People are going to schools and parents are struggling that there children succeed in school so that they can get good employment. However, the rate of unemployment has increased and many countries are affected by it. The financial crunch that is been experienced by most developed countries has resulted in many companies and organizations been closed. Many countries and organizations develop ways that they can reduce this rate of unemployment and prevent negative impacts to their organizations and countries.
Thus, the aim of this report is to analyze unemployment in United Kingdom bring out the causes of unemployment and the consequences of it to the economy of the country. Moreover, the report discusses ways that unemployment can be reduced. 2. 0 United Kingdom Unemployment Analysis In most cases and especially in the United Kingdom, unemployment may be defined has a person who is capable of working and is looking for employment or a person who is seeking for job seeker’s allowances.
Currently, due to recession the number of people who are employed has drastically reduced. By September 2008, the employed people were 29. 41 million while the employment rate was 74. 4%. According to data from ILO, unemployed people are 1. 82 million by September 2008, which is 5. 8% of the workforce (Gash 2008). The unemployed people who are looking for the jobseekers allowance was 980, 900. The figure of 5. 8% has decreased from the long high of 1992, which was about 10%. This is because there has been no major economic growth interruption.
However, the current increase of unemployment is attributed to the current credit meltdown experienced all over the world and mostly in the developed countries (Theodere 2007). 3. 0 Types of Unemployment in United Kingdom 3. 1 Keynesian/Cyclical Unemployment Cyclical unemployment is the time that the economy requires a small workforce; it is also referred to as demand deficient unemployment. In most cases, it occurs when the economy is in disequilibrium and is associated with business cycle.
Thus, it means that many job seekers are looking for employment in an economic situation that requires few recruits. Another common cause of cyclical unemployment is recession. Currently, most developed economies have felt the pain of financial crunch and United Kingdom is not spared. Various companies have reduced their abilities to produce large scales while others have been completely shut down. This means that there are companies that are dumping their employees into a market that has already been saturated with job seekers (Gash 2008). 3. 2 Frictional Unemployment
This kind of unemployment usually occurs when an employee shifts between employments and applies to the new entrants to the employment market – graduates. When an employee shifts between employments, the time runs. This time the worker is said to be frictionally unemployed. This type of problem occurs in an efficient economy and long time employee welfare. Moreover, such unemployment is caused by imperfect information and application for the right position takes time. For instance, the case of UK, the average time that is required for an employee to successful change between employments is six weeks.
The six weeks time is the time required to look for the opportunity, apply, go for an interview, wait for the interview results and if accepted given some time before the employee actually starts working. Each month three hundred and fifty thousand people are made redundant, incorporating the six weeks lag it results to about six hundred thousand employees per month. Such unemployment contributes to about 40% of the unemployment number in the economic market. However, this problem can be reduced by having perfect information concerning the market (Howard 2006).