Transcript 8.2 Employment and unemployment

Year 1 Economics
Today’s lesson:
Unemployment
- Explain the different measures of unemployment
and list their potential downfalls
- Illustrate full employment and unemployment on
a range of diagrams
- Discuss the reasons why people become
unemployed
- Analyse the different types of unemployment
and evaluate ways to reduce these
Unemployment
Key terms:
Unemployment refers to those without a job but who are
actively seeking work at current wages.
Full employment does not necessarily mean every person
of the working population is in work. It is a situation
where the number of workers wishing to work at the
going market real wage rate is equal to the number of
employees firms wish to hire at the current wage rate.
i.e./ Labour Supply = Labour Demand
Diagram to show full employment
PPF showing full employment and
unemployment
Measuring Unemployment
1.
2.
3.
4.
5.
Two measures of unemployment used in the UK. The
claimant count and the Labour Force Survey (LFS).
Read the hand out and answer the following questions:
What does the claimant count measure?
How does the LFS differ from the claimant count and
how does the data from these two measures tend to
vary over time?
List key groups of unemployed who are not counted by
the claimant count
Explain 1 reason why the claimant count might actually
be higher than true unemployment
List any other reasons why both the claimant count
and LFS may underestimate unemployment.
Why do people get made
redundant?
Why do unemployed people
struggle to find employment?
Types of Unemployment
• Demand side causes
• Cyclical Unemployment – When there is
insufficient demand in the economy for all
workers who wish to work at current wage rates
to obtain a job
• An example of this is in the current recession.
• Seasonal Unemployment – unemployment
caused by changes in demand for workers at
different times of the year. An example of this
type is someone working at a holiday resort such
as Cornwall during the summer.
Diagrams to show cyclical
unemployment
1.Unemployment and the Output gap
GDP
Cyclical or Demand – Deficient Unemployment
During Negative Output Gap (Between Points A & B)
Actual growth
Trend Growth
0
A
B
Time
Types of Unemployment
• Supply side causes
• Structural Unemployment – occurs when there is
fundamental change in the structure of industry. This is
can be due to change in taste or developments in
technology, resulting in little or no demand for a product
or service. An example of this is the number of former
ship builders and coal miners becoming unemployed.
Frictional Unemployment – short-duration unemployment
caused as workers move from one job to another. An
example of this type of unemployment is someone who
is moving from one job to another for higher wages and
has a gap between this time.
Categorisation 1
Gita Mattoo is 28 years old
and has recently graduated
from Leeds Metropolitan
University. She is unsure of
the career path to pursue
and is temping to build up
her experience until she
makes that decision.
Currently Gita is not working.
Categorisation 2
Gary Molnar is 42 years old
and lives in the North East of
England. He has worked as
a Father Christmas
impersonator for 10 years
now. Gary only has work
from mid-November to midJanuary and is currently
unemployed.
Categorisation 3
David Blakely was
employed as a miner until
1997 when the South Crofty
Mine (in Cornwall) where he
worked was closed. David
has been unemployed ever
since the closure of the
mine.
Categorisation 4
Colin lost his job when the
automobile production site
he worked at collapsed, due
to economical factors. Colin
needs to support his family
but has been unemployed
ever since the closure.
Types of Unemployment
Situation
1
A newly qualified plumber opts to spend some time looking for a new
job rather than accept employment with a local business.
2
A number of journalists are made redundant when a magazine
decides to use copy from press agencies as a cost-cutting measure.
3
Newcastle Building Society announces it is to make 1500 workers
redundant as a result of the downturn in the mortgage market.
4
Eighty jobs are lost at the classified ads company Exchange & Mart
after the decision to cease print publication of the magazine and
continue with the magazine online.
5
A building firm lay off ten workers for three weeks and mothballs their
existing building sites because of harsh weather in the winter.
6
A former bank manager decides to leave her job and take early
retirement in order to look after an elderly relative.
7
A steel smelting plant closes and thirty workers with job specific skills
are forced to look for new work elsewhere in the locality.
Type
Consequences of Unemployment
What are the consequences of unemployment on:
A)
the unemployed;
B)
the employed;
C) the government.
A) Possible Costs of Unemployment
to the Unemployed
•
•
•
•
•
•
•
Poverty and financial hardship
Social problems
Family tension and break-down
Homelessness
Health
Rejection and alienation
Erosion of confidence and self-esteem
B) Possible Costs of Unemployment to
the Employed
• Higher taxes
• Suffer from social problems
• Employers have psychological advantage over
employees
• Insecurity in their jobs
• Weaker labour unions as membership decreases
• Greater work effort but not necessarily higher wages
• Reduced chances of quitting and finding work
elsewhere
C) Possible Costs of Unemployment to
the Government
•
•
•
•
•
Loss of tax revenue
Increase in expenditure
Extra burdens on the public sector
Pressure from opposition parties and voters
Loss of output to the economy (GDP lower than it could
be)
• Managing social issues
Plenary
Name 3 types of unemployment
Name 2 measures for unemployment and
their characteristics
Provide 1 killer unemployment stat of 2016
Cover work and homework
• Create a PowerPoint explaining the different types of unemployment
and different policy responses to each type of unemployment
The PowerPoint MUST contain:
Definitions
Examples
AND…ways that the government could attempt to solve each type of
unemployment. You must explain why these methods would work
and EVALUATE them (will they create winners and losers? Can
you foresee any unintended consequences?
The PowerPoint should also include:
Images
Diagrams
Data
(trends on employment/unemployment/part-time, full-time working/zero
contract hours)
Definition
Measures
Demand & supply
side factors
Unemployment
Types, causes &
relationship to
economic cycle
Recent UK Trends