Unemployment greatly affects individuals, society, and the economy of a country and reflects how healthy a country’s economy is in terms of growth. Unemployment is brought about by different factors that range from job market skills required, excessive minimum wages, global pandemics such as the recent Covid 19 pandemic that has left millions of people across countries unemployed.
The unemployment rate of a country is measured by dividing the number of unemployed individuals by the population of employed people. A person is considered unemployed if they are unable to find work while actively searching for employment opportunities. The unemployment rate is a closely monitored economic indicator since it does not only impact the unemployed population but also greatly a country’s labor market, disposable income of families, the purchasing power of consumers, and economic output.
1. Unemployment benefits. Unemployed persons are offered unemployment benefits to help them get by financially and protect them from income losses for some time before they can find a job. Unemployment benefits play a great role in ensuring individuals can sustain a desirable consumption level with minimal strain.
2. Self-employment. Unemployment may make individuals venture into self-employment so that they can be able to cater to their needs and mitigate the unforeseen future and this also increases a country’s economy and plays a major role in creating more employment.
3. Lifestyle. People will tend to spend more time with families and take part in volunteerism during times of unemployment and this may play a positive role also in developing new interests and ideas of making income. Individuals get time to attend more events, workshops and engage in activities that they are limited to when employed.
4. Low Wages. High rates of unemployment make employers have a higher bargaining power to reduce salaries or wages thus having lower production costs hence incur higher profits.
5. New Talents. Unemployment can make people discover new talents and potential that they didn’t recognize they possess and may end making career changes that impact their wellbeing.
6. Financial. Unemployment makes individuals re-evaluate their financial needs and spending hence they become more aware of better money management skills for the future. Unemployment makes you more conscious of your spending and saving decisions to avoid being bankrupt or in debt soon.
7. Lower Prices. Due to low demand for consumer goods, companies would lower their pricing of goods to attract more purchases and this would be favorable and affordable to the unemployed population.
1. Opportunity Cost. Remaining unemployed for a long period makes one miss out on learning new skills, establishing a reputable network, gaining new experiences, and advancing in their career and this may lead to cost-push inflation in the economy.
2. Security Concerns. Due to frustration from unemployment, people may turn into violent ways of making money such as robbery thus leading to high crime rates and deterioration of security in the society.
3. Personal Identity. Long periods of unemployment may result in an individual losing their identity in society. Their social status would also be affected greatly since they would tend to avoid spending time with their employed peers or their peers are too busy focusing on their careers thus creating a social gap and lead to loneliness.
4. Less utilization of products and services. The unemployed population has a lower purchasing power hence businesses will remit lower taxes this forces the government into excessive borrowing from other countries to keep the country’s economy afloat. Unemployment brings about less consumer spending and companies may experience a decline in profits and this can also lead to unemployment to other people creating a contagious action effect in the economy.
5. Living Standards. Reduced living standards are high among unemployed individuals since they exercise cost-cutting measures to be able to meet their daily needs.
6. Hysteresis Effect. This is brought by long-term unemployment thus a person starts losing motivation, skills leading one to become less incentive to work and this rises the rate of unemployment over time.
7. Effects on Poverty. Unemployment increases a country’s poverty rate thus leading to a weak economy. There is a lot of manpower resources wastage during unemployment creating a liability to the economy.
8. Less Economic Growth. Unemployment damages Government finance by creating budget deficits through decreased revenue collection and increased benefits payment this affects the Gross Domestic Product of a country.
9. Cold Callers. During unemployment, one would experience a period of cold callers who make you think you’ve received a response to your job applications only to find they are advertising agencies and promotion agents thus making you agitated at times and also lose confidence in your job search.
10. Health Hazards. People may fall into depression due to lack of income and this may lead to adverse mental health issues, physical health, social stigma, family disputes and breakdowns of unions, and more so high rates of suicide and increased rate of Gender-based violence. Unemployment makes people have anxiety, fear, stress, and hopelessness, lack of motivation, lack of appetite, poor sleeping habits, and sometimes experience social stigmatization.
11. Liquidity Constraint. Unemployed people can face liquidity constraint pressure and may end settling for jobs that do not match their skills and some may even opt for low-wage jobs instead of waiting to find an appropriate job that supplements their skills, experience, and expertise.
12. Unemployment benefits. High unemployment benefits may create laxity within the unemployed population, whereby people may search for jobs less intensively hence lengthening the unemployment spell and create adverse effects on the economy.
13. Unproductivity. Unemployed people may tend to be unproductive since many individuals would waste time watching unproductive TV programs, waste time on social media pages, and may increase more of their sleeping patterns due to laziness or depression of being unemployed.
14. Substandard Products. Due to low demand and low profits, companies may introduce inferior or low-quality goods to cut on their cost of production and maintain their profit margins.
15. Socio-political. High rates of unemployment make individuals engage in civil unrest activities in a country such as protests.