a newly funded local infrastructure program to create
around 15,000 new high quality jobs and training opportunities for youth in disadvantaged areas.
The money is being spent on local councils with high unemployment to help create jobs and
build community infrastructure. Initiatives such as this need to continue to drive business growth
and create more opportunities for youth in disadvantaged areas.

9. Increased uptake of work-related learning and qualifications in the senior phase of school

Even before entering an apprenticeship, schools need to take responsibility for developing the
skills students need to enter the workforce. It’s all about making the transition of the world of
school to the world of work easier.
10. A national levy scheme for skill shortage areas

Similar to the UK, Australia should be shifting towards a levy scheme to recruit and train young
people in skills shortage areas. The construction industry is one area which has started seeing
success, achieving consistent, ongoing investment in training young entrants and reaping the
benefits of having a consistently skilled workforce.

The cause of unemployment is when there are less jobs than applicants. The technical term
is demand-deficient unemployment. While it happens during the recession phase of the business
cycle, it's called cyclical unemployment.

Low customer demand creates cyclical unemployment. Companies lose too much profit when
demand falls. If they don't expect sales to pick up anytime soon, they must lay off workers. The
higher unemployment causes consumer demand to drop even more, which is why it’s cyclical.
It results in large-scale unemployment.

In these fact are help to reduce the unemployment in the country. Every country can reduce the
unemployment it is not to painful situation in the economy.It is not reason for the economic
recession in the country and country can achive the development.
References
https://www.investopedia.com. (n.d.).