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Unemployment in the conditions of market economy

Unemployment as a socio-economic phenomenon is characteristic of a market economy, constantly agitating the society, requires an in-depth study of the causes of, that creates, the attention of the government structures at all levels and a broad analysis of the economic science.

Unemployment this is a complex economic, social and psychological problem. It makes the economy inefficient, and social relations — strained. In addition, people, what became unemployed, experiences extreme psychological tension, loses the opportunity to realize their potential creative abilities of the worker, feels unneeded, the inability to support yourself and your family, depressed.

High unemployment leads to social wars, political disturbances and coups, the destruction of material and spiritual achievements of generations, frustration. That is why the government of any country cannot be remain indifferent to the problem of unemployment.

Unemployment as an economic phenomenon linked with the excess supply of labor resource over demand on this resource.

Unemployment as a socio-economic phenomenon linked with institutional factors. Able-bodied people are considered aged 15 to 70 years. These limits determine the peak workforce (CRS).

The labour force is the population aged under 15 to 70 years, which seeks to realize its ability to work as an employee for the purpose of receiving income in cash or in kind. In other words CRS called human resources, or economically active population.

With this in mind, the entire population is divided into two large groups:

• institutional — individuals, under the age able-bodied pique, and those, who have already dropped out of the workforce due to permanent disability (persons with disabilities), retirement, stay in long-term isolation, etc;

• anstiranana, which is able-bodied persons, what, in turn, are divided into two subgroups:

— economically active population, composed of persons, employed, that is busy, and the unemployed;

— economically inactive population, composed of persons, voluntarily not employed (Housewives, students, members of the liberal professions, businessmen etc.) (rice. 1.).

Rice. 1. The structure of the population by ability to wage labor

Unemployed is the unemployed, included in the workforce, are actively looking for employment (registered in the labour market) and ready to start working at any time.

Such, retired from the workforce, consider individuals, not having employment and not actively looking for. They are part of the economically inactive population. In addition to the above categories to be eliminated from the workforce and include those, who lost hope to find work and stopped her search.

There are two types of unemployment: involuntary and voluntary.

Voluntary unemployment is associated with the free will of the person, which is part of the workforce, to refrain from offering labor for her unacceptable conditions.

Involuntary unemployment is not connected with the free will of the person, which is part of the workforce, and due to the factors, beyond its choice.

Voluntary and involuntary unemployment appear in the relevant forms.

Forms of unemployment

There are many forms of unemployment, but the most important of them are three: friction, structural and cyclical, — these forms are important for determining the natural rate of unemployment. Each of the forms of unemployment has its reasons. Therefore, the definition of forms associated with causes, that gave rise to them, duration and type of unemployment.

Friction unemployment arises from the fact, the establishment of equilibrium between the quantity and quality of employees, with one hand, and the quantity and quality of jobs on the other, takes time.

This form, thus, related to the search and expectation of work, that corresponds to a specific qualification, preferences and level of remuneration.

Frictino unemployed already are qualified, skills, experience, you can sell on the labour market. If a person wants to change jobs (geographically), change skills or to move to a similar job with higher wage, she solves this problem voluntarily. Therefore, frictional unemployment, as a rule, voluntary and short-term.

Structural unemployment due to changes in the structure of demand due to changes in the structure of the economy. This form of unemployment arises from the fact, that certain professions “aging” and the need for them significantly reduced or eliminated. However, there are sectors and industries, which require new skills, qualifications, knowledge, professions. Not always a former miner can become a qualified hairdresser, the seller or programmer. This means, what structural unemployment is mainly involuntary and is much longer, than friction.

Frictional and structural unemployment make up the natural unemployment.

Natural consider such unemployment, which:

— there is full employment, that is, such employment, which still competition in the labour market and efficient use of hired labor;

— achieved potential national output (there is a complete and rational use of all resources);

— no inflation.

Full employment is employment at natural unemployment rate, the value of which is 5-6 %.

The assignment of the frictional unemployment rate to the natural is no doubt, because it is freely chosen (voluntary), and economic freedom is the basis of market participants ' behaviour. Against structural unemployment, which is forced, some of the scientists did not recognize its natural. And yet, a strong argument in favor of attributing structural unemployment is natural to, changes in the structure of production is determined by changing social needs, what, of course, consistent with the nature of economic man.

Cyclical unemployment is the deviation of actual unemployment from natural in one direction or another. In a recession there is a fall in gross national production below the potential level, the actual unemployment rate exceeds the natural rate. In the boom period, when there is inflationary growth in the economy, actual GDP exceeds the potential level, and the actual unemployment rate will be below the natural level.

There are other forms of unemployment, which does not have a crucial impact on the economy, but it is important to know which, because they affect the interests of certain groups of the working-age.

Seasonal unemployment — forced the form of unemployment, due to the specific conditions of production in certain branches (agriculture (the crop sector), sugar, forestry, fishing industry). Often in the off-season, people have resorted to self-employment or leaving for work in the regions, because there is not enough proceduresit. This form of frictional unemployment tends to, though it has its own specifics.

Technological unemployment — forced the form of unemployment, related to release of workers in connection with introduction of new efficient equipment and technologies. This form of unemployment tends to be structural.

Youth unemployment is youth, which first enters the labor market and can't get a job. The market is indifferent to the supply of labour from young people, while they do not have experience, some qualifications, but require, in accordance with the laws, preferential conditions (harmless production, part-time, more vacation, etc).

In addition to the mentioned forms, it is also important to distinguish two types of unemployment: overt and covert.

Open unemployment — the situation on the labour market, in which the individual recognizes, he denied, and officially registered with the employment service.

Hidden unemployment due to the presence of people, longer job search, having lost hope to find her.

So, we examined the content, types, forms and types of unemployment. Now consider the problem of quantitative measurement of unemployment.

The unemployment rate is determined by the formula

where U — unemployment rate; F — the number of unemployed; R — the workforce (economically active population).

If R be defined as (L+F), where L is the number of employed, the formula will look like:

In addition, the unemployment rate can be defined as the proportion of those, monthly who loses his job, to the sum of those, monthly who loses his job, and those, who finds her on a monthly basis, that is:

The impact of unemployment on the economy should not be assessed only as negative. Unemployment performs useful and harmful functions (rice. 2.).

Rice. 2. Constructive and destructive impact of unemployment on the economy

The impact of unemployment on the annual national production was investigated by the American scientist Arthur oken (Perch). He found a mathematical relationship between the excess of actual unemployment over the natural and GDP loss:

where β is the sensitivity coefficient of the GDP to cyclical unemployment; U is the actual unemployment rate; U* — natural rate of unemployment; Y* — potential GDP; In — actual GDP.

From the above we can conclude, the economy, which works in the conditions of the natural rate of unemployment, feels predominantly constructive impact, and the unemployment rate, that exceeds the natural, has a predominantly negative impact on the economy.

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