Consequences of Unemployment

This type of unemployment occurs when the employee does not meet the requirements of the vacancy. This means that the job seekers cannot fulfill the requirements of the position and employers demands. At a time, the number of job seekers may be the same as the vacancies but the two are not compatible. This can also be caused by geographical location of economies and industries. For example, in the case of UK, an employee may believe that he may be employed within six weeks in a certain region. This may be because of concentration of industries and manufacturing firms in the region.

Nevertheless, these industries may be uneconomically viable resulting in many people loosing their employments in a region that had initially been saturated with industries. When the economies fail, many employed people are dumped into job seekers market resulting in many people looking for employment at the same time. Moreover, even if there are certain industries that can employ the people invest in this region, there is a high chance that the vacancies cannot take all the unemployed people at a time (Nickell 2005).

Additionally, it means that those sectors that were supporting the same industries may fail resulting in more people been sent to look for employment elsewhere. This is what is meant by structural unemployment and it adversely affects the midlands and the north parts of United Kingdom. In the 1980, there were some parts that structural unemployment accounted to 20% of the unemployed force, the areas was Glasgow, Sheffield and Manchester.

In the early 2000s, the structural unemployment had drastically reduced but there are small points that are still affected by the structural unemployment and are usually caused by pollution, restricted expansion space and traffic congestion. In the 1980s, the government devised ways to reduce the causative agents of structural unemployment through the provision of grants and subsidies to those companies that operates in regions that are not economically viable. Moreover, strategies like offering the footloose industries with subsidies and motivating workers to re-train and refresh their job education specifications.

This reduced the causes of structural unemployment. The change of economies and the origin of raw materials and technology have played an important role in determining the unemployment in United Kingdom. In the mid twentieth century, most UK industries were using few technologies to accomplish production. The industries used to import cheap raw materials from third world countries and change them into expensive products that they later sold to the third world countries.

However, the third world countries have developed their industries and manufacturing firms resulting in few raw materials been taken to UK. The third world countries products are cheap, which are later sold to UK where the same products are expensive. Many people will prefer the cheap products leading to falling production industries in UK (McConnell & Brue 2005). In most cases, a sign of market failure is seen when there is persistent unemployment resulting in wastage of resources and translates in efficiency in potential output.

This means that the economy is operating below the maximum output that can be achieved. An example is recession; recession will result in contraction seen in the real national output while the economy will be operating below the maximum capacity. On the other hand, when unemployment decrease the economy of a country shifts toward macroeconomic equilibrium. This means solving problems that are associated with structural and fractional unemployment results in the improvement of the economy.

The training and educating the workers who looks for employments is expensive to the economy of the country. Moreover, the long time that the job seekers stay out of the market are de-motivated and loose touch of their skills. The government financials are affected by unemployment allowances, job seekers allowances and decreasing revenues form the workers who were supposed to work and pay income tax, VAT and insurance. These extends to the way that consumer has income to use in leading day-to-day live (Baumol & Blinder 1996).