What are the Main Types and Causes of Unemployment?
Structural unemployment happens when there is a long-term decline in demand in an industry leading to fewer jobs as demand for labour falls away.
Examples might include:
Structural unemployment exists where there is a mismatch between their skills and the requirements of the new job opportunities. This problem is due to occupational and geographical immobility of labour and requires investment to improve skills, give the unemployed suitable and effective training and work experience and make them able to move location if needed to take a new job.
Cyclical unemployment is most likely to occur when there is a negative output gap
Bank of England research suggests that strong growth in self-employment in the UK is due to rising workforce participation by older people and women and technological changesDeloitte Monday Briefing (March 2015)
The term “technological unemployment" was first coined in the 1930s by John Maynard Keynes to describe the way in which productivity-enhancing innovation displaces workers and creates periods of higher unemployment. It is linked to structural unemployment.
Some link the rise of the internet as a cause of technological unemployment for example the US business Kodak went bust in 2013 with its 140,000 employees, in part the result of the rapid expansion of Instagram, which, when it was sold to Facebook employed just 13 people. Evidence over the long term is that innovation and the emergence and uptake of new technologies creates more jobs than it destroys.
Those most at risk from the creative destruction of new technologies are those with low and out-dated skills in the labour market.
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