Unemploymen types of unemployment There are 4 types of unemployment: 1. Frictional Unemployment 2. Structural Unemployment 3. Cyclical Unemployment 4. Seasonal Unemployment Frictional Unemployment Frictional unemployment is due to the normal working of the labor market. That is frictional unemployment results from job search activities. Arises because of the time needed to match qualified job seekers with the available job openings. For e. g. the short span of time you spend unemployed after your graduation, may be because you need to travel to your new employers location.
Structural Unemployment Structural unemployment is the unemployment that arises when changes in technology or international competition change the skills needed to perform jobs or change the location of job. For e. g. Typist who are skilled in using typewriters have to train themselves to use word processors………………… Cyclical Unemployment Cyclical unemployment are unemployment that arise due to deficient in aggregate demand, it fluctuates with the business cycle, cyclical unemployment increases during recessions and decreases during expansions. Seasonal Unemployment
Seasonal unemployment is the unemployment that arises because the number of jobs available has decreased because of the season for e. g. sugar cane farmers. Unemployment Rate Now moving on to unemployment rate. As stated before unemployment rate is one of the key labor force indicator. The unemployment rate is the % of the people in the labor force who are unemployed. UR = U/LF x 100 Problems with the way Unemployment Rate is Measured However I would like to take this opportunity to also discuss 2 problems with the way the unemployment rate is measured: The problem of: . Discouraged workers 2. Under- employed workers Discouraged workers are workers who have in effect drooped out of the labor force because of lack of success in finding jobs. This does not appear in the unemployment statistics. Under- employed workers/underutilized workers- are workers who are working part time but seeking full time employment. Natural Rate of Unemployment Through my ec101 learning journey I have learnt some thing about natural rate of unemployment. So I would like to take this opportunity to briefly discuss about natural rate of unemployment.
Natural rate of unemployment is the unemployment rate when the economy is producing at its potential level of output (at full employment). Natural rate of unemployment is unemployment arises from job search and skill mismatch in the labor market: That is frictional and structural unemployment. There will be no cyclical unemployment. Natural rate of unemployment fluctuates over time due to changes in structure of the economy and labor market functions. Overall I would like to highlight a point, that when we are operating at potential level of output, it does not mean that there is no unemployment.
Only cyclical unemployment doesn’t exist that time. However, frictional and structural unemployment does exist when an economy is producing at potential level of output. Current Trends of unemployment in Fiji Let’s now look at the current trend of unemployment for Fiji for past 5 years. According to Asian Development Bank, in year 2005 the unemployment rate was 6. 8% in 2006 the unemployment rate was 7. 2%, in year 2007 the unemployment rate was 7. 7%, in year 2008 the unemployment rate was 8. 3% and in year 2009 the unemployment rate was 8. % but in year 2010 the rate was 7%. It can be seen that the unemployment rate has increased from year 2005 to 2009 but has decreased in year 2010. It is forcasted or estimated that the unemployment rate for 2011 would be 7%. It can be said that the increase in unemployment rate is because of the two coups during the millennium period. The coups led to a downturn in the economy and lead to job losses. Also many cane farmers lost their land during this period because of non-renewal of the land leases.