Causes And Effects Of Unemployment In South Africa Pdf

causes and effects of unemployment in south africa pdf

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How the Unemployment Rate Affects Everybody

Job creation and unemployment are affected by factors such as aggregate demand , global competition , education, automation , and demographics. These factors can affect the number of workers , the duration of unemployment, and wage rates. There are a variety of domestic, foreign, market and government factors that impact unemployment in the United States.

These may be characterized as cyclical related to the business cycle or structural related to underlying economic characteristics and include, among others:. There are many domestic factors affecting the U. These include: economic growth; cyclical and structural factors; demographics; education and training; innovation; labor unions; and industry consolidation [4] In addition to macroeconomic and individual firm-related factors, there are individual-related factors that influence the risk of unemployment.

Macroeconomic conditions affect both the quantity and types of jobs that are available. This is normal and healthy for the economy, as it increases the matches between job openings and seekers. Structural unemployment is caused by structural changes in the economy. This includes technological changes and the movement and relocation of certain industries.

Cyclical unemployment is caused by the various stages of the business cycle; more specifically the recession and recovery stages. During a recession, output production temporarily falls due to lack of demand, and as a result fewer workers are needed. They are also the most prevalent during recessions, depressions, and financial crises.

There is ongoing debate among economists regarding the extent to which unemployment is cyclical i. A general reduction in employment across multiple industries would likely be cyclical, while a skills or geographic mismatch for available jobs would be structural.

During the Great Depression, "hard core" structural unemployment was very common. Hard-core unemployment refers to individuals that have been unemployed for a prolonged period of time i.

The hard core unemployment phenomenon present in the s is believed to be caused by not only the depression, but also a shift in business personnel policies. In the s, businessmen found the most profitable wage to be the "efficiency wage", one that attracted more productive workers.

This resulted in new policies designed to find trained, efficient workers, and to encourage other workers to become more like them.

Ben Bernanke stated in November "[T]he slow pace of employment growth has been widespread across industries and regions of the country. That pattern suggests a broad-based shortfall in demand rather than a substantial increase in mismatch between available jobs and workers, because greater mismatch would imply that the demand for workers would be strong in some regions and industries, not weak almost across the board.

Likewise, if a mismatch of jobs and workers is the predominant problem, we would expect to see wage pressures developing in those regions and industries where labor demand is strong; in fact, wage gains have been quite subdued in most industries and parts of the country. Labor mobility was not a key issue due to the widespread nature of job losses across geographies and industries.

Cyclically sensitive industries such as manufacturing and construction had the most significant job losses. One study referenced in the CRS research indicated that long-term unemployment can convert cyclical to structural unemployment through loss of skills.

Mohamed El-Erian wrote in May "Unemployment must be seen as much more than a cyclical problem; it's a structural one that requires concurrent progress on job retraining, housing reform, education, social safety nets and private-sector competitiveness America's political parties must jointly agree [to make] progress on the structural-reform agenda The term frictional unemployment refers to the period when workers are searching for a job or changing jobs. It is sometimes called search unemployment and can be voluntary based on the circumstances of the unemployed individual.

Frictional unemployment is always present in an economy, so the level of involuntary unemployment is properly the unemployment rate minus the rate of frictional unemployment. Involuntary vs voluntary unemployment: Job loss is considered to be a form of involuntary employment, and occurs when workers are either fired or laid off. A worker leaving a job due to health reasons is also considered to be involuntary job loss.

This is because, although the worker rather than the employer made the decision, the worker has no control over the situation. Voluntary employment is usually a conscious decision that can be influenced by external factors.

Job-seeker benefits and allowances constitute some of these external factors. Job-seekers' benefit is a payment given to the short-term unemployed. Job-seekers allowance is typically given to those whose insurance benefits are not adequate, or do not have enough benefits to qualify for job-seekers' benefit; it acts as a safety net for these individuals. The Natural rate of unemployment refers to the rate of unemployment due to structural or supply-side factors alone.

Cyclical factors, such as government stimulus or austerity policies, cause the actual unemployment rate to vary around the natural rate. Economists debate the natural rate of unemployment. Demographics have a significant impact on the labor force and therefore employment statistics.

The U. Reasons for the decline in labor force participation vary. One Federal Reserve economist estimated that demographics accounted for two-thirds of the decline since Other Federal Reserve studies place the blame primarily on the recession of — For example, a Federal Reserve study reported in October that: "The BLS lists the following factors as primary drivers of the decline in the LFP rate since 1 the aging of the baby boomer cohort; 2 the decline in the participation rate of those 16—24 years old; 3 the declining LFP rate of women since its peak in , and 4 the continuous decline of the LFP rate of men since the s.

The main factors that keep the aggregate LFP rate from falling further are the increase of the LFP rate of those 55 and older and the strong attachment to the labor force of Hispanic and Asian people, who constitute the main share of the immigrant population.

Bureau of Labor Statistics reported in December the reasons given by persons surveyed for not working. Overall, a greater percentage of persons in versus were ill or disabled, retired, or going to school.

For example, the percentage of those going to school had increased by Economists at the Federal Reserve Bank of Atlanta reported in April that changes in the labor force participation rate reflect both aging demographic and behavioral aspects.

They estimated the demographic effect was responsible for about half of the 3. However, the behaviors contributing to the remainder changed when measuring components of the 1. Those persons wanting a job who were still considered outside the workforce due to not actively searching for employment contributed 0. From to , later retirement was another factor offsetting the decline, while disability, more youth in school, and prime age workers not wanting a job contributed to the decline.

Analyzing the 25—54 prime working age range can help correct for the effects of aging Boomers leaving the workforce. The jobs created since the end of the recession have not been sufficient to show a significant improvement in employment for the 25—54 age range. The Hamilton Project reported in March that: "As the Baby Boomers retire, immigration flows change, and the number of young people entering the labor force declines, the number of new jobs needed to maintain pre-recession employment norms will decline One result of this aging of the population is that overall labor force participation rates and therefore the number of new jobs required to keep up with the labor force are expected to decline.

The Bureau of Labor Statistics provides a monthly employment situation summary. For June "Among the major worker groups, the unemployment rates for adult women 5. The rates for adult men 5. The jobless rate for Asians was 5. The number of long-term unemployed those jobless for 27 weeks or more declined by , in June to 3. Over the past 12 months, the number of long-term unemployed has decreased by 1. Workers with higher levels of education face considerably lower rates of unemployment.

This difference depends significantly on the type of major and type of employment. Some companies believe that with high unemployment, they can find the skills necessary should job openings arise. A variety of experts have proposed education reforms to improve U. Ideas relate to better qualified and incentivized teachers, less reliance on standardized testing, better feedback systems to help struggling teachers and students, more investment, paying for performance, employing data systems that track how much a child learns from a teacher, measuring teacher quality, giving local administrators the ability to manage staff and finances, and comparing results to the best education systems in the world.

The rapid pace of technology change and global competition are rewarding those who continuously improve their skills and education. Futurist Alvin Toffler wrote: "The illiterate of the future are not those that cannot read or write. They are those that cannot learn, unlearn, relearn. Thomas L.

Friedman wrote: "How [can workers] adapt? It will require more individual initiative. We know that it will be vital to have more of the 'right' education than less, that you will need to develop skills that are complementary to technology rather than ones that can be easily replaced by it and that we need everyone to be innovating new products and services to employ the people who are being liberated from routine work by automation and software.

The winners won't just be those with more I. It will also be those with more P. A "skills gap" would exist if employers were demanding skills that the workforce did not provide. The hypothesis of such a gap in the USA recently grew stronger, in part due to the poor results of the country at OECD adult skills survey.

Unemployment remained higher for workers at all education levels. Further, workers with the "right" skills would theoretically receive significant raises if there were skills shortages, which was not occurring. Paul Krugman wrote in March "Meanwhile, multiple careful studies have found no support for claims that inadequate worker skills explain high unemployment.

Long-term unemployment is defined by the International Labor Organization ILO as referring to people who have been unemployed for 27 weeks or longer and are actively seeking employment.

Other measurements have been used by different Bureaus and Agencies worldwide. Bureau of Labor Statistics classifies unemployment based on various aspects into six groups U1-U6 , with U3 referring to the most widely recognized, ILO definition. The ratio of long-term unemployed 27 weeks or longer to unemployed rose from It has steadily fallen to a still elevated Skills may become obsolete, business contact lists become outdated, and current industry information is lost.

About 1. Job training programs and incentives for companies to hire the long-term unemployed are among the solutions available, but gathering the political will to address an isolated group is difficult. The long-term unemployed are less likely to vote. CBO reported several options for addressing long-term unemployment during February Two short-term options included policies to: 1 Reduce the marginal cost to businesses of adding employees; and 2 Tax policies targeted towards people most likely to spend the additional income, mainly those with lower income.

Over the long-run, structural reforms such as programs to facilitate re-training workers or education assistance would be helpful. Economist Paul Krugman wrote that historically, worker participation in labor unions gave workers more power in negotiating how corporate profits were split up with shareholders and management. Organized labor acted to limit layoffs.

The Overall Effects of Unemployment

Job creation and unemployment are affected by factors such as aggregate demand , global competition , education, automation , and demographics. These factors can affect the number of workers , the duration of unemployment, and wage rates. There are a variety of domestic, foreign, market and government factors that impact unemployment in the United States. These may be characterized as cyclical related to the business cycle or structural related to underlying economic characteristics and include, among others:. There are many domestic factors affecting the U. These include: economic growth; cyclical and structural factors; demographics; education and training; innovation; labor unions; and industry consolidation [4] In addition to macroeconomic and individual firm-related factors, there are individual-related factors that influence the risk of unemployment.

JavaScript is disabled for your browser. Some features of this site may not work without it. Graduate unemployment in South Africa: extent, nature and causes. Author Van de Rheede, Taryn Joy. Metadata Show full item record.

Unemployment, also referred to as joblessness, occurs when people are without work and actively seeking employment. Unemployment, also referred to as joblessness, occurs when people are without work and are actively seeking employment. During periods of recession, an economy usually experiences high unemployment rates. There are many proposed causes, consequences, and solutions for unemployment. Unemployment is calculated as a percentage by dividing the number of unemployed individuals by the number of all individuals currently employed in the workforce. The final measurement is called the rate of unemployment.

Insight Newsletter Issue 13

There are various arguments about the causes of unemployment in South Africa, some of which are:. Some research shows that the deliberate exclusion of black people from the educational system and from skilled occupations under apartheid contributed to high rates of unemployment today. Inadequate education and lack of productivity is costing jobs. Unemployment increases progressively with decreased educational levels; and the education system is not producing the skills for the labour market.

Periods of high unemployment in the UK exacerbated problems of poverty, alienation, and levels of inequality. The economic and social costs of unemployment include Personal costs to unemployed lost income, loss of sense of value, lower on-the-job training Costs to government lost tax revenue and higher benefit spending Costs to society in general social problems, alienation, lost GDP.

Causes of unemployment in the United States

Unemployment affects the unemployed individual and his family, not only with respect to income, but also with respect to health and mortality. Moreover, the effects linger for decades. The effects of unemployment on the economy are equally severe; a 1 percent increase in unemployment reduces the GDP by 2 percent. The criminal consequences of unemployment are mixed; in some circumstances, property-crime rates increase significantly; in other circumstances, there seems to be no effect. Writing in The New York Times on "The Enduring Consequences of Unemployment," economist Binyamin Applebaum explains that the consequences for an unemployed individual are both grave and long-lasting.

This research was done as part of a larger research project on the experience of unemployment in South Africa. Contributors to this project were: Dr. Unemployment has both individual and social consequences that require public policy interventions. For the individual, unemployment can cause psychological distress, which can lead to a decline in life satisfaction. It can also lead to mood disorders and substance abuse.

This type of unemployment is when employees leave their job to find a better one. That is when workers' skills or income requirements no longer match the jobs available. The seventh cause leads to cyclical unemployment.

Youth unemployment in South Africa. A theological reflection through the lens of human dignity. Anita Cloete 1. This article pays attention to youth unemployment as one of the most serious socioeconomic challenges in South Africa.

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Economic costs of unemployment

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