7.3 Employment

7.3 Employment

1. Definitions

   • Unemployment is the number of people who are capable of and willing to work but is unable to find suitable employment.
     • Labour Force refers to all people within a country who are economically active (Either working or actively looking for a job). Thus labour force consist of employed and unemployed.
       • The unemployed refers to people who are actively seeking employment but currently without a job.
         • Economically Inactive: People unwilling/unable to do work as they are too old, underaged, handicapped, housewives, students or retirees -- Not part of labour force thus not considered unemployed.
           • Unemployment rate: Percentage of unemployed persons to the total labour force aged 15 years and over x100%.
             • Unemployment rate is a rate of measure of extent of unemploynment in Sg. It can be influenced by size and composition of labour force & labour productivity.

2. Employment is defined as the number of people who are in full-time or part-tome paid work.

   • Employment is high > Large of people w access to income > ability to consumer g/s > High SOL.

3. Types & Causes of Unemployment

   • 1. Frictional Unemployment
     • Occurs during time required to match qualified job seekers with available openings. Associated with normal turnover of labour. Short-Term in nature.
   • 2. Cyclical Unemployment (Demand-deficient or Keynesian Unemployment)
     • Fluctuations in unemployment caused by business cycle. It increases during recessions & decrease during expansion.
   • 4. Structural Unemployment
     • A) A change in pattern of demand
       • Occurs because change in tastes/ technology/ taxes / competition which reduced demand for certain skills & increases demand for other skills.
     • B) A change in Pattern of Supply
       • Changes in Techniquie of production
         • Technological unemployment is a structural unemployment resulting from successful growth of new industries using labour-saving tech. Advances in automation are blamed for rising unemployment.
       • Occupational Immbolility
         • Situation where people unable to take up jobs in another industry or occupation because lack of relevant skills or education.
       • Geographical Immboility
         • A situtation where workers unable/unwilling to move to another region that has better job prospects.
     • Occurs when structure of economy changes. Arises due to mismatch of skills or geographical location.
   • 3. Seasonal Unemployment
     • When demand for certain types of labour flutuates with the seasons of the year.

4. Effects of Unemployment

   • 1. Producers
     • 1. Lower Wage Costs.
       • 2. Larger Pool of Labour
         • 3. Less demand for Goods & Services
           • 4. increase in Demand for Inferior Goods
             • 5. Higher Training Costs
   • 2. Consumers
     • Lower SOL
   • 3. Governement
     • 1. Lower Tax Revenues
       • 2. Higher Welfare Costs
         • 3. Higher Supply-side Costs
   • 4. Lower Social Stability
   • 5. Negative Impacts on LRAS

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