by Edwin Mwai|2012
Unemployment is as a result of many factors. The root cause of unemployment is difficult to pinpoint and has been a matter of stormy debate with myriad theories, explanations and predictions being put forth by economists.
For purposes of this article however, we shall dwell on the Keynesian theory of macroeconomics as postulated by the knowledgeable British economist John Maynard Keynes. His theory is based on the premise that unemployment is as a result of an increase in the demand rate while the economy is operating under its optimum potential output and growth rate. This results in the economy coming under great pressure.
Some of the causes of unemployment are discussed herein under.
Values of the Employee
Employees are seldom afforded the recognition that they deserve when it comes to the dedication or exceptional performance that they have for their jobs. This leads to unmotivated employees as a result of unfavorable working environments. This in turn leads to a loss of interest on the employees part because they feel either short-changed or neglected by their company. This has the effect of forcing them to leave their jobs and seek better employment elsewhere. As a result, they remain unemployed until such a time that they find a good job.
Inflation
Inflation is one of the oldest known causes of unemployment. Inflation is defined as the rise in the overall prices of goods and services in a country’s economy over a given period of time. Basically, inflation means that when the price level increases, the unit of legal tender purchases a limited amount of goods and services. Thus, inflation can be said to lower the purchasing power of legal tender. It essentially leads to the country facing an exponential increase in the prices when compared to other global economies. It results in the export economy failure because the country can no longer compete with other global economies. People’s earnings are affected and they start using up their savings. Companies start firing employees due to their inability to pay them on time. This essentially leads to unemployment.
Dissatisfaction with One’s Work
Job satisfaction is a very crucial factor in ensuring that individuals have some form of stability and a feeling of self progress in their work. Many individuals take up temporary jobs because they have to deal with issues such as financial crisis, family pressure or they are looking to boost or make their resumes stellar through experience seeking. Most of these individuals are, however, not content to remain on their current jobs because they feel that they have made a number of compromises when it comes to their skill set, job profile or remuneration that they should be receiving. This dissatisfaction with one’s work is one of the primary factors responsible for unemployment.
Recession
Recession is defined as a general slow down in economic activities within a country. Economic recession was largely responsible for the loss of many jobs in the U.S job market in 2007. It resulted in high levels of unemployment through out the world because most economies depend on the U.S. This is a phenomenon that can be attributed to globalization where one event in one part of the world can have serious implications in another geographical region. Most developing countries are still recovering from the effects of the recession.
The Availability of Unemployment Benefits
Welfare payments are intended to act as a safety net for the unemployed and to some degree are responsible for resulting in unemployment. This form of help that is given to individuals by the state has the effect of making people unwilling to work. Unemployment benefits can therefore be said to have an indirect negative impact that results in unemployment because individuals become highly dependent on the aid that they receive. This leads to the practice by individuals to remain unemployed deliberately.
Discrimination on Racial Grounds
No matter how hard we try to ignore the elephant in the room, discrimination on racial grounds is prevalent in a number of organizations. It is one of the main reasons that many individuals remain unemployed. Non citizens in a particular country may find it extremely difficult to land a job because of discrimination not only based on race but also on religion, ethnicity and caste. As a result, they find it extremely difficult to secure work and they may even be forced to leave the country due to lack of employment.
The Dynamic Nature of Technology
Technology is highly dynamic and companies will always try to keep up with these changes by looking for individuals with specializations in advanced aspects. While they do not fire individuals haphazardly, they create an imbalance when they stop using their employees in crucial aspects of production as well as development. This results in mounting of tension and frustration in the workplace with some employees opting to resign. They thus get substituted by more specialized employees making them unemployed whether on a temporary or permanent basis. In a nutshell, it would suffice to say that job cuts that are occasioned by the dynamic nature of technology lead to an increase in the rates of seasonal unemployment.
When all is said and done, it is worth noting that the way an individual tackles his unemployment situation will define whether he or she will get a job. In the meantime, individuals who are unemployed can find relief in the form of unemployed benefits. For more information on how to file for unemployment benefits, be sure to follow our next post.
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