Distinguish between employment and unemployment.

Employment can be defined as a contract between two (2) or more parties for the exchange of
services for money or other forms of compensation for any work done.
Unemployment is generally defined as persons of age who are willing or unwilling to work but
are unable to find jobs in the labour force.

State the difference over and under employment.

The difference between overemployment and underemployment is that overemployment is a case

where there is excessive employment but the labor force is inadequate to support this level of
employment i.e. lots of jobs but not enough human resource whereas underemployment is
defined as skilled workers being employed in positions/jobs that do not utilize their level of
skills/expertise, in other words being employed at jobs that are not sufficient for your
qualifications or experience.

Discuss the types of employment.

There are 3 types of employment namely self-employed, casual wage labourers and regular
salary employees.

Self-Employed- is defined as working for yourself i.e. owning your own business/company.

Casual Wage Labourers- is defined as someone who is a permanent employee of a company

and is contracted for specific sets of services.

Regular Salary Employees- are permanent employees of a company who are engaged in the
day to day operations of the company and are a part of the payroll.

State the effects of Unemployment: both social and economic.

Unemployment has many effects. Some negative effects are:
Lower production
Higher spending on employment relief
Lower tax revenue
Emotional effects

Explain the cost of Unemployment.

State the solution for the various causes/types of unemployment.

The types of unemployment are:

Cyclical unemployment – as the national income changes, the amount of production and
the number of persons employed change.

Solution
Economic growth is one way in which cyclical unemployment can be reduced. As the level
of national income increases, businesses would expand and more workers would be need.

Structural unemployment – this occurs when the economy’s structure changes and it refers
to instances where certain industries close down and new ones open.

Solution
The support of the government through funding education and training helps to increase
the skills and productivity of workers. As labour productivity increases, so too does the
demand for labour.

Real wage or classical unemployment – this occurs when wages are above the market
equilibrium and as a result, companies hire less labour.

Seasonal unemployment – this is due to seasonal demands in certain markets.

Solution
One measure that the government can undertake is to provide employment subsides to
firms during their off season, which can be used to pay workers.

Fictional unemployment – this is as a result of persons switching jobs. As long as individual

are aware of the kind of jobs available in the market, they can easily decide which job suits
them best.

Solution
The government can create employment programmes for school graduates who may have
difficulties finding jobs for the first time because they have no work experience.