Subject Code: MB206 Marks:100

SEMINAR REPORT

On

“UNEMPLOYMENT”
For The Partially Fulfilment Of

Award Of Degree In

MBA

Submitted By

215220672026

SANTI UDAYKUMAR

Sri Indu Institute of Management

Approved by AICTE, New Delhi & Osmania University,

Sheriguda (V), Ibrahimpatnam(M), R.R.Dist

2021
 ABSTRACT
This seminar report mainly deals with the concept or topic of unemployment.
The National Income mainly depends on the rate of employment only. Actually, the
national’s economy will depend on the rate unemployment itself. In this report it mainly
deals with the concept of unemployment, types, how it causes, what are the effects, how
whole world suffered this year and what are the solution can be taken to decrease the
rate of unemployment of the nation.
 UNEMPLOYMENT

What is Unemployment?

Unemployment is a term referring to individuals who are employable and

actively seeking a job but are unable to find a job. Included in this group are those
people in the workforce who are working but do not have an appropriate job. Usually
measured by the unemployment rate, which is dividing the number of unemployed
people by the total number of people in the workforce, unemployment serves as one of
the indicators of a country’s economic status.

Understanding Unemployment

The term “unemployment” is often misunderstood, it as it includes people who

are waiting to return to a job after being discharged, yet it does not include individuals
who have stopped looking for work in the past four weeks due to various reasons such
as leaving work to pursue higher education, retirement, disability, and personal issues.
Also, people who are not actively seeking a job but do want to work are not classified
as unemployed.

Interestingly, people who have not looked for a job in the past four weeks but
have been actively seeking one in the last 12 months are put into a category called the
“marginally attached to the labour force.” Within this category is another category
called “discouraged workers,” which refers to people who have given up looking for a
job.

The categories mentioned above sometimes causes confusion and debate as to

whether the unemployment rate fully represents the actual number of people who are
unemployed. For a full understanding, one should juxtapose “unemployment” with the
term “employment,” which the Bureau of Labour Statistics (BLS) describes as
individuals aged 16 and above who have recently put hours into work in the past week,
paid or otherwise, because of self-employment.

Definition

Unemployment refers to a situation in which the workers who are capable of

working and willing to work do not get employment. The state of being without any
work yet looking for work is called unemployment.
Types of Unemployment

❖ Frictional unemployment
❖ Structural unemployment
❖ Cyclical unemployment
❖ Seasonal unemployment

Frictional unemployment

Frictional unemployment occurs when people voluntarily change jobs within an

economy. After a person leaves a company, it naturally takes time to find another job.
Similarly, graduates just entering the workforce add to frictional unemployment. This
type of unemployment is usually short-lived. It is also the least problematic from an
economic standpoint.

Frictional unemployment is a natural result of the fact that market processes

take time and information can be costly. Searching for a new job, recruiting new
workers, and matching the right workers to the right jobs all take time and effort,
resulting in frictional unemployment.

Structural unemployment

Structural unemployment comes about through a technological change in the

structure of the economy in which labour markets operate. Technological changes, such
as the replacement of horse-drawn transport by automobiles or the automation of
manufacturing, lead to unemployment among workers displaced from jobs that are no
longer needed.

Retraining these workers can be difficult, costly, and time-consuming, and

displaced workers often end up either unemployed for extended periods or leaving the
labour force entirely.

Cyclical unemployment

Cyclical unemployment is the variation in the number of unemployed workers

over the course of economic upturns and downturns, such as those related to changes
in oil prices. Unemployment rises during recessionary periods and declines during
periods of economic growth.
 Preventing and alleviating cyclical unemployment during recessions is one of
the key reasons for the study of economics and the purpose of the various policy
tools that governments employ on the downside of business cycles to stimulate the
economy.

Seasonal unemployment

Seasonal unemployment is when people who work in seasonal jobs become

unemployed when demand for labour decreases. This typically occurs when a specific
time of year ends or a new season begins, such as for a holiday or due to weather
changes.

For example, someone who works at a resort during the summer might
experience unemployment once the fall arrives and summer facilities have to close.

Seasonal unemployment often takes place in locations that see high volumes of
tourists, as different tourist attractions can close or slow their operations depending on
the time of year and season. This is especially true for tourist attractions that exist
outdoors, as they might only be able to operate during certain types of weather.

Long-term Unemployment vs. Short-term Unemployment

Unemployment that lasts longer than 27 weeks even if the individual has sought
employment in the last four weeks is called long-term unemployment. Its effects are far
worse than short-term unemployment for obvious reasons, and the following are noted
as some of its effects.
• Some 56% of the long-term unemployed reported a significant decrease in their
net worth.
• Financial problems are not the only effects of long-term unemployment as 46%
of those in such a state reported experiencing strained family relationships. The
figure is relatively higher than the 39% percent who weren’t unemployed for as
long.
• Another 43% of the long-term unemployed reported a significant effect on their
ability to achieve their career goals.
• Sadly, long-term unemployment led to 38% of these individuals losing their
self-respect and 24% seeking professional help.
Causes of Unemployment

Unemployment is caused by various reasons that come from both the demand
side, or employer, and the supply side, or the worker. Demand-side reductions may be
caused by high interest rates, global recession, and financial crisis. From the supply
side, frictional unemployment and structural employment play a great role.

• High Population growth.

• Absence of employment opportunities.
• Seasonal Employment.
• Joint Family System.
• Increasing turnout of students from Indian Universities.
• Slow Developing of Industries.
• Insufficient Rate of Economic Progress.

Effects of unemployment

The impact of unemployment can be felt by both the workers and the national
economy and can cause a ripple effect. Unemployment causes workers to suffer
financial hardship that impacts families, relationships, and communities. When it
happens, consumer spending, which is one of an economy’s key drivers of growth, goes
down, leading to a recession or even a depression when left unaddressed.

Unemployment results in reduced demand, consumption, and buying power,

which in turn causes lower profits for businesses and leads to budget cuts and workforce
reductions. It creates a cycle that goes on and on that is difficult to reverse without some
type of intervention.

Individual: Unemployed individuals are unable to earn money to meet financial needs.
Failure to pay instalments or to pay rent may lead to homelessness through eviction.
Unemployment increases chances of malnutrition, illness, mental stress, and loss of
self- esteem, leading to depression.

Society: An economy with high unemployment is not using all of the resources, i.e.,
labour, available to it. Since it is operating below its production capability, it could have
higher output if more people are usefully employed.
 However, there is a difference between economic efficiency and
unemployment: if the frictionally unemployed accepted the first job they were offered,
they would be likely to be operating at below their skill level, reducing the economy's
efficiency.

Measurement of unemployment

Unemployment Rate

The unemployment rate is the percent of the labour force that is jobless. It is
a lagging indicator, meaning that it generally rises or falls in the wake of changing
economic conditions, rather than anticipating them. When the economy is in poor shape
and jobs are scarce, the unemployment rate can be expected to rise. When the economy
is growing at a healthy rate and jobs are relatively plentiful, it can be expected to fall.

The unemployment rate is calculated by expressing the number of unemployed

persons as a percentage of the total number of persons in the labour force. The labour
force (formerly known as the economically active population) is the sum of the number
of persons employed and the number of persons unemployed. Thus, the measurement
of the unemployment rate requires the measurement of both employment and
unemployment.

Economists typically focus on the unemployment rate. The unemployment rate

is expressed as a percentage, and is calculated as follows:

{Unemployment rate = unemployed worker/total labour force*100}

As defined by the international labour organization, "unemployed workers" are

those who are currently not working but are willing and are able to work for pay,
currently available to work, and actively searching for work.

Rate of unemployment over the world in the years 2005 – 2022

❖ Young people were left unemployed by the pandemic in far greater numbers
than adults, with the effects being felt worse in lower income countries.
❖ Young women have tended to be more likely to become unemployed as a result
of COVID-19 disruption than young men.
❖ The equivalent of 255 million full-time jobs were lost around the world due to
the pandemic, according to data from the International Labour Organization.
 Around the world in 2020, youth employment dropped by 8.7%. For adults the fall
in employment was less severe, registering at 3.7%. This difference illustrates the extent
of the pandemic’s economic consequences for younger people.

Unless action is taken to tackle the way the pandemic has affected young
people’s employment opportunities, many of them could continue to struggle for
decades, according to the International Labour Organization (ILO).

A ‘far deeper’ setback

The economic hit inflicted on the global economy in 2020 was “far deeper” than
the one seen in 2009, following the global financial crisis. The effects have been felt all
around the world. In April 2020, the US experienced its highest rate of unemployment
(14.8%) since records began.

The challenge of the economic disenfranchisement of young people is also

featured in the World Economic Forum’s Global Risk Report 2021. “Today’s youth
already bear the scars of a decade-long financial crisis, an outdated education system,
and an entrenched climate crisis, as well as violence in many places,” the report says.

With “lockdown and other containment measures, most notably in the second
quarter of 2020,” enacted in most countries, the ILO says the effects of pandemic-
induced economic harm were widespread. “Output in emerging and developing
economies is estimated to have declined by 2.2% in 2020 compared with a fall of 4.7%
in advanced economies.”

The number of working hours that disappeared because of COVID-19 are

equivalent to 255 million full-time jobs being lost around the world. Not only have
young people suffered more than adults, but young women have been hit hardest by
unemployment during the pandemic.

Solutions for Unemployment

❖ Better education
❖ Motivation programs
❖ Programs against drug addiction and homelessness
❖ Fight discrimination
❖ Support programs for mental issues
❖ Subsidies for companies how are reintegrating unemployed persons
❖ Fiscal and monetary measures in a financial crisis situation
❖ Fight structural unemployment
❖ Create jobs
❖ A Change in the pattern of investment
❖ Encouragement to small enterprises as against big enterprises
❖ Problem of Choice of technique
❖ Encouragement of New Growth Centres in Small Towns and Rural Areas
❖ Subsidies on the Basis of Employment
❖ Reorientation of Educational Policy

Better education

In order to fight unemployment, it is crucial to improve education levels of

people so that it will be easier for them to find a job. This education should start early
in school and teachers should pay close attention and take care of every child to ensure
good educational progress. Moreover, children from families that do not care about
their education at all should be supported by community programs and financial aid so
that these children also have a fair chance to increase their level of education and find
a good job once they turn into adults.

Motivation programs

Jobless people who are not willing to work at all have to be incentivized to get
a job. This could mean that their social security levels may be lowered if they do not
take action to go back to work. It could also mean that these people are forced into
programs in which they get taught about the advantages of getting out of unemployment
so they have a broader perspective on the chances of employment and might be more
willing to search for a job.

Programs against drug addiction and homelessness

Before homeless people and drug addicts are able to get and maintain a job,
these people often need support from social workers or programs in order to find their
way back into society.

These programs should show these people a future perspective so that they are willing
to take the hard way out of addiction and homelessness and start a new life. By doing
so, we will be able to bring part of these people back into occupations.

Fight discrimination

We should also try to fight all sorts of discrimination as a society. This also
includes gender inequality. In countries where women are still repressed and not seen
as equally important as men, governments and celebrities should speak up and show
the general public that women are as important as men and therefore job discrimination
due to gender is not a senseful behaviour. By doing so, the job opportunities for women
may improve since the acceptance towards them will be increased.

Subsidies for companies how are reintegrating unemployed persons

Many companies also refrain from employing unemployed persons, especially

if these persons suffer from long-term unemployment. In this case, it might be senseful
to provide financial incentives by governments for these firms if they are willing to
reintegrate long-term unemployed persons into the workforce by offering them a job.
By doing so, these people may be able to get a job and therefore may be able to get out
of unemployment.

Create jobs

An intuitive measure to fight unemployment is to create jobs. Jobs can be

created in several different ways. The creation of jobs often involves raising the
incentive for companies to employ people and open branches in weak economic
regions. This can often be accomplished by giving firms financial incentives like tax
advantages or other incentives to offer jobs for the local population.

Fight structural unemployment

Structural unemployment is hard to fight and will take a quite long time. It can
only be fought if governments take action for a better qualification of workers so that
the incentive for companies increases to employ these workers. It also has to be
analysed which kinds of workers are needed in the respective region so that they can be
qualified accordingly and are able to get out of unemployment.

Fiscal and monetary measures in a financial crisis situation

In case unemployment is due to a financial crisis, central banks should take

appropriate measures in order to get out of this crisis situation by applying fiscal or also
monetary policy measures. These measures could help to stabilize the global economy
and may prevent a further downward slope which in turn would result in even higher
unemployment. Thus, in financial crisis situations, it is crucial that central banks take
suitable measures in order to prevent high levels of unemployment.

Final Word
Unemployment is a serious social and economic issue that results in a
tremendous impact on everything but is often overlooked. A stronger system of
assessing unemployment should be put in place in order to determine its causes and
how to address it better.