Disadvantages of Unemployment Essay

Submitted By tayspits
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Pages: 7

Unemployment occurs when people are without work and actively seeking work. During periods

of recession, an economy usually experiences a relatively high unemployment rate. According to
International Labour Organization report, more than 200 million people globally or 6% of the world's workforce were without a job in 2012. (International Labour Organization)

Disadvantages of Unemployment
At first glance, unemployment seems inefficient since unemployed workers do not increase profits. However, unemployment is profitable within the global capitalist system because unemployment lowers wages which are costs from the perspective of the owners. From this perspective low wages benefit the system by reducing economic rents. Yet, it does not benefit workers. Capitalist systems unfairly manipulate the market for labour by perpetuating unemployment which lowers laborers' demands for fair wages. Workers are pitted against one another at the service of increasing profits for owners.
According to Marx, the only way to permanently eliminate unemployment would be to abolish capitalism and the system of forced competition for wages and then shift to a socialist or communist economic system. For contemporary Marxists, the existence of persistent unemployment is proof of the inability of capitalism to ensure full employment.Workers as well as employers accept a certain level of imperfection, risk or compromise, but usually not right away; they will invest some time and effort to find a better match. This is in fact beneficial to the economy since it results in a better allocation of resources.
However, if the search takes too long and mismatches are too frequent, the economy suffers, since some work will not get done. Therefore, governments will seek ways to reduce unnecessary frictional unemployment through multiple means including providing education, advice, training, and assistance such as daycare centers. As defined by the International Labour Organization, "unemployed workers" are those who are currently not working but are willing and able to work for pay, currently available to work, and have actively searched for work.Individuals who are actively seeking job placement must make the

effort to: be in contact with an employer, have job interviews, contact job placement agencies, send out resumes, submit applications, respond to advertisements, or some other means of active job searching within the prior four weeks. Simply looking at advertisements and not responding will not count as actively seeking job placement. Since not all unemployment may be "open" and counted by government agencies, official statistics on unemployment may not be accurate. In the United States, for example, the unemployment rate does not take into consideration those individuals who are not actively looking for employment, such as those still attending college. The unemployment ratio calculates the share of unemployed for the whole population. Particularly many young people between 15 and 24 are studying full­time and are therefore neither working nor looking for a job. This means they are not part of the labour force which is used as the denominator for calculating the unemployment rate. The youth unemployment ratios in the European Union range from 5.2 to 20.6 percent . These are considerably lower than the standard youth unemployment rates, ranging from 7.9 to 57.9 percent.

Health/social/financial stability issues caused by unemployment
Unemployed individuals are unable to earn money to meet financial obligations. Failure to pay mortgage payments or to pay rent may lead to homelessness through foreclosure or eviction. Across the
United States the growing ranks of people made homeless in the foreclosure crisis are generating tent cities.Unemployment increases susceptibility to malnutrition, illness, mental stress, and loss of self­esteem, leading to depression. According to a study published in Social…