Unemployment Rate as the Biggest National Economy Challenge

The United States has the largest national economy and it is the largest trading nation in the world. However, a segment of the US population is facing devastation of unemployment making it a significant challenge to the national economy. Unemployment has elicited important economic, public policy and political debates in the past. Currently, it is a significant topic for discussion in the political arena. The economic health of the US is often measured by the number of jobs created (Associated Press, 2012).

The recent financial crisis of 2008 increased the rate of unemployment, and impacted the economy negatively. United States government experienced a great pressure in the fields of taxation and public finances. Although the economy has shown good signs of recovery, unemployed Americans are still seeking for jobs. Unemployment is associated with loss of income and the consequent loss of health insurance. Unemployed people are usually unable to cover their health expenses. The government is forced to provide special health coverage assistance to these people; this impacts the economy negatively. Most unemployed people are uninsured; this puts the economic stability of the US at risk.

Unemployment rate is a measure of the growth rate of the economy. It is also used to measure the negative economic occurrences like recession. Unemployment rate in the US had increased during the credit crunch of 2008, and continued to increase after the economy showed the signs of recovery. After the credit crunch, employers were reluctant to hire more employees.

Reduced economic activities cause recession which results in unemployment. Loss of jobs results in a significant decline in earnings, and a decline in consuming capacity of unemployed people and their families. Unemployment is the major cause of mortgage defaults that crippled the economy of the United States. In addition, it reduces the ability to spend by affected families. This implies further decline in demand for goods and services. Businesses suffer significant losses and are forced to lay off some of their workers, which, in its turn, contributes to increased unemployment rates.

Small businesses in the United States are the largest employers accounting for over 50% of employed individuals, while large businesses employ about 38%. Small businesses are the leading creators of new job opportunities in the US. Statistics shows that only 50% of small businesses survived for half a decade in the United States. This shows that the leading employer in the United States is not only unstable, but also unreliable. Small businesses create more employment opportunities, but at the same time, they are the most affected by the financial crisis. This means that the great part of the American population lose their jobs. Continued reliance on small businesses shows that unemployment is a huge economic challenge (SBA, 2012).

The economic crisis of 2008 increased the rate of unemployment from 5% to 10% in the last quarter of 2009 fiscal year. In September 2012, unemployment rate stood at 7.8%. The present rate has been used by the current president in his bid for reelection. Reports indicate that a lot of people base their judgment on unemployment trends rather than the rates themselves. The report further suggests that in some states, unemployment has dropped because some people have given up their job seeking efforts; some have dropped out of their jobs. These people have lowered the rate of unemployment since unemployed status is only valid for people who are actively looking for jobs. The national unemployment rate decreased since wrong conclusions had been made. People with part time jobs who are still looking for better opportunities are mistakenly counted as employed (Associated Press, 2012).

Approximately four million young people were unemployed by July 2012, a slight improvement from 4.1 million youth last year. Youth unemployment has a great economic significance since these people form the most productive segment of manpower. Unemployment among American youth varies based on race and socio-economic background differences. Surveys conducted in July 2012 indicated that about 15% of white American youth, 29% of African American, and 19% of Hispanics youth were unemployed (BLS, 2012). Unemployment among the Hispanics and the African American youth is believed to be caused by drug abuse and increased crime among American youth (Haynes, 2009).

A survey conducted in August 2012 revealed: for every available job opportunity, there are six interested unemployed people. This shows that the country has not fully recovered from the financial crisis. In addition, statistics indicates that recovery from the financial crisis might be prolonged with poor economic development and longer periods of unemployment (Associated Press, 2012).

During the financial crisis of 2008, African American youths were worst hit by unemployment. Unemployment rate among young people between 16 and 24 years old reached 34.5%; this was similar to the Great Depression. Unemployment among young Americans has troubling effects on the economy. Unemployment among the young people has long lasting negative effects. It is hard for the victims of unemployment to recover financially in their future. This means that in future unemployed youths and their families are likely to live in devastating conditions. According to economists, young people hired with minimum wage are not likely to recover for at least ten years (Haynes, 2009).

Unemployment in the United States has detrimental effects on the economic potential and financial position of the country. Unemployment implies reduced production among capable individuals. It also means reduced performance in the business arena and reduced taxation; a form of government revenue. The government is also forced to aid the affected population through healthcare and other social amenities. Ultimately, the government debts increase reducing the national economic potential (El-Erian, 2011).

Although the nation has recovered from the credit crunch, unemployment rates are still considerably high. The rate would be higher that the present 7.8% if all part time workers seek for a full time employment. This indicates that unemployment rate is unexpectedly high; this is an economic predicament. Economic effects of unemployment in the US are multifaceted. Unemployment affects the economy, and affects personal lives of Americans. It is also responsible for increasing budgetary pressures, and intensifying social and political pressures (El-Erian, 2011).

A profound research indicates that when unemployment rates begin to rise, it is difficult for unemployed people to get employment. In essence, it is hard to restrain unemployment. The long-term effect is an unstable economy due to decreased productivity. Unemployment in the United States is deteriorated by lack of adequate investment in human resources, declining labor mobility and lack of job retraining plans. Unemployment problem in the United States will continue to rise, and the gap between the rich and the poor will continue to widen. Productivity and labor skills will continue to be undermined, and the economy will continue to be poor (El-Erian, 2011).

References

AssociatedPress. (2012). Unemployment rates fall in 7 US swing states and were unchanged in 2 others. The Washington Post , pp. 1-2.

BLS. (2012). . Unites States Department of Labor: Bureau of Labor Statistics. Web.

El-Erian, M. A. (2011). . Project Syndicate, A World of Ideas. Web.

Haynes, D. (2009). Blacks hit hard by economys punch. The Washington Post , pp. 1-2.

SBA. (2012). Advocacy: The Voice of Small businesses in Government. US Small Businesses Administartion. Web.

Business Cycle and Unemployment

Describe and define the three phases of the Business Cycle

The business cycle may either go through a recession, recovery and a boom in the business cycle. During the recession phase, the real GDP of the economy will have declined to the bottom but this must have taken place for six months before it can officially be declared to be a recession (Shafrin, 67). In the graphical representation of the business cycle (which is a plot of real GDP against time (In quarters or months), this period is often seen as a trough.

The other phase is the recovery phase which occurs after the recession and is seen by a steady rise on GDP. Finally, any business cycle will also have a boom which a period characterized by high capital. It will contain high instances of inflation which will necessitate the need to lower interest rates. Booms arise when excess capital is contained in the market and these drive up asset prices (Slavin, 217).

The economy and phase of the business cycle

Currently, the US economy is in the recovery rate. The worst of the recession may be offered because some of the leading indicators appear to be increasing. The most important economic indicator is the GDP. In 2010, it was at 14.72 trillion dollars which was an increase of 0.39 trillion dollars from the previous year. A rise in purchasing power parity is always synonymous to a recovery. Furthermore, inflation rates have increased from -0.3% to 1.4% between 2009 to 2010. A rising inflation rate is indicative of greater prevalence of capital assets in the economy. Also unemployment went down by 0.4% between the years 2010 and 2011.

Leading economic indicators

There are over 20 economic indicators but the most significant ones are about five. The first being the GDP which is a measure of a countrys wealth through the series of services and goods produced. Consumer price index refers to changes in prices that consumers paid for. Producer Price Index on the other hand indicates the amount that producers receive for their goods and indicates the cost of living. This is seen as an important measure of inflation. Money supply is an important measure as it denotes the total amount of money in the economy. Consumer confidence survey looks as public optimism about the economy.

Current employment rate indicate the status of the labor force through employment and unemployment numbers. The Retail sales index is a measure of personal consumption. The S and P 50 stock index illustrates performance of 500 public stocks and is an important predictor of future consumer confidence levels. Housing starts is a measure of new constructions and is important because mortgage rates are highly related to interest rates. Trade inventories and manufacturing sales are also crucial as they measure trade values of shipments in manufacturing, wholesale and retail (Shaffrin, 46).

Who compiles the most widely-used forecasting device on a monthly basis?

The most widely used forecasting device is the consumer confidence survey which is released on a monthly basis by the Conference board. As mentioned earlier, this is an assessment of the degree of public confidence in the status of the US economy. It predicts the level of consumer spending because if consumers are not confident in the economy then they are unlikely to spend.

In three or four sentences, answer the following question: What is the Conference Board?

The conference board is a nongovernmental organization that was formed in 1916 in order to deal with declining confidence in the economy. The Conference board is mandated to carry out research on business trends and the economy. the six categories that it carries out research include corporate citizenship, corporate governance, economics (including consumer confidence index, business cycle indicators and Help wanted advertising index), human resources, marketing communications and strategy planning.

What are the three types of unemployment that figure into total unemployment

The three types of unemployment include frictional unemployment, structural unemployment and cyclical unemployment. Frictional unemployment refers to that kind of arrangement in which a person is not looking for a job but is not working as well because he or she is waiting to start; a situation that arises out of relocation or new admissions. Structural unemployment refers to a situation in which a worker is not working because he or she has been displaced by a newer technology or by a new invention in the market. Lastly, cyclical unemployment refers to those people who lose jobs as a result of economic conditions such as the recent recessions.

What is meant by Natural Unemployment?

Natural unemployment comes from full employment. When unemployment levels correspond to structural and frictional employment brought on by worker transitions and entry of new members into the labor market then chances this becomes natural unemployment (Shaffrin, 45).

What is meant by full employment for our US economy?

Full employment denotes a situation in which the economy it at full capacity. In other words, no cases of cyclical unemployment should exist such that people are only unemployed because of frictional unemployment or structural unemployment. A percentage of 94% of the labor force need to b employed in order to claim that full employment exists.

If the unemployment rate is 7 percent, how much is the cyclical unemployment?

Cyclical unemployment may best be understood as the difference between unemployment and natural unemployment. Frictional and structural employment account for 6% unemployment. Unemployment rate=structural+frictional+cyclical unemployment

7%=6%+cyclical unemployment

Cyclical employment=1%

Problem No. b: Compute the unemployment rate given the following information: 8 million unemployed, 117 million employed.

Unemployment rate=number of employed people / labor force*100.

Labor force=number of employed +unemployed persons = 117,000,000 + 8,000,000 = 125,000,000. Therefore unemployment rate=8,000,000/125,000,000=6.4%

Problem No. c: Given the following information, how many people are in the labor force? Information: 3 million people are collecting unemployment insurance; 7 million people are officially unemployed; 2 million people are discouraged workers; and 110 million people are employed. Show the computation fully.

Discouraged workers are those people who do not fall in the labor force (Slavin, 223)i.e. they are neither employed (in a paid job or family business or absent from work due to illness) or unemployed (actively looking for work or laid off and maybe recalled) so they cannot be included in these calculations. Additionally, people collecting unemployment insurance are also not a reliable measure for unemployment because some may still be collecting checks when they are still engaging in some other form of part time business. Usually official figures are the ones that count. Labor force=Employed +unemployed=7,000,000+110,000,000=117,000,000 are in the labor force.

Unemployed means different things to different people

As a result of the recession, person Y who worked for General motors has been laid off. General motors laid off workers because of the changes in economic conditions that caused it cut down on costs. Person Y is therefore cyclically unemployed because he will get back to work as soon as the economy recovers. Person W is a fresh graduate who has just gone through an interview and is waiting for processing of his health report before he can commence work.

This is a case of frictional unemployment because Person W is not looking for work actively but is simply waiting to clear all formalities before he can start. Person T is a housewife who used to work for a calling centre. Her department was outsourced to India and she is now jobless. In fact, most of her peers in this industry are going through the same predicament and it is unlikely that she will get any such job in the US again. This is case of structural unemployment.

In the articles listed in your Research Site List found in Course Documents, what one specific job added approximately 400,000 jobs in the Spring of 2010?

These were jobs in census hiring. Since the census is only a periodical thing and it is not something that will last. They should not have been included in raising employment numbers because they were only to do this in the short term. They are not like the usual part time workers who find employment in restaurants and other permanent businesses. The census is administered once in a couple of years so they will remain unemployed for a very long time.

What is the current unemployment rate as stated by the Federal Government

In the month of May 2011, it was asserted that the US unemployment rate is 9.1% (BLS, 13). Some economists affirm that the true unemployment rate is much higher because the number often excludes the discouraged workers who quite looking for work. in reality, discouraged workers are still not contributing actively in the economy so they are still unemployed. When long term discouraged workers are not counted then this makes the estimates quite inaccurate

Works Cited

US Bureau of labor and statistics. US unemployment rate. May 2011. BLS report. 2011.

Sheffrin, Steven. Economics: principles in action. NJ: Pearson, 2003.

Slavin, Steven. Economics. NY: McGrawhill publishers , 2009.

United States Unemployment Rates in 2013-2014

Introduction

Unemployment is a macroeconomic aspect that has a direct impact on the general public (U.S. Bureau of Labor Statistics para. 2-7). In the US, there have been different trends in the economic sector different rates of unemployment. Generally, the understanding of unemployment in the macroeconomic context is vital both for consumers and economists. This paper, therefore, explores the aspect of unemployment in the United States in the context of macroeconomics.

Statistics

In March 2014, job openings increased by about 4.0 million showing no much change from the statistics in February of the same year. In March, there were no changes in terms of rates of hiring, which stood at about 3.5 percent. Similarly, the rate of separation stood at about 3.3 percent showing no significant changes (Kurtz para. 3-6). Likewise, the rate of those who quit their jobs for one reason or the other (about 2 percent) remained constant in March, but the rate of the discharge from duties reduced by about 1.0 percent.

In the first four months of 2014, the rate of unemployment in the United States dropped to about 6.2 percent from 6.8 percent (U.S. Bureau of Labor Statistics para. 4-7). This was the lowest rate of unemployment recorded in the US since the last quarter of 2008. Those rendered jobless as well new workers gained entry into the labor force (Izzo para. 1-3). The number of people who previously were unemployed stood at about 10 million, but at the turn of 2014, the number decreased by about 730,000 to reach about 9.3 million people.

Overall, from the last year 2013, the rate of unemployment in the United States reduced by about 1.3 percent, and the number of the unemployed dropped by about 1.8 million (Carmichael para. 3-6). Amongst the major groups of workers, the rate of unemployment dropped in March and April this year. Specifically, for grown-up women, it dropped to about 5.6 percent, for adult men, it fell to about 5.7 percent and for teenagers, it reduced to about 19.0 percent (U.S. Bureau of Labor Statistics para. 2-4).

In terms of race, for whites and Latinos, it dropped to about 5.2 percent and 7.0 percent relatively and for African Americans, it feels to about 11.5 percent. For the Asians, the rate of unemployment remained at about 5.8 percent. Moreover, the number of people who lost their jobs for one reason or the other also dropped by about 250,000. Previously, this number stood at about 5.3 million (U.S. Bureau of Labor Statistics para. 3-4).

In addition, the number of those people who are employed on a long-term basis also dropped by about 280,000 in the early months of 2014. Previously, the number of people who were employed in the long term was about 3.4 million. Overall, these people accounted for about 30 percent of the entire unemployed population (Izzo para. 3-5). For the last year, the number of people who were unemployed on a long-term basis also dropped by about 900,000. In the month of April 2014, the civilian labor force reduced by about 800, 000 (U.S. Bureau of Labor Statistics para. 4-5).

In addition, in the month of April, the rate at which the labor force participated, which previously stood at about 62 percent, dropped to about 61.6 percent (Izzo para. 3-4). The bottom line is that the rate of participation amongst workers has not recorded any significant change since the last year 2013. In terms of productivity, in the first quarter of 2014, unit labor costs increased by about 4.0 percent leading to a drop in productivity level by about 2.0 percent. All this was in the other sectors but not in the agricultural sector. Specifically, in the manufacturing sector, productivity grew by about 3.0 percent with an increase of about 0.2 percent in labor costs (Izzo para. 3-4).

Reasons

In general, the health care sector added about 32,000 jobs, the retail sector added about 23, 700 jobs, the construction industry added more than 48,000 jobs, and the mining sector added about 5,000 jobs (Izzo para. 2-5). In addition, the transportation sector added about 1,300 jobs, leisure & hospitality added about 24,000 jobs and manufacturing added about 14,000 jobs, film industry added 21,000 jobs and the wholesale sector added about 30,000 jobs. This is also attributed to the establishment of a good environment for investment by the US government (Kurtz para. 3-6). In specific sectors, such as construction, the federal government announced an increase in funding for major projects, such as schools, roads, and even repair of airports, that is why the number of jobs increased (Carmichael para. 7-10).

In the manufacturing sector, the bailout by the government helped put major employers on track hence many jobs were created (Kurtz para. 5-6). Overall, out of the millions of jobs lost as a result of the 2008 financial crisis, the United States had only managed to put about two-thirds of people who lost their jobs back to work. In addition, the number of those who are out of work has remained high majorly because the population of the United States has also been increasing.

Works Cited

Carmichael, Kevin. U.S. Unemployment Rate Drops To 6.3 Percent, Lowest in more than Five Years. 2014. Web.

Izzo, Phil. . 2014. Web.

Kurtz, Annalyn.. 2013. Web.

U.S. Bureau of Labor Statistics. Regional and State Employment and Unemployment Summary. 2014. Web.

Definition of Unemployment and Its Types

The high level of employment in any nation promotes the sound of the economy. When youths and women are in full employment, the country social, political, and economic aspects are in a better position. Through a high level of employment, the government gets wide ways of obtaining taxes, as the product output is increased.

Through an increment of government revenue and increased output in productivity, there is growth in the economy and poverty reduction (Boyes and Melvin 312). In a country where the level of economy growth is high, there are more and more opportunities.

High levels of employment make the economy stable and help in recovering damaged parts. Even if the terms of employment are short or long they tend to boost the economy a great deal. Other benefits related to the employments are high levels of entrepreneurship due to the increased participation of young and energetic people in the labor market. Economists say that well paying jobs improves the overall incomes and social money spending of poor people, and assists a great deal in financing social activities.

Unemployment is an economic condition that occurs when an individual or a group of people seek jobs to no success. In every country, the level of unemployment depends on some factors such as the status of the economy, market and commerce forces.

There are five main types of unemployment (Baumol and Blinder 630). To begin with, there is frictional unemployment that is a temporary status of the job seekers. This condition occurs when a person takes a break from his or her current job and start looking for another opportunity somewhere.

This period when one shifts from one point of work to the other is the one that creates frictional unemployment. In most of the developed countries that have advancement in various ways, there is a high probability of one securing another job after leaving one. The major challenge is in the developing and in the underdeveloped countries where if one quits from one job, getting another one is a problem.

The issue of frictional unemployment can have a solution through employment insurance programs. This program offers support and temporary sources of income to the people who in several occasions become unemployed. In most cases, people do not quit from their jobs voluntarily but because of some circumstances like nursing a sickness, giving birth, or other critical issues in the family.

Through this insurance program, the unemployed people are still made to earn some income to continue supporting their families, and meeting their needs (Tucker 380). During this period, the unemployed people face their challenges with more confidence. The government should concentrate on empowering these insurance programs such that they are in a position to meet even large group of the frictional unemployment cases.

The employees who mostly benefit from this program are those who quit their jobs due to good reason like shortage of work, or sudden break of the job management. The government should also come up with a policy of encouraging the idea of permanent jobs to avoid such breaks. If one is in a permanent job, and well paid, it would be hard for one to quit from such a job. Taxation should be favorable to some salaries, as the net salary is so small unable to sustain ones life.

With reasonable tax on salaries, employees will have a good amount of salary to manage their lives without any need of quitting. The major limitation of the insurance programs policy is that the employees have to make regular contributions of some amount to the program. However, there is no guarantee of receiving this compensation after quitting a job. Compensation depends on the reason of quitting.

The second type of unemployment is structural unemployment that happens due to major changes in the economy. The major reason behind this type of unemployment is when the job in question requires more skilled workers than the current ones.

In addition, this form of unemployment may occur because of the difficulties of moving to a new working location, or challenges of learning new skills to meet the needs of the available jobs. Sometimes, the economy may advance greatly making use of new machines and technologies replacing some employees.

Structural unemployment in most cases occurs due to creation of new job opportunities to meet the labor demands in the market. This type of unemployment is very common as far as the economy of the country is flexible whereby when there are some firms going down, there are others that are in need of other skills and expands at the same time (Gwartney, Stroup and Sobel 516).

The rate at which the technological advancement of the nation is developing and globalization, the need for a more advanced labor is required. The nation cannot avoid be prohibited from advancing in technology or in its economy but there can be a solution for this type of unemployment.

The fact is that every nation is subject to some ways of advancement, and because of this advancement, a continuous mismatch of labor and the skills required is inevitable. As far as the government acts fairly to all sectors in the economy, there is need for special attention to service based sectors, such that it will be possible for them to accommodate as many employees as possible. Policies to increase job opportunities in service sectors can help many people to secure jobs in these sectors.

The rest of people, who may not fit in service industries, will then find some places in the industrial sectors. Some policies of regular training of employees in industrial sectors are also very important (Tucker 89). These sectors should emphasis on conducting regular trainings to keep their employees updated and matching with the current changes.

Before an industry purchase a modern machine that may require new skills, there is need to equip the current employees with the necessary skills as long as they are ready to learn. Most of these employees will be ready to learn to secure their jobs. It can be much disappointing if an industry can lay off more than 85% of its employees because they lack the necessary skills.

The only group that may deserve dismissal is of those who may find it hard to learn those new skills due to their education levels. If such policies may put into action, a country can only be experiencing very few cases of structural unemployment. If government supports service sectors fully and other business departments there will be more job opportunities for the citizens to choose where they fit best (Campbell and Craig 203).

Advancement of the countrys economy and its technological levels should be an opportunity for job creation but not a way of dismissing workers. Advancement is worth celebration but not an issue causing such disappointments of joblessness. Government may be much willing to support service industries, but there is need to distribute resources uniformly hence putting a limitation to that policy. If it supports one industry more than the rest, it may seem like discrimination.

Another type of unemployment is classical also called real wage and occurs as result of trade unions and other labor organizations actions. Severally, trade unions fight for the rights of the employees especially if the salary they are getting is not worth their responsibilities at their working places. When they realize that a certain company is underpaying the employees or the working conditions are not favorable for them, it is their duties and responsibility to fight for the rights of those employees.

To some extent, they calls for a bigger salary increment that the company may not afford to pay, and in return, the company decides to reduce labor and pay the few that it can afford. Although there is right for the trade unions to fight for the rights of the employees, the type and the status of the company should also be a factor to consider before taking actions. It is better to receive little salary than to survive without any money to support personal and family needs.

The government may try as much as possible to curb this type of unemployment through some policies like a minimum amount of wages than any company should not go below, and the minimum salary for the employees. Those terms can only be ignored incase there is a special arrangement between the employer and the employee. Sometimes it can be challenging to the government to take hard measures on some companies, as they also have their own rights in operations (Baumol and Blinder 420).

The trade unions should be taking some time to talk with the employees first before they take any action of salary negotiations. The employee should be ready to take the risks of the negotiation outcome if it will be necessary for that salary complaint. As much as the government tries to put some limitations on the wages that the company should pay its employees, some companies object and decide to negotiate with its employees.

The other type of unemployment is seasonal that mostly occurs in industries that deals with seasonal customers or products. For instance, tourism industries work only during the periods when there are expecting tourists. When these jobs are out of season the employees stays unemployed (Tucker 113). The employer may engage these employees in other minor jobs, even if with relatively lower salaries during the off-season as they wait for the peak of the season.

On the other hand, the government may provide these employees with some reserve works in the public sectors to keep them going during the hard seasons. This can only be possible if the countrys economy is doing well and the government has enough money to take care of these situations. Although it may be hard to take care of every individual, but the majority should benefit and earn something during such seasons.

Those people, who suffer from seasonal unemployment, are at an advantage on the other hand. When their job is on season, they earn much money that may take them through the off peak seasons or invest in other fields to keep on earning.

During this period when they are not officially working, they can also look for other seasonal jobs before they resume to their normal fields. Even if the government can try to accommodate those people during the off-season periods into public sectors, it cannot afford to absorb all of them, hence putting a limitation to this policy.

Disguised unemployment is another type most common in the underdeveloped countries. The major problem in these countries that results to this type of unemployment is the slow growth of capital stock.

The rate of population growth is much higher than the capital stock growth, hence becoming very hard for the country to offer a reliable type of employment (Gwartney, Stroup and Sobel 121). A country with such a problem is realized through a high number of unemployed people in the urban areas especially cities. In such countries most of the young energetic people end up in agricultural activities where the name disguised unemployment comes from.

The people who finally end up in agriculture do not add any value as they do this work unwillingly, as they have little knowledge on how agricultural activities operate. The government can only solve this problem through establishing more sectors by adding spending to create job opportunities, although the overall Gross Domestic Product of the nation limits this policy sometimes.

The last type of unemployment is cyclical that occurs during recession. At times, the economy of a nation may be so down whereby the demand of the goods and services is also down hence pulling down the need for labor in industries and other sectors.

During such a period, most companys have no other option other than firing any surplus labor. It is a hard moment of every company as they wonder on what criteria they will suck the excess employees. Most of them make use of the education levels and the acquired skills of the employees as the best factor of elimination.

When the countrys economy is in recession, the government can only be the savior. The government may decide to lower both the tax and interests rates, which will in return boost the consumer spending as well as the demands of various goods and services. This act by the government will create more job opportunities that creation of cyclical unemployment. Prolonged reduction of the government revenue may limit this policy, as the government also requires money for its operations.

In conclusion, the government does not set any target in its operations for the unemployment cases. Its main objective for its citizens is to have enough jobs in the market offering opportunities to everyone who is in need of work. The government aims at equalizing the demand and the supply policies between its citizens and the industrial needs to make both benefits from one another (Gwartney, Stroup and Sobel 701).

To some extent there are inevitable limits that the government cannot exceed as far as controlling unemployment cases is concerned. In several cases, the policies that are looked upon to improve the levels of employment in a nation may be very expensive and on the other hand, they have an opportunity cost for them to be successful.

Works Cited

Baumol, William and Alan Blinder. Economics: principles and policy. New York: Cengage Learning, 2008.

Boyes, William and Michael Melvin. Economics. New York: Cengage Learning, 2006.

Campbell, David and Tom Craig. Organisations and the business environment. London: Butterworth-Heinemann, 2005.

Gwartney, James, et al. Economics: private and public choice. New York : Cengage Learning, 2008.

Tucker, Irvin. Macroeconomics for Today. New York : Cengage Learning, 2008.

Global Recession and Unemployment Growth Connection

The global recession has led to rising numbers of unemployment in the United States and the world at large. The protest at Granite City, Illinois, depicts frustrations and disappointment of the workers who are not sure of their jobs. Indeed, a myriad others have lost their jobs and are seeking means to address the dire situation. Many corporations have embraced the globalized trade in the aim outsourcing labor in economies where it is cheap. The results have been rise in unemployment and underemployment amongst the Americans. Steve Jobs appreciates the role of global chain supplies and points out that the American jobs are not coming back any time soon. The global chains are to blame for the unemployment rates although little could be done since it would be irrational for Wall Street not to save on the labor costs. The importation of steel from other countries where it is cheap has also collapsed the local steel industry. This in turn has increased the woes of thee American steel workers. Could the authorities do anything to avert the situation considering the number of the American population that is underemployed or unemployed?

Ricardo theory explicates that every nation stands to benefit from international trade. He was convinced that despite the countries experiencing different economic growths, the developed and the developing would reap benefits by engaging in international trade. In his theory of labor, it is critical for different countries to appreciate the law of comparative advantage. For instance, when companies produce similar products at the national level, the company that minimizes the cost of labor has an absolute advantage over its competitors. Nonetheless, Ricardo would argue that the law of absolute advantage rarely dominates the international trade. Rather, the law of comparative advantage comes into play and exposes countries to benefits. He explains that organizing and planning the international trade would remove the law of absolute advantage that currently accrues the Asian countries such as India and China.

He would suppose therefore that the internal economy would be planned rather than allowing the capitalistic greed to prevail. As such, the American steel industry in comparison with the Asian steel industry gives a picture of the latter enjoying the absolute advantage of the former. This has led to the collapse of the steel industry, which should not be the scenario according to Ricardo. He would make assumptions of efficiency in production of steel where workers should all be employed, as idleness would not be condoned in such an ideal global economy. Besides, the factors affecting the productivity are constant and not easily changed.

Hence, planned economy would dictate that the workers assume roles that they are skilled and can perform at their best. This would lead to the need to employ both American and Indian steel workers since they specialize in various tasks. By assigning the American and Indian workers to the roles they are relatively good at, the consumption of steel would increase in the countries with relatively high competitive advantage. Besides, the concept of division of labor between countries stands to benefit all countries due to the principle of comparative advantage. However, the increased unemployment and the collapse of the steel industry in the United States results from the domination of companies at the microeconomic level seeking an absolute advantage at international stage. Ricardo distances himself from the law of absolute advantage at global economy. He would probably accuse the Wall Street of undermining the international trade principles at the expense of the American workers.

However, Ricardo would criticize the changes that are evident at the international trade. While he articulates that the real wages are similar across the entire biological subsistence, he fails to see the role of capitalistic ravenousness that has typified the global economy in the name of Multinational Corporations. He would be dismayed that contrary to his notion that the profits tend to equalize at the local market, the rise of the powerful companies and corporations has led to profitability of firms outside the national economy. This has led to differences in the real wages across the global economy as the corporations seek to take advantage of labor markets dominated by low wages that even fall below the real wages. In the same tune, the policies and laws that govern workers in the American society have overtime increased the wages overtime. Similarly, it has led to the shifts in international labor markets at the expense of the American worker.

The rise of capitalistic motives typical of the current multinational companies such as Apple, Dell and Applied materials to mention but three have led to the negative effects of the international trade. The companies have dominated the policymaking processes of the government at the expense of thee workers. Despite the growing concerns of the steel industry and the consequent rise in unemployment rates, the multinational corporations are reaping immensely from the liberalized trade. The government ought to scrutinize its policies and understand the areas that it has high comparative advantage to limit the outsourcing that the companies are making. Besides, it would ensure a comparative advantage by issuing subsidies to the local industries to protect them from the vicious effects of Multinational Corporation that are motivated by profit motives and capitalistic urges.

It is evident that the American economy enjoys huge advantages in the name of relatively high innovation, skills, sound intellectual property policies and above all, technology. It is therefore possible for the country to protect the local industries by stimulating production in the above areas that it commands substantial comparative advantage. This would be in line with Ricardos theory of international trade that is anchored in the belief that all nations stand to benefit by liberalizing their economies. Besides, this would protect the American worker from the whims of capitalistic objectives without necessarily interfering with free trade.

Essentially, the American economy is suffering from the international trade. Companies have sought to import materials and outsource labor from the countries that commands absolute advantage over the United States. Such industries like the steel industry are on the verge of collapse owing to the increase in the profit-motivated multinational companies. Ricardos arguments that the international trade would benefit every country that participates in the trade have failed to foresee the increase in companies that command huge influence on the course of the global economy. Besides, they have destabilized the real wages across the entire international markets. However, not all is lost as the government still has a chance to ensure that the companies do not outsource labor in areas that it commands comparative advantage. Besides, it can increase its comparative industry through subsidies and other avenues.

Causes of Rising Unemployment

Introduction

Human beings have various needs that are essential for their survival on earth. These needs are categorized as basic (food, clothing, shelter, education and proper health care) hence one can not survive without them. Even though others are more urgent and important than others, it requires proper planning to ensure that they are all considered and catered for. In order to have these essential needs, a person has to have money to access or buy them. Money is earned through payments from employment. This essay aims at pin pointing the main reasons why there is an increasing rate of unemployment in many countries in the world.

Main Body

Employment refers to any activity that is aimed at generating income to an individual in terms of profit or salary. Profits are realized when a person invests capital on any business activity while salary is obtained after offering services to an individual, company or organization (Powers 104). Unemployment is a situation that involves lack of participation in an activity that generates income for the individual. This has been fuelled by the following major reasons that are man made while others are natural;

Human population growth rate has sky rocketed in the last few years to supersede the worlds ability to create employment opportunities to the available population (Cottle 36). The worlds population is said to be increasing at a compounded rate of about eighty million people every year. This statistic means that after about eighteen years time there should be an addition of at least fifty million employment opportunities for these people when they are grown ups. In addition, this population is projected to be about ten billion by the year 2050. These statistics mean that there should be about four billion newly created employment opportunities by 2050. However, this is usually not the case as the rate of employment opportunities being created are very few compared to the demands of the population and this means that many people will be unemployed regardless of their qualifications.

Technology and innovations have also contributed to the high rates of unemployment when people are being forced to leave their work positions as machines take over. In the last four decades a single office would have an office secretary, personal assistant, office messenger and an office clerk (Stringham 121). However, with the increase in the use of computers in the office one person is able to do all these chores courtesy of the internet. People with the ability to use computers to perform various tasks are usually considered better candidates in interviews compared to people with limited ability. In some occasions, human beings have been completely replaced by machines like in the dairy sector where milking of dairy cow is now being widely done by milking machines. The use of robots in many industrial and warehousing processes has contributed greatly to the displacement of human labor in the production processes. Furthermore, the use of robot controllers and integrators that combine human and machine efforts is a recent development that will have great impact on employment opportunities in the world.

The most inevitable factor that has contributed to high unemployment rate in all parts of the world is the depletion of natural resources that offer employment opportunities to the community. Many countries that have natural resources like mineral ores and carbon fuels usually offer immense employment opportunities to the local and beneficiary population. However most of these resources are not renewable others like timber take too long to be replaced and regain their useful state. Sometimes human activities lead to the depletion of these natural resources (Brophy 92). Whenever these resources are depleted the people who were directly and indirectly depending on them for employment become jobless.

The high inflation rate has made it very difficult for many companies to sustain their production processes and at the same time keep their staff at work. Many businesses have closed down as the costs incurred are much higher than the profits realized. This means that the final result is nothing short of losses and wastage of resources (Brophy 135). On the other hand people have taken loans from banks in order to counter the effects of inflation but this proves futile as the high interest rates on loans deprive them the profits realized. Banks also have not been left out as they are forced to increase their lending rates to the clients in order to sustain their operations. This in turn discourages people from borrowing money from these financial institutions forcing them to close down and more workers are laid off leading to unemployment.

Furthermore, the education system being used in many countries is based on theoretical concepts. It has ignored the practical aspects of skills and knowledge and therefore converting these theories to real use in the job market becomes a tall order. Many students graduate with very remarkable grades, but use most of their time looking for suitable employment (Brophy 112). Some have been blinded by the fact that they are educated and have become too selective in their choice of work. They ignore simple and manual labor on grounds that they are educated and need respectable work. This creates temporary unemployment as thousands of graduates become jobless while they wait for their star to shine.

Lastly, the world is currently being faced with numerous terrorists attacks that have threatened the existence of human life. For instance the terrorist bombings in the World Trade Center in America (September 11th, 2001) threatened international investments in cosmopolitan countries and cities. This is because the costs incurred in the restoration of the businesses and injuries incurred are very expensive (Powers 84). It is estimated that America suffered a loss of about $ 95 billion in terms of losses to the city of New York in jobs, salaries, taxes, damage to infrastructure and costs of cleaning the city. In addition, the insurance industry suffered a loss of about $ 40 billion while the global market suffered an incalculable amount. Such terrorist activities deter investments that in turn limit the potential of creating employment opportunities and so many qualified people are left jobless while investors fear the safety of their businesses.

However, the high rate of unemployment can be controlled by careful family planning to regulate the high population growth rate. In addition, the government should enact laws that govern the use of natural resources to avoid wastage and misuse. Learning institutions should adopt education systems that produce manpower that suits the job market. Security should be given high consideration in national budgets to provide secure investment opportunities in all countries to foreigners and the locals.

Conclusion

Unemployment has resulted to the rise of many social, economic and political evils and every one should play their roles in ensuring there are available opportunities for qualified candidates. Unemployment lowers the Gross Domestic Product due to high dependency on the working population hence limiting national growth, but with careful long and short term planning many states will successfully fight unemployment.

Works Cited

Brophy, Tom. Little Victories: Conquering Unemployment. New York: CreateSpace, 2010. Print.

Cottle, Thomas J. Hardest Times: The Trauma of Long-Term Unemployment. Massachusetts: University of Massachusetts, 2003. Print

Powers, Sarah. Unemployment Doesnt Have to Suck. New York: Sarah Powers, 2012. Print.

Stringham, Jim. The Unemployment Survival Guide. Boston: Gibbs Smith Publisher, 2004. Print.

Inflation and Unemployment in the United States

Introduction

In the 21st century, there are so many issues in the economy of the United States. Inflation, unemployment, technology and other issues are increasing. This paper will present a discussion on two questions regarding the demand for skilled and unskilled workers, minimum wages, unemployment, inflation, and barter trade. Assessments, predictions and justifications will also be given.

The Labor market and income

Formulate two reasons why the demand for highly skilled workers has increased relative to the demand for less-skilled workers. Predict whether this type of demand will change in the next 10 years. Provide support for your response.

There are so many immigrant workers who are highly skilled and the economy of America has moved into the technological age. Therefore, more high skills are required to sustain it. This demand will not change in the coming 10 years. This is so because the rate of immigration is high and it is expected to rise even more in the coming 10 years.

This will increase the number of immigrant skilled workers within the United States. Also, the economy is becoming more and more technologically oriented. This is increasing the demand for skilled workers by the day as opposed to the unskilled. In the next ten years, the economy will have grown more technologically hence the higher need for highly skilled workers (Aaronson, Mazumder, & Schechter, 2010).

Give your opinion on whether or not the poor benefit from increases in the minimum wage. Justify your response.

The poor do not benefit from any increase in minimum wage. The employee receiving an average minimum wage does not fall among the poor. Many of those getting minimum wage increases earn over 3 times what those under the poverty line earn.

If for example the minimum wage is increased to $ 7.25 per hour, only 12.7 percent of this would benefit poor families. 63 percent of these benefits would be taken up by those families with income above the poverty line by 2 times while 42 percent would benefit families with an income of 3 times above the poverty line. Average benefit for all the families is almost equal (Andereyeva, Long, & Brownell, 2010).

Unemployment and Inflation

Predict whether the years following the next presidential election will bring us inflation, deflation, or relatively stable prices. Provide support for your response.

After the next presidential election, the inflation rates will go down. Currently the rate of unemployment is high at about 8 percent.The rates of unemployment are high because Americans are yet to choose between Obama and Romney. When one of them is voted in, there is a possibility that rates of unemployment will drop and this will bring inflation down as well (Luojia, and Toussaint-Comeau, 2010).

Analyze how inflation could occur in a society that relies exclusively on barter versus money.

Inflation could occur in a barter trade society when the supply of certain commodities is high and their demand is low. This would mean that small quantities of the other commodities would exchange with the abundant items for very large quantities. When the supply of a particular product is low its demand rises and therefore other commodities will be exchanged with it in large amounts for a small amount of the scarce commodity (Luojia, and Toussaint-Comeau, 2010).

Speculate what form of inflation would occur and how you would recognize it. Provide support for your response.

Demand pull inflation would arise. This can be recognized through the low supply of certain important commodities which would then lead to an acute demand for those commodities. Small measures of such commodities would fetch larger measures of the other commodities (Heyne, Boettke, and Prychitko, 2010).

Conclusion

In this essay the issue of inflation and unemployment in the United States has been examined. Highly skilled workers are on high demand because of changing technology. Minimum wage increase does not benefit the poor. Inflation may drop following the coming presidential election since unemployment is expected to go down. Supply and demand would bring about inflation in barter trade societies.

References

Aaronson, D., Mazumder, B., & Schechter, S. (2010). What is Behind the Rise in Long term Unemployment? Economic Perspectives, 34(3/4), 28-51.

Andereyeva, T., Long, M., & Brownell, K. D. (2010). The Impact of Food Prices on Consumption: A systematic Review of Research on the Price Elasticity of Demand for food. American Journal of Public Health, 100(2), 216-22.

Heyne, P., Boettke, P. J., & Prychitko, D.L. (2010). The Economic Way of Thinking. (12th ed.). Upper Saddle River: Pearson Prentice Hall.

Luojia, H., &Toussaint-Comeau, M. (2010). Do Labor Market Activities Help Predict Inflation? Economic Perspectives, 34(3/4), 52-63.

Consumer Price Index and Unemployment Rate

The issues associated with the Consumer Price Index (CPI) include substitution bias and inadequate adjustment for quality changes and introductions of goods. The first issue is related to the tendency of consumers to adjust their preferences based on prices faster than the CPI can reflect, leading to inaccurate representations of the data in the index. The second issue is related to the indexs fixed basket and methods. They lead to assume a price of a good increased due to inflation when the actual cause was an increase in quality and ignorance of the introduction of new influential products until the basket is manually revised.

When the actual rate of unemployment exceeds the natural rate, the economy stagnates, as there are unfilled workplaces, and the nations output is reduced. In addition, the deflation caused by the weakening of the economy complicates future planning. Furthermore, more people go without income, and eventually, their skills deteriorate, and they become unable to hold the jobs they were previously qualified for, leading to a loss of self-worth. Ultimately, a substantially high unemployment rate can cause social unrest, an increase in the level of crime, and other antisocial tendencies in people.

Inflation has various costs for both people and the state, including a redistribution of incomes and uncertainty about the purchasing power of money. Lending money becomes less profitable, as the amounts of money paid back by the borrower do not change, but the value does. Savings become less valuable, as they are worth less and do not grow with the inflation. Writing contracts for future payments becomes difficult, and the costs of reducing inflation weigh down the government. Lastly, countries with high inflation become less competitive internationally, and their exports fall.

Money serves three primary functions: a medium of exchange, a unit of account, and a store of value. The first role allows people to avoid a barter situation where a person needs to go through a complicated chain of trades to exchange a good he or she possesses for a product he or she wants. As a unit of account, money allows people to evaluate the relative values of different products or services and record debts. Lastly, as a store of value, money serves as a non-deteriorating good that can be saved indefinitely for later use, unlike normal goods, which may become outdated or perish.

Banks in America operate on a fractional reserve system, under which they are only required to keep a part of their deposits available for immediate withdrawal. The fraction is called the reserve requirement and can be held as cash in a banks vault or at the Federal Reserve as noninterest-bearing deposits. Banks are allowed and encouraged to use the rest of the deposited money to give out loans and charge interest on them. This ability enables them to maintain the growth rates of the deposits and make a profit for themselves in the process while keeping the deposited money in circulation.

The Federal Reserve uses three primary tools to change monetary policies: open market operations, the discount rate, and reserve requirements. The first tool can influence the volume of reserves held by banks, making it easier or harder for them to maintain sufficient resources and consequently expanding or contracting the economy. The discount rate is the interest rate that the Fed charges to the banks that borrow at its discount window, with increases meaning contraction and decreases meaning expansion. Lastly, the Fed can change its requirements for the reserves held by banks, with changes having effects similar to those in the discount rate.

Private savings are the difference between savings and investments in the private sector and are therefore equal to 50. Public savings are the difference between taxation and government spending in the public sector and can be calculated, with the result being -250. National savings are a combination of the two factors above it and are equal to -200. Net exports are functionally the same value as national savings in an open economy model, and therefore they are also equal to -200.

Foreign exchange market

In the figure above, point C describes the initial equilibrium with an exchange rate equal to R0. Assuming a lack of interference, the situation would stay stable at that point. However, in a scenario where the interest rate in the U.S. becomes lower than that in other countries, income would decrease, leading to fewer imports. Consequently, the supply curve would shift to the left, making the unmarked point where S0 and D1 intersect the new equilibrium and leading to an increase in the exchange rate. However, due to an outflow of money to countries with higher interest rates demand would fall, moving downward and making A the ending point.

In a fixed exchange rate system, the Federal Reserves goal would be to eliminate the disequilibrium without disrupting the exchange rate. This aim means adjusting demand for dollars by selling the other currency for dollars in case of a U.S. deficit or buying it for dollars in an excess situation. The action simultaneously increases demand for dollars and reduces the supply (or the other way around), which keeps the exchange rate stable while eliminating the disequilibrium.

Unemployment as a Sorting Criterion

Empirical Work

Eriksson and Rooth developed an empirical study to evaluate the effect of the unemployment period and the level of employment stigma in the labor market. The main focus of the study is to develop a clear understanding of the attitudes associated with employers when contracting employees facing different periods of unemployment. It is apparent that the rate of unemployment in the society has been on a fluctuating trend over the past decades, and there is an indication that there is a rise in the coefficient of long-term unemployment (Erikson and Rooth 1015).

Additionally, the empirical study reveals that the current labor market has demonstrated an increase in stigmatization in employment, especially for individuals with more than nine months of unemployment functions. It is apparent that most employers are keen on analyzing the information about the past employment of job applicants, and this study reveals that there is a high likelihood of stigmatization for applicants with long-term experience with unemployment.

Methodology

The researchers developed a study to evaluate the relationship between the length of unemployment and the stigmatization attitude associated with employers when they handle the affected job applicants. The descriptive study relied on both primary and secondary data. The secondary data was retrieved from various studies from the past through a theoretical analysis process that revealed the findings from other researchers. The primary data was retrieved from an experimental process. The experiment entailed the collection of job applications in the Swedish labor market in selected jobs. The researcher considered 8,466 applications sent out to 3,786 employers (Erikson and Rooth 1019).

The large sample space provided a clear representation of the entire labor market to enhance the validity and reliability of the findings. The applications were designed to possess realistic attributes of job seekers with different levels of experience and unemployment periods. The attribute under consideration was the unemployment history, but it was not highlighted explicitly. The analysis process entailed the evaluation of the likelihood of the applicants being invited for a job interview based on the length and number of unemployment spells.

Identification and Estimation Strategy

The researchers had full control of the attributes of the applicants, and they were assigned randomly. The unemployment history attribute was estimated in a manner that would provide a realistic picture of the virtual applicants. The contemporary unemployment group involved estimation of between 0-9 months of unemployment. The applications also included graduates who had been unemployed for a year, and other applicants with varying numbers of unemployment spells, and different numbers of employees ranging from 1-3 employees. The main reason for having limits in the estimation process was to ensure that the attributes possessed by the respective applicants could be included in the analysis process.

One of the limitations of the identification and estimation strategy is that it did not provide a clear indication that the gaps in the employment experience skills were caused by unemployment; hence, it is possible that the recipients of the CVs would have assumed that the gaps were caused by other reasons. The baseline equation was estimated by determining the invitation of a job interview as a function of the standard deviation of the job advertisement attributes (Erikson and Rooth 1028).

Findings

The researchers found that the callback probability is a function of the unemployment history of the applicants. The higher the coefficient of unemployment spells the lower the probability of callback from the employers. Additionally, the frequency of the unemployment spells is also a major determinant of the callback function. The researchers clearly revealed that unemployment stigmatization exists in the labor market (Eriksson and Rooth 1036).

However, the results also revealed that other factors like skill levels and experience have an effect on the decisions made by employers. The research reveals that people with a long spell of unemployment before applying for a job have a lower probability of being called for an interview, especially if the job opportunity is a high-skill level opportunity. This implies that the employers associate the long unemployment spells with the erosion or lack of skills (Solga 160).

It is also apparent that job applicants with a long list of past employers experience a hard time getting a new job because in callback function is relatively lower, especially if the applicants have longer periods of unemployment between jobs (Karren and Sherman 849). The study validated the fact that employers look beyond the skills and experience possessed by the employees. The unemployment stigmatization is a concept that should be studied further to help in the development of an understanding of the factors that enhance the chances of getting a job for the unemployed members of society.

Works Cited

Carvalho, L., Stephan Meier, and Stephanie W. Wang. Poverty and Economic Decision-Making: Evidence from Changes In Financial Resources At Payday. American Economic Review 106.2 (2016): 260-284. Print.

Eriksson, Stefan, and Dan-Olof Rooth. Do Employers Use Unemployment as a Sorting Criterion When Hiring? Evidence from a Field Experiment. The American Economic Review 104.3 (2014): 1014-1039. Print.

Howlett, Elizabeth, Jeremy Kees, and Elyria Kemp. The Role of SelfRegulation, Future Orientation, and Financial Knowledge in LongTerm Financial Decisions. Journal of Consumer Affairs 42.2 (2008): 223-242. Print.

Karren, Ronald, and Kim Sherman. Layoffs and Unemployment Discrimination: A New Stigma. Journal of Managerial Psychology 27.8 (2012): 848-863. Print.

Shah, Anuj K., Sendhil Mullainathan, and Eldar Shafir. Some Consequences of Having Too Little. Science 338.6107 (2012): 682-685. Print.

Solga, Heike. Stigmatization by Negative Selection: Explaining LessEducated Peoples Decreasing Employment Opportunities. European sociological review 18.2 (2002): 159-178. Print.

Employment Status, Dismissals and Exit Interviews

Types of employment statuses and the importance of identifying an individuals employment status

Three types of employment statuses include the worker, the employee and the self-employed. A worker is a person who fulfils daily duty requirements, hired either on a daily basis or for a fixed term to help in the production system. The workers contribution to the company is significant because the worker helps reduce the workload so that the organization can achieve its goals and objectives. An employee is a person who has a regular term of reference in the company, thus able to enjoy the full benefits of the employment contract. The employee contributes to the improvement of the production system without leaving a vacuum. A self-employed person is the individual carrying out his or her business without being subjected to another persons rules. Self-employment increases specialization and the desire to succeed in advancing the quality of service offered in a company. In addition, it promotes the employment status of a person.

Three reasons can be cited for the importance of identifying an individuals employment status. First, it helps to determine the role that the individual is supposed to play in an organization. Secondly, the status helps to determine the obligations of the employer towards the individual, and the rights of the individual. For example, only employees may present claims of unfair dismissal by an employer and the employer is liable for the actions of the employee and not the self-employed. Thirdly, determination of employment status helps an organization to determine the benefits that the individual is entitled to. For example, the remuneration of an employee is the net amount because of tax deductions. In contrast, the remuneration of a self-employed individual is the gross amount without deductions. Individuals in the three statuses enjoy different benefits and perform different roles. In addition, employers have different obligations to individuals in each of the three statuses. Employment status determines the employer-employee relationship, which determines the control that an employer has over the employee. In addition, it determines the rights that are applied in legal mediation for cases in which the employer commits labour malpractices against the employee.

The difference between fair and unfair dismissals

In case of an employees dismissal, the employer must give convincing reasons for the dismissal. Otherwise, it will be considered an unfair dismissal. An employer has to show the negative effect of an employees actions on the company in order to validate the dismissal. For example, an employer may prove that the actions of the employee resulted in a decline in productivity, the employee exhibited dangerous behaviour that affected other employees negatively, and the employee violated the companys policies. Examples of reasons that constitute fair dismissal include redundancy, conduct, capability and contravention of the law. Redundancy occurs when an employee loses a job because of reasons such as business closure or staff downsizing, which are caused by financial constraints or reorganization. An individual may also be dismissed if his/her retention goes against the provisions of the law.

For example, if an employee loses his/her work permit due to carelessness, the dismissal is considered fair. An employee may be dismissed on grounds of conduct if he/she fails to fulfil the required standards of expected behaviour or practices. In addition, dismissal is fair if an employee is no longer able to perform his/her tasks due to factors such as poor health and misconduct. Reasons for unfair dismissal include pregnancy, religious or political opinions, race or sexual orientation and procedural irregularities. Dismissal is unfair if an employee is dismissed because of giving their religious or political opinions, or because of their gender or race. In addition, dismissal is unfair if it is related to pregnancy issues such as breastfeeding. Employers should strictly adhere to the ACAS Code of Practice to ensure that the dismissal of any employee is fair. Unfair dismissal results if the employer fails to follow the ACAS Code of Conduct. Since all employees have a right to fair treatment, they can appeal if they consider their dismissal unfair.

The importance of exit interviews with both parties

Exit interviews are beneficial to employers and employees. They are conducted when an employee exits a company, be it because of dismissal or resignation. Exit interviews help employers to understand the reasons for an employees exit, and his/her experience with the working environment of the company. The employer can gather useful information on the most efficient programs in the company and the effect of policies on productivity and efficiency. They help employers understand the employees perceptions of the companys working conditions, management, benefit and reward schemes, remuneration, and policies. Exit interviews that are conducted well help employers to solve issues that may result in lawsuits. Exit interviews can provide employers with honest feedback that they can use to make significant changes in the company. For employees, exit interviews help to understand the reasons for their exit in cases of dismissal and aids in the evaluation of the quality of their skills and qualifications. In addition, they help employees resolve any conflicts or disagreements with the employer that may result in lawsuits.