ASSIGNMENT TITLE: UNEMPLOYMENT

CLASS : JBA2522B

GROUP NO : GROUP 1

GROUP MEMBERS :

# NAME MATRIC #

1 AZRI REDZUAN BIN ABD LAH AZIZI 2022491508

2 NUR AIEZAH ALEEYA BINTI MOHD RODZI 2022812608

3 ZUHAIRAH BINTI ZAHRIL 2022646072

4 MUHAMMAD ROZAIRI BIN ROSMIDI 2022645962

5 SARA HUDA BINTI MOHAMAD RASUL 2022818842

6 NUR ANIS SOFIEA BINTI SAHRI 2022887796

SUBMITTED TO : SIR BAZRI BIN ABU BAKAR

SUBMISSION DATE : 22 JUNE 2023

DEFINITION OF UNEMPLOYMENT

Unemployment is defined as a situation in the economy where there are people between the age

of sixteen until sixty-five who are not working or unable to find work but are actively seeking jobs.

Unemployment is a significant socio-economic issue that affects individuals, families, and entire

communities around the world. High levels of unemployment can have far-reaching consequences on

both the individual and society as a whole, impacting economic stability, social well-being, and overall

quality of life. Unemployment is often used as a measure of the health of the economy.

There are two types of employees that occur seeking jobs. First and foremost is the labor force.

Any member of the general population between the ages of 16 and 65 who is not incarcerated and is

either employed or unemployed but looking for work. In addition to being in institutions (like colleges),

those who are not in the labor force may also be willfully unemployed and not looking for work. Second

is full employement. The economy is in this state when all resources are being used to create goods and

services. In an economy, full employment is defined as 95% to 96% of total employment. The remaining

4%–5% of the labor force is unemployed due to frictional, structural, or technological reasons, and this is

not a significant economic issue.

Next, unemployment rate is a measure of the percentage of the labor force that is unemployed

and actively seeking employment. It is an important economic indicator that reflects the health of the

job market. The most frequent method to measure the unemployment rate is by dividing the number of

unemployed individuals by the total labor force and multiplying by 100 to get the unemployment rate as

a percentage. The formula is :

UNEMPLOYMENT RATE (%) = Number Unemployed x 100%

. Labor Force

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 Figure 1 the data of unemployment rate in Malaysia

The figure above shows the data of the unemployment rate in Malaysia from 2010 until 2020.

This can clearly be seen that the unemployment rate in Malaysia is the highest in 2020 when the

inflation rate is lower because according to the Phillips Curve, the relationship between inflation and

unemployment rate is inversely proportional.

TYPES OF UNEMPLOYMENT

1. CYCLICAL UNEMPLOYMENT

Figure 2 shows the business cycle of cyclical unemployment

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 Unemployment resulting from insufficient total spending. The quantity of total spending

determines the quantity of national output, which determines the quantity of employment. The business

or trade cycle gives this type of unemployment its name. Economic Cycle is used to describe the

long-term, cyclical ups and downs in the level of economic activity. There is a peak in the business cycle,

a time of full employment when prices tend to rise (also known as the booming period). After some

time, there will be a recession, marked by a drop in overall output, income, employment, and trade. The

economy and economic activity slow down at this time, and some companies may close their doors or

lay off employees in an effort to save costs. During the recovery phase, the economy recovered and jobs

increased. Cyclical unemployment, which can last for years, is a severe issue for a nation and can be

resolved by expansionary government policies.

2. SEASONAL UNEMPLOYMENT

This refers to employees who are employed for at least a portion of the year yet experience

seasonal unemployment at other periods. Examples include rubber tappers who cannot produce during

wet seasons, fishermen who cannot catch fish, and farmers who cannot harvest crops during cold

weather. These types of workers must possess abilities in other industries in order to continue working

throughout these seasons. For instance, when they are unable to fish, fishermen might grow their own

fruits or vegetables or work in a factory.

3. FRICTIONAL UNEMPLOYMENT

This is the type of unemployment brought on by employees quitting their jobs voluntarily and by

brief layoffs. When people leave their jobs in search of a better position or salary or when recent

graduates look for their first job, this could even occur when there is full employment. Although

unemployment is a transient state for these people, it lasts the entire year for the economy. However, it

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is not a significant issue for the nation. If job seekers have appropriate knowledge of the labor market or

use organizations that can assist them in finding employment, their time spent unemployed may be cut

short.

4. STRUCTURAL UNEMPLOYMENT

This type of unemployment is caused by fundamental shifts in an economy and caused by

factors such as technology, competition, and government policy. Employers may not require workers'

skills, or workers may not have the necessary abilities to find employment, which results in

unemployment. There are labour surpluses in some geographic regions and occupations and shortages

in others. For instance, if the mine closed, a coal miner with no other skills might still be without a job.

This type of unemployment cannot be prevented and can happen even in a fully employed economy.

Structural unemployment can last for decades and usually requires a radical change to reverse.

5. TECHNOLOGICAL UNEMPLOYMENT

This is brought about by a development in technology, such as enhanced manufacturing

procedures, rearranged factory layouts, or improved management approaches. The requirement for

labour might decrease if industries adopt more advanced equipment and computers. This type of

unemployment can happen even in full employment and is also unavoidable. The government might

contribute to its reduction by promoting or supplying technologically oriented education or skills.

6. UNDEREMPLOYMENT

When a person does not work full-time or accepts a job that does not reflect their true training

and financial needs, they are considered underemployed. That instance, their employment does not

require all of their abilities and education, or it pays less than full-time. This is not the same as being

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unemployed, which refers to persons who are not currently working. When a skilled worker is denied the

opportunity to demonstrate their worth, the job becomes underemployed.

THE EFFECTS OF UNEMPLOYMENT

For Individuals : Financial Hardship & Emotional Suffering

For an individual, unemployment results in both financial and emotional anguish for a person.

Unemployment can cause a loss of self-worth and a sense of inadequacy that can result in despair,

irritability, an increase in domestic violence, and even suicide. Those who are still working could worry

that they'll be the ones laid off next, which could stress them out and impair their effectiveness at work.

For Economy : Low Production And Income, Slow Growth And High Poverty

For the economy, unemployment is a production loss brought on by idle resources. While the

populace goes without the items that these resources could have offered, resources sit inert during

periods of unemployment. Millions of Americans became hungry during the Great Depression of the

1930s, and vast quantities of food rotted away for lack of a viable market. Due to the inability of

factories to sell their goods, consumers were unable to purchase these goods since they lacked

employment. A significant unemployment issue indicates a deteriorating economy. Low output levels

and income are the result. Long-term unemployment will cause poverty to increase.

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MEASURES TO REDUCE UNEMPLOYMENT

(A) MONETARY POLICY

Using monetary tools, the government and the central bank can expand the money supply and generate

more credit. More business will result from an increase in the amount of money in circulation activities

and boost the number of jobs. Additionally, the Expansionary Monetary Policy is referred to here. The

usage of monetary instruments enables an increase in the amount of money in the commercial bank. As

a result, banks are better able to lend money, enabling businesses and consumers to meet their demand

for goods and services. A rise in employment results from an increase in the economy's total demand.

Controlling the money supply is a short-term strategy to lower unemployment, especially cyclical

unemployment. A persistent growth in the money supply could eventually cause an inflation issue.

Examples of some QUANTITATIVE tools include:

1. A decrease in Reserve Requirements

This covers the statutory reserve, liquid assets, and cash needs. By lowering the percentage of

reserves required from deposits, the goal is to boost the bank's capacity to generate credit.

2. Buying Long Term Bonds

The banks can reduce the length of time for loan repayment by converting long- and

medium-term loans to short-term loans. They are able to expand the number of loans thanks to

this.

3. Buying the Short Term Bonds

To raise the purchasing power of the populace and promote expenditure, the central bank will

purchase short-term bonds from businesses or the public on the open market. Demand growth

will increase employment and lower the unemployment requirements

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 4. Decrease Interest Rate

The central bank will persuade commercial banks to reduce their rate of interest on deposits.

This will reduce total savings and increase the level of demand for money. On the other hand,

when all banks decrease interest rates, the cost of credits to the public will be reduced. This will

increase public purchasing activities and increase the demand for money. Unemployment also

will be reduced when firms offer more jobs. The central bank will persuade commercial banks to

reduce their rate of interest on deposits. This will attract more credit and increase the level of

demand.

5. A Decrease in Discount Rate or Bank Rate

A reduction in the bank rate that the central bank charges discount houses, which will have an

impact on all other market rates and permit more money to circulate in the economy.

QUALITATIVE measures include allowing and supporting the banks and financial institutions to advance

credit to households as well as firms for productive and non-productive purposes.

(B) FISCAL POLICY

1. Decrease in taxes

A decrease in direct and indirect taxes on businesses and households will result in

increased demand for goods and services due to increased consumption. A rise in

investment will result from an increase in investment, which will increase employment

as demand for goods rises.

2. Increase in government spending

On the other hand, more money will be spent by the government to enhance overall

demand. To meet the demand for goods and services from the government, more

workers will be employed. The government and the country may be forced to finance

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 the deficit that results from the excess of government expenditure over tax collection in

the long run, therefore fiscal policy can only be undertaken in the short term.

(C) DIRECT CONTROL POLICY

1) Provision of professional skills and technical education

Workers can adapt to the changes in technology by receiving professional training and

technical and vocational education in relevant subjects. This could boost knowledge and

assist in lowering structural and technological unemployment. Long-term

unemployment might be decreased as a result.

2) Migration of Labor

One option is through shifting or migrating labour to regions where it is required. While

hidden unemployment indicates an oversupply of labour in some areas, structural

unemployment is the outcome of a downturn in some industries. Therefore, moving the

surplus or unemployed workers from certain areas to those that require labour will assist

solve the issue. However, organisations or the government will need to ensure that they

have employment and access to transportation. But this is only a short-term fix and a

temporary measure.

3) The development of new land

Long-term unemployment relief, particularly for seasonal and covert unemployment, can

be achieved by the construction of new land. The government offers additional regions

to developers through organisations like RISDA, FELDA, and FELCRA in order to give them

long-term employment. Additionally, this will halt the flow of villagers into cities,

potentially resolving the issue of urban unemployment.

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4) Birth control

Birth control measures may also be supported in order to moderate the expansion of the

labour supply in an economy. This might aid in lowering frictional and hidden

unemployment. A significant portion of the labour supply can be decreased to satisfy a

finite number of job openings by limiting the birth rate. Long-term effects of this action

can be observed.

5) Creation of new job opportunities

Economic diversification can result in job growth. A country can generate goods and

services across a variety of markets and sectors by diversifying its economy, even if it

lacks a comparative advantage in the production of such goods and services. The

government can create cottage businesses in rural or distant locations in addition to

encouraging labourers to work in agriculture. It's important to support other industries

as well, like tourism and services.

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WHY IT IS IMPORTANT TO UNDERSTAND UNEMPLOYMENT

Understanding unemployment is important because it is a key economic indicator that measures

a country’s economic performance and shows the ability of workers to readily find gainful employment

and contribute to economic output.

One of the reasons why understanding unemployment in a country is crucial is because

unemployment is a key sign of the strength and stability of an economy. High unemployment rates can

be a sign of deeper issues like a slowing economy, a lack of investment, or ineffective labour market

regulations. Policymakers, economists, and companies can devise measures to support job creation and

economic growth by understanding the causes and patterns of unemployment.

Next, unemployment will affect inflation rates and central banks' actions regarding monetary

policy, which has an impact on inflation. A theory in economics called the Phillips curve proposes a

trade-off between inflation and unemployment. Economic experts can help policymakers set the right

interest rates and monetary policies by analyzing unemployment trends, determining the possible

impact on inflation, and assessing the prospective impact on inflation.

Other than that, understanding unemployment is crucial for long-term economic planning. It

helps in identifying structural labour market problems including demographic shifts, technology

disruptions, or changes in international trade patterns. Policymakers may create policies to adapt and

retrain the workforce, encourage innovation, and promote sectors that can lead to future employment

growth by recognising these trends.

All in all, understanding unemployment is crucial for economic stability, inflation management,

and for long-term economic planning. It makes it possible for business leaders, economists, and

policymakers to take well-informed judgements and put specific plans into action that will lessen the

negative effects of unemployment and promote a thriving society.

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e-DOSM-2020_fig1_344349921

Pettinger, T. (2019, June 14). Policies for reducing unemployment. Economics Help. Retrieved June 21,

2023, from

https://www.economicshelp.org/blog/3881/economics/policies-for-reducing-unemployment/

Tretina, K. (2022, August 31). Inflation And Unemployment – Forbes Advisor. Forbes. Retrieved June 19,

2023, from https://www.forbes.com/advisor/investing/inflation-and-unemployment/

Unemployment: Its Measurement and Types | Explainer | Education. (n.d.). Reserve Bank of Australia.

Retrieved June 21, 2023, from

https://www.rba.gov.au/education/resources/explainers/unemployment-its-measurement-and-t

ypes.html

Vorster, S. (n.d.). Policies to Reduce Unemployment (4.7.5) | CIE IGCSE Economics Revision Notes 2020.

Save My Exams. Retrieved June 21, 2023, from

https://www.savemyexams.co.uk/igcse/economics/cie/20/revision-notes/4-government-and-the

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What Is Unemployment? Understanding Causes, Types, Measurement. (n.d.). Investopedia. Retrieved

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