Structural unemployment occurs when the skills of jobseekers are not matching the skills employers are looking for, such clashes occur when changes of technology takes place and demand of consumer changes where certain skills to meet the new demand become obsolete. The government tends to side with technological changes in spite of the fact that they create structural unemployment. Let us analyze the reasons behind such encouragement.
Government encourages changes in technology because it changes the standard of living in a country. Changes in technology really make a country better off as it increases aggregate supply on a long term basis. A change in the long term aggregate supply leads to a change in a country’s output and increases productivity .This leads to an increase in real income and which in turn leads to a change in consumption thus bringing a change in the aggregate demand. The country’s real per capita income rises and puts a country in a better position economically. It generates a wealthier nation. A good example is the US economy which faced a technological change in the 90’s. This change really brought United States of America’s economy as an example to take from when it comes to technological changes.
A second reason as to why the government welcomes technological changes is because it encourages the population to be more skillful in terms of education and knowledge. Technology may create structural unemployment but creates employment for people who have the skills to handle such advancement. Education has many benefits such as it breaks down the barrier of ignorance and makes the population move forward together with the country. It also encourages those people lacking the necessary skills to train themselves a...
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...e structural unemployment but the benefit that comes from it surpasses the flaws. By gauging the advantages and disadvantages, governments and economists come up with the conclusion that it is best to adopt technological changes with the opportunity cost being structural unemployment. With time, structural unemployment goes away since unskilled workers realize that it is in their best interest to develop their skills and adapt to new changes. Countries are giving their economy a 360O flip by adopting technological changes. China is an example which is adopting technological changes and currently it is one among the fastest growing countries in terms of economy in the world. The government is ready to train its population and make them adapt to the changes that prevail to prevent structural unemployment. Today many countries are taking China as an example to follow.
First, Structural unemployment occurs when the entire makeup of an economic system experiences fundamental problems such as uneven labor distribution across industries and a lack of skilled workers to fill these positions. Structural unemployment is not caused by changes in supply and demand as the other major types of unemployment. Instead, this kind of unemployment happens because of significant changes in the use of new technologies such as robotics and a.i. Advancements can create
“Our Future Selves” by Eric Schmidt and Jared Cohen construct views on countries’ technologies that changes the world on a daily basis. Conversely, technologies reconstruct countries in various simpler ways to live throughout economic trends. Furthermore, the quality of life is massively changing with new technologies. Consequently, wealthy countries are viewed differently from poor countries towards technological advantages. Ordinarily, technologies have made the difficult obstacles so much easier than just by hand. Industries have utilized the advanced technologies to provide huge manufacturing productivity. Moreover, Eric Schmidt and Jared Cohen have some very compelling reservations within their article, “Our Future Selves”, on the trends
An economic management issue in the public sector is unemployment (or joblessness) occurs when individuals are without work and actively applying and looking for work. The unemployment rate is a measure of the prevalence of redundancy and it is calculated as a percentage by dividing the quantity of those unemployed by all individuals currently in the labor force. Throughout periods of recession, an economy usually encounters a relatively high unemployment rate. According to International Labor Organization report, “more than 197 million individuals globally are not in workforce or six percent of the individuals were without a job in 2012.” (Allegretto & Lynch, 2010) Persistently high rates of unemployment in Europe throughout the last two decades show that unemployment is, at least to a reasonable degree, not just business cycle anomaly. This reflects a proceeding waste of labor and of human capital in most European nations and the United States. It appears reasonable to inquire, if given levels of unemployment impact long-run productivity growth or the long-run level of productivity itself. While unemployment is an extreme issue in Europe, not in the U.S., the decrease in productivity growth has been stronger in the United States. “Between 1979 and 1997 the average rate of unemployment in the US was 6.7% and the average growth rate of labour productivity was 0.9%. In Europe the average rate of unemployment was 9.3% and the average growth rate of labor productivity was 2.2%.” (Allegretto & Lynch, 2010) The reason given for these facts is: high wages lead firms to substitute labor with capital. This can lead to increasing unemployment and productivity since the workers who are still utilized become more productive Therefore, it is ...
The run of human kind for more efficiency, productivity and progress may have just about start to show its dark side. For decades the universal truth was that the better we will be in those categories, the more everyone will benefit. Well, it is turning out that it may not be entirely true. This paper aims to argue and reason why we should be worried about future of workplace, its mechanization to be more specific. It is based on the fact that World has technologically evolved and mechanized in the past decades and some jobs are inevitably gone. We do know that those jobs are not coming back, but what we do not know whether the economies will be able to maintain unemployment levels between 5 – 10% in the long-term under such conditions, taking into account the world population more than twice as large as 50 years ago. In the first part, this paper we will examine the beginning of this phenomenon and its roots and the consequences it had so far in the real world. In the end, based on facts collected and knowledge gathered, potential solutions, of this possibly next great structural shift in labor, will be presented.
Technology unemployment is unemployment due to our discovery of means of economizing the use of labor outrunning the pace at which we can find new uses for labor. (Brynjolfsson & McAfee, 2011)
The largest cause of unemployment can be attributed to recession. The term recession refers to the backward movement of the economy for a long period. People spend only when they have to. (Nagle 2009). With people spending less there would be less money in circulation therefore, enterprises would suffer financially and people would suffer too. This is so because recession reduces the fiscal bases of enterprises, forcing these enterprises to reduce their workforce through layoffs. These enterprises lay off their workers in order to cut the costs they incur in terms of wage and salary payments.
Inferior technology was a large part in the downfall of Rome because of being dependent on animal and human labor, they were not able to evolve and start creating machines and new technology. They weren’t able to provide for the people. In America today, we have the complete opposite problem. Large companies that provide goods are dependent on machines and new technology to do the work and not hire many people to work for them. Having the new technology is great for companies to keep money, but people are out of a job oppertunities. If big companies and factories hired people to take over the work machines are doing, there would be a large decrease in unemployment
thus shown to rely less on workers and shift to technology, which is able to produce goods and
Unemployment is a macroeconomic factor that is pertinent to an extensive economy at a regional level. Therefore it affects a large population rather than a few select individuals. Unemployment does not only have social costs, but economic costs too. The ILO, International Labour organization, defines unemployment as, ''People of working age, who are without work, but available for work and actively seeking employment.'' Therefore implying that it is a state of an individual looking for a job but not having one. Unemployment is one of the key indicators in determining the economic stability of a country; hence governments, businesses and consumers closely monitor it. There are numerous aspects that might lead to unemployment such as labour market conflicts and recessions in the economy. There are two main types of unemployment, which can be focused on, seasonal and cyclical unemployment. Seasonal unemployment occurs when a person is unemployed or their profession is not in demand during a particular season. On the contrary, cyclical unemployment occurs when there is less demand for goods and services in the market so consequently supply needs to be decreased.
Public policies for improving education, for example, can have positive economic impacts by leading to a workforce with better education and skills. Policies related to infrastructure can strengthen the foundation for economic growth by improving transportation and communications systems. These improvements position a nation to accommodate the rapid pace of technology change” (Hall,
The disparities between the two views of the economy lead to very different policies that have produced contradictory results. The Keynesian theory presents the rational of structuralism as the basis of economic decisions and provides support for government involvement to maintain high levels of employment. The argument runs that people make decisions based on their environments and when investment falls due to structural change, the economy suffers from a recession. The government must act against this movement and increase the level of employment by fiscal injections and training of the labour force. In fact, the government should itself increase hiring in crown corporations. In contrast the Neoliberal theory attributes the self-interest of individuals as the determinant of the level of employment.
The first type of unemployment is frictional unemployment. Mankiw (2008) says that frictional unemployment is “unemployment that results because it takes time for the workers to search for the jobs that best suit their tastes and skills” (p. 601). The rate of frictional unemployment will never be zero so the full employment never reached. The new entrants like fresh graduates and re-entrants like housewives will also lead to frictional unemployment. The period of frictional unemployment is determined by the unemployment insurance benefits and the speed of the information (Mouhammed, 2011). According to Arnold (2011), the major cause of frictional unemployment is imperfect information, which means that the lacking of information required in matching a job applicant immediately with a job vacancy. T...
In an attempt to find out why most governments and economists encourage technological changes even though it increases structural unemployment, it is important to first and foremost understand the meanings of ‘technological change’ and ‘structural unemployment’. Technological change refers the improvement of processes that make it easier to produce more, efficiently and at reduced inputs. On the other hand, structural unemployment refers to a situation where skills needed to produce efficiently cannot be matched to appropriate unemployed persons due to technological change – in other words, it refers to inefficiencies in the labor market.
Ever since the Industrial Revolution (1780s), the impact of technology has been subject to public debate over its effect on employment – does it cause unemployment or does it underlie the huge increases in standards of living (Jones 1996, p.11)? While it is difficult to ascertain the relationship between technology and employment, all that can be said with any certainty is that technological advancement has the capacity to create revolutionary economic and social changes (Jones 1996, p.21). In order to provide a clear analysis of the impact of technology on employment, we need to take into account the consequences of technological transitions and seek to relate these to social, economic, political, and cultural factors occurring at the time.
Due to the dependence on non-internal markets, Singapore is more vulnerable to repercussions and actions of the global markets and as a result, the global recession had impacted unemployment rates heavily, which had resulted in a rise in unemployment. Putting that aside, Singapore is known to be among one of the highest employment ratings in the world. Another form of unemployment which is a challenge to Singapore is structural unemployment. Moving alongside Singapore’s speedily developing economy is its shift from being a labour intensive economy to a capital intensive one. This is inescapably met with the challenge of the substitutions of skills in the labour force of Singapore. For example, the recent shift into the biomedical and Research and Development (R&D) industries subject workers who can only work in the lower end of manufacturing industries tend to find themselves unemployed because the mass production work is usually outsourced to other economies that are developing. In order to solve this issue, the government of Singapore had invested a large sum in training and education, with and average of one in four citizens who were employed in 2010 to be degree holders, therefore allowing citizens of Singapore to remain relevant and