Unemployment – Causes, effects and trends

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Employment has direct implications on lives of everyone of us and ironically, unemployment has been a part of every country for a while now. It is such a critical issue that it has such implications which reach beyond money matters. With the increased development in technology, the rate of unemployment is rapidly increasing. It is because most of the industrial process, which used to be labor intensive before, are now being automated. The issue of unemployment always has deeper socio-economic effects. The youth are the real victims of unemployment as they get pessimistic during their blooming days and it in turn creates a whole generation of negative minded people. Despite automation, there are a number of other reasons as well to the issue and a greater percentage of population is being hit by the unemployment, corrective actions for which need Government intervention.

Unemployment – Causes, effects and trends

One of the major cause of unemployment among labor class is the automation of the industrial processes. Where industrial revolution has resulted into greater production efficiency due to automation of manual processes, at the same time a great number of labor are jobless. Business, specially within the manufacturing industry, find it useful to invest in machinery rather than people. The same level of automation can also be seen at the higher levels, like accountants, for example (Burns). The newer, more advanced ERP systems are replacing the well-staffed finance departments in many organizations and it is adding to the unemployment levels.

The issue of unemployment has too many problems attached to it. Unemployment is like a chronic disease in this society which is fatal for the economy of the country. As a human being, we are programmed to build a career, work and make lives easy by getting such jobs that we are passionate about. However, with the unemployment prevailing, it is not easy to build a career. The youth has faced a lot of problems which is why they feel really disappointed after their graduation. These social problems contribute to raising illegal activities in the society.

Fig 1.1 United Stated Unemployment rate 2017 (Riffkin).

In reference to Figure 1.1, Among the major groups in the United States, the rate of unemployment increased up to 4.7% in the year 2017. However, the rate of white wedged increased up to 3.5%. According to this graph, the rate of jobless women in the United States is up to 3.6 percent, Jobless men 3.9 percent, teenagers 13.9 percent and Asians up to 3 percent. Moreover, the number of long term unemployment has increased to almost 1.4 million in January. There was also a significant percentage of people who were employed as part time job holders at that time (Riffkin). It was almost 5.0 million in January and it is still unchanged.

Solutions of unemployment:

The clear cut solution of unemployment is to create better employment opportunities. According to latest studies, there is an average increase of 2-3 percent in the economic growth rate which is enough to create minimum 150,000 jobs which is exactly what we need in order to prevent the increase in the unemployment.

  • The first solution to decrease the unemployment rate in a country is the changing of the monetary policy. The monetary policy can provide quite effective and a quick solution to fix the problem. Decreasing the interest rates helps flourishing the economy as more people tend to set-up or expand the businesses. There is a higher demand to change the pattern of investment as well (Mehta). This change of system will be really helpful for the organizations and sole traders as well.
  • The second most important thing to do is work on the educational system. The present system does not allow every student to get a job which will help them choose better careers so that they can work full time jobs and not waste their time after graduation at part time jobs (Amadeo). Speaking of education, there is also a need that the youth may be engaged in more technical education which would empower them to make a living as soon as they graduate.
  • Another solution to unemployment in on the part of government. The government should develop policies where they support people who are not employed yet due to one reason or another. Government should be providing the unemployed people, especially those who are skilled in any field, with the low interest rate loans so that they may be able to establish their source of income. There are scores of highly skilled people in the society who only need an initial start-up and then they can carry it further. It includes plumbers, electricians, carpenters, car mechanics and many other alike skilled people (Amadeo). If supported properly, they may not only be able to support themselves but also have some youngsters employed with them.
  • Government should be providing more unemployed people with unemployment support. It is obvious that all the money received by unemployed people shall be spent and it will create new business activities. It is a fast track solution for handling the unemployment (Amadeo). In this way, the funds provided by the Government are directly injected into the economy of the country.
  • On the longer term, one solution is to invest in the industry development. Construction and mass transit projects are of particular importance in this regard. According to studies, if one billion dollars are spent on mass transit projects, it will open up around twenty thousand job opportunities in construction industry (Amadeo). Construction is such a vast field that a lot of other smaller industries are directly linked to it. Investing in the construction is like feeding a whole system of economy which creates scores of employment opportunities for unemployed and self-employed as well.
  • Increased government spending on education sector can also be a solution to unemployment. Every one million dollar spent in the education sector add back 1.3million dollars to the economy. It is because more people are technically educated which helps them landing the jobs. More people get to earn and the spending level also increases, thus opening up new economic activities.
  • Organizing different type of exhibitions and can also help reduce the unemployment. With the increased exhibitions or expos, there will be short term job openings for the local population. Though this may not result in long term effects, but it will cater the immediate need of the unemployed people.

Figure 1.2 Labor force statistics in the United States.


To sum up the issue of unemployment, the government needs to take practical steps in order to solve the issue of unemployment. Unemployment is currently the biggest challenge a lot of countries are facing at this moment. The idea of creating more and better employment opportunities for the people and creating a better living standard for everyone is a responsibility of the government. As a nation, everyone needs to play their part in building a career which can serve them well in the future as an individual in the society. This government needs to consider the unemployment issue very seriously as this issue also plays a factor in encouraging illegal activities in a country. Every barrier which lies in the job creation should be removed immediately and effectively as this is how the government can initiate to solve this issue. This is definitely not an easy journey.

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