Category: Unemployment

Introduction

After a period of successful operations, situations occur when organizations need to reduce their operational costs to remain profitable. As a result, downsizing becomes inevitable. It entails reducing the size of a business to retain operational costs that the business can sustain. As this paper reveals, firms downsize to enhance their efficiency, productivity, and competitiveness. However, such a move influences employees, communities, and business operations.

Why Firms Downsize

York (2009) defines downsizing as an irrevocable cutback of an organizations workforce. The management unit makes and implements downsizing plans to increase a companys effectiveness, competitiveness, and yield. Indeed, some strategic resolutions, including mergers and acquisitions, are adopted to allow an organization to acquire a competitive advantage in todays changing business world (Iverson & Zatzick, 2011). Such decisions are always accompanied by discussions about the appropriate business size. Downsizing constitutes a foreseeable dominant theme in such deliberations. Figure 1 below shows some of the possible reasons that lead to reducing the number of workers.

In the current competitive market, York (2009) argues that firms are under substantial pressure to cut their cost of operation to improve their efficiency. As such, many businesses are currently automating their systems. Hence, they are forced to downsize their workforce after adopting emerging technologies that take the place of many employees. Here, technological changes are depicted as signals that call for organizational downsizing. Indeed, such transformations occur, especially where the suggested technology has the potential of increasing business output while employing a few people. Pressing issues driven by the perspective that smaller organizations are better about larger ones may also lead to downsizing decisions. Also, companies downsize to enhance their operations even during financially trying moments. York (2009) agrees with this assertion by adding that such a move helps to relatively prevent bankruptcy while proactively increasing business productivity and chances of survival. Downsizing entails a response to acquisitions, mergers, a reduction in the market share, and unsatisfactory revenue.

Consequences of Downsizing to a Community

A healthy economy can compensate workers who lose jobs by giving them new ones. However, in case the rate of mass lay-offs following the downsizing of many firms exceeds the number of newly opened companies, the move to reduce the size of the available workforce is said to produce negative economic effects on communities within a nation. One lost job becomes a predicament whereby families are forced to cut spending following the reduction of gross household income levels. This situation decreases consumers purchasing potential. Thus, the government earns less income from taxes. For example, when mass lay-offs occur within a country because of downsizing endeavors by companies, a car manufacturer anticipates making minimal sales. Consequently, this state of affairs leads to fewer job opportunities recorded in corporations that supply car parts.

In other words, the net effect of downsizing is a decrement of the purchasing power of all people within communities where laid-off employees live. The resulting reduced tax collection implies that governments have minimal funds to spend in the supply of public goods that are critical in enhancing communities living standards. Considering the negative ripple effect of downsizing in communities, organizations need to consider other alternatives. York (2009) identifies these options as overtime cutbacks, retraining, remuneration decrement, the freezing of employee enrollment efforts, and job-sharing among others.

Example of an Employer/Organization where Downsizing was Necessary

The merger between Westpac Corporation and St. George Bank came when the two businesses were performing very well. Westpac Corporation was regarded as one of the best financial institutions in Australia while St. George Bank had built its special niche as a family-centered financial institution (Al Jerjawi, 2015). The merger of the two institutions resulted in a huge company with a massive capacity to meet the demands of the market in various segments of the finance industry (Al Jerjawi, 2015). After the amalgamation of Westpac Corporation and St. George Bank, issues of rightsizing emerged. The two entities operated separately. However, they had to operate as a unit. Bearing in mind that they were in the same line of business, the possibility of duplicating duties and overlaps was inevitable. The management of this new business had to find a way of rightsizing the human resource to not only increase efficiency but also cut operational costs. It had to determine if there was any need for downsizing the number of employees.

Rightsizing is the joining of Westpac Corporation and St. George Bank was a delicate process that needed substantial management intelligence. The two sets of employees tried to prove their superiority levels (Al Jerjawi, 2015). Nevertheless, this experience was not new. Iverson and Zatzick (2011) observe that great care should be taken when executing the rightsizing process since some employees may feel intimidated in case one of the two merging firms is a major stakeholder. They may need protection against workers from the larger firm who not only feel superior but also demand favors. In the merger between Westpac Corporation and St. George Bank, the management had to find a way of balancing the two divides in a manner that after downsizing, the remaining number of employees felt appreciated and valued within the new firm.

Impact on Employees and Business

The amalgamation of Westpac Corporation and St. George Bank led to a survival syndrome. According to York (2009), when a firm retrenches some of its employees, workers who are retained develop some form of apprehension, owing to the possible lack of job security. This situation impairs their performance within the firm. Downsizing affects employees psychologically. They are subjected to a situation of imagining what their fate would be in the future (Iverson & Zatzick, 2011). They start thinking about how they would survive when their turn to be retrenched comes. As a result, they demonstrate some withdrawal signs.

The business of an organization also experiences unprecedented impacts. While downsizing aims at increasing companies productivity and efficiency, this goal may not be achieved. According to York (2009), a downsized organization may be unprofitable and non-efficient in some situations, hence interfering with the process of product development. Reducing the number of employees increases labor turnover. Further, low productivity levels are associated with a deteriorated organizational commitment by employees who remain in a company. York (2009) presents downsizing as an alienating experience whereby staff members who are left behind feel dejected and anxious. Consequently, businesses record poor organizational performance because it is directly related to employees dedication to work and job security. The above information may be summarized in Figure 2 below.

Conclusion

Organizations reduce their workforce to increase productivity and reduce the cost of operation. Nevertheless, this goal may not be realized in all situations. The survival syndrome associated with downsizing may translate into reduced work commitment and motivation among the remaining employees. Therefore, even though management teams need to consider efficiency, productivity, and cost-reduction concerns in their downsizing decisions, it is important to factor in the ripple effect of such resolutions. In other words, instead of retrenching employees, such teams may take into account other options that can help in managing operational costs effectively, including retraining, job sharing, and the reduction of overtime.

References

Al Jerjawi, K. (2015). The role of human resource executives in mergers: A comparative case study of two bank mergers, the merger of Westpac Corporation and St. George Bank (Australia) and the merger of Emirates Bank International and the National Bank of Dubai (UAE). Web.

Iverson, R., & Zatzick, C. (2011). The effects of downsizing on labor productivity: The value of showing consideration for employees morale and welfare in high-performance work systems. Human Resource Management, 50(1), 29-44.

York, K. (2009). Applied human resource management: Strategic issues and experiential exercises. London, England: Sage Publications.

Planning Considerations in Downsizing

The decision to use downsizing is often dictated by external factors. Hostile market settings such as stiff competition affect a companys resources and resilience, which entails the necessity to downsize. By using a combination of research, communication, appropriate HRM techniques, and situational leadership, one can lead an organization to successful downsizing.

Key Definitions

The notion of downsizing is rooted in HRM practices and the allocation of corporate resources. According to Clair, Ladge, and Cotton (2015), downsizing is a constellation of stressor events centering around pressures toward workforce reductions which place demands upon the organization, workgroups, and individual employees, and require a process of coping and adaptation (p. 302).

Planning for Downsizing

• Communication. Conveying the message about changes in corporate policies is the first step toward downsizing. It is imperative for all employees to understand the reasoning behind downsizing (Waddell, Creed, & Cummings, 2016).
• Research. To perform downsizing properly, an HR manager has to study the key aspects of the selected workplace, including the relationships between staff members, the quality of communication, overall performance levels, and the extent of cross-disciplinary collaboration within teams.
• Leadership. Flexibility in decision-making and the opportunity to exert a positive influence on staff members are essential aspects of downsizing since changes in the corporate setting will affect the organizational environment (Waddell et al., 2016). It is necessary to keep loyalty levels among employees the same throughout the process.

Execution Considerations in Downsizing

Prioritizing

Before undertaking downsizing as a part of the process of reducing a companys scope, one should reset the priorities and align them with the opportunities and capacities of the organization. To define the extent of downsizing and the rearrangement of roles and responsibilities that will be assigned to the rest of the staff, a companys key goals will have to be determined, including the domains of marketing, communication, and finances.

Communicating

When executing the process of downsizing, one should also establish a coherent communication system through which the corporate values, key messages, and other essential information will be shared with employees. To keep the loyalty levels of staff members high, company managers will require honest and direct communication with staff members supported by the active focus on corporate values (Clair et al., 2015). A system allowing the organization to receive feedback from its staff and shaping its strategy respectively should be created as well.

Setting Goals

Determining the expected outcomes of the downsizing process with regard to changes in the number of expenses taken by the firm is a critical stage of downsizing. Requiring careful planning and analysis, the described step will provide data for the further evaluation criteria. The application of the SMART framework will be needed to ensure that the objectives are sensible.

Implementing Changes

Once the desired effects are sketched, and the strategies for performing the downsizing are determined, the process has to be launched. Based on a strong leadership approach, preferably a situational one, downsizing should take place according to a previously drawn plan. The change should occur based on Lewins Model since the framework provides a detailed account of every step of the process (Waddell et al.,  2016).

Assessing the Results

The analysis of the effects that downsizing will have brought to the organization should become the final stage in the implementation of the process. The results of the assessment will inform the decisions made further to improve the firms performance and shape the HRM strategies, respectively. Moreover, changes in the organizational behaviors and motivation of staff members will have to be studied to keep their motivation levels high.

References

Clair, J. A., Ladge, J. J., & Cotton, R. (2016). This is how we do it: How perceived prosocial impact offsets negative personal outcomes associated with carrying out necessary evils. Journal of Management Inquiry, 25(3), 301-321. Web.

Waddell, D., Creed, A., Cummings, T. G., & Worley, C. G. (2016). Organisational change: Development and transformation (6th ed.). Melbourne, Australia: Cengage AU.

Although the United States has one of the highest economic indicators globally, thousands of Americans are unemployed across the country. Despite the official national records, an actual level of unemployment is persistently high and can be a severe threat if government officials will not adopt necessary measures. Acknowledging the severity of the unemployment rate and understanding its causes is especially crucial during the pandemic aftermath.

Firstly, current economic downfall caused by the COVID-19 pandemic can be the primary reason for the increase in unemployment rates. In April 2020, the unemployment rate in the US had reached 14.8%, the highest rate observed since 1948 (Congressional Research Service [CRS], 2021). Crucially, the unemployment rate for this COVID-19 recession was much higher than the rate for the Great Recession, a 10.0% (CRS, 2021).

Hence, this substantial difference indicates that unemployment caused by the current recession will take much longer time to recover. Secondly, oil price uncertainty can be another reason for the high unemployment threat. Research has found that oil price uncertainty magnifies the rise in the US unemployment rate (Kocaaslan, 2019). Due to pandemic and oil price war between Saudi Arabia and Russia, in 2020, the price of Brent crude oil fell by 30%, the most significant drop since the Gulf War (Devpura & Narayan, 2020). In addition, more governments and companies are moving towards green energy, leading to oil price volatility. Thus, the uncertainty caused by such factors can exacerbate the unemployment rate.

To conclude, the abovementioned reasons are only a few factors that might cause a high unemployment rate in the US. Nevertheless, these reasons indicate that there is a threat of a high unemployment rate in the future. The problem is much more acute for gender and racial minorities and economic sectors such as hospitality and leisure. Hence, during and in the aftermath of a pandemic, government officials must embark on a policy to alleviate unemployment.

References

Congressional Research Service. (2021). Unemployment rates during the COVID-19 pandemic. Web.

Devpura, N., & Narayan, P. K. (2020). Hourly oil price volatility: The role of covid-19. Energy RESEARCH LETTERS, 1(2), 15. Web.

Kocaaslan, O. K. (2019). Oil price uncertainty and unemployment. Energy Economics, 81, 577583. Web.

Introduction

The U.S. Bureau of Labor Statistics (2018a) published a short article that reports the results of the analysis of the changes in the nonfarm payroll employment in metropolitan areas for the year ending February 2018 (para. 1). The article does not include a detailed description of the study that produced the results, but it provides a link to the report by the U.S. Bureau of Labor Statistics and the U.S. Department of Labor (2018) with a technical note. The latter offers more details, showing that the methodology was prone to notable errors that might have affected the studys accuracy and precision.

Main body

The variable of interest for the study was the nonfarm payroll employment. It was measured every month using ratio-level data: the numbers of people employed were used (Healey, 2015). The changes were also depicted with the help of a chart that used percentages (U.S. Bureau of Labor Statistics, 2018a). Technically, there was only one variable (non-farm employment), which is why the distinction between dependent and independent variables is not very applicable to this analysis (Levine, 2014). The study is descriptive (Healey, 2015; Levine, 2014); the investigators did not manipulate any variables, and no variables were introduced to explain the changes in employment.

The study incorporated the results of the Current Employment Statistics (CES) program, which produces employment data through estimation. For large samples, CES uses the weighted link relative estimation technique, in which a sample of establishments is studied to calculate the ratio of current month weighted employment to that of the previous-month weighted employment (U.S. Bureau of Labor Statistics & U.S. Department of Labor, 2018, p. 4). The latter is then used to calculate employment estimates. For small or highly variable samples, CES chooses models based on sample estimates and historical data (U.S. Bureau of Labor Statistics & U.S. Department of Labor, 2018, p. 5).

The U.S. Bureau of Labor Statistics and the U.S. Department of Labor (2018) report that the data of the study is subject to multiple limitations and errors that originate from its use of surveys and models. The source focuses on the sampling errors, which have been calculated and are available for review (U.S. Bureau of Labor Statistics, 2018b). However, non-sampling errors, including those related to data collection, are also mentioned for the study, even though no information about them is available for checking (U.S. Bureau of Labor Statistics & U.S. Department of Labor, 2018, p. 5). Thus, the analyses are subject to measurement errors (Levine, 2014).

Conclusion

Only the standard errors of the study can be reviewed (U.S. Bureau of Labor Statistics, 2018b). However, since the anticipated standard and random errors for the survey are notable, it can be assumed that the results are not highly accurate or precise (Ogundare, 2015). Still, the U.S. Bureau of Labor Statistics and U.S. Department of Labor (2018) report controlling the errors and provide proof to at least some of their efforts (U.S. Bureau of Labor Statistics, 2018b), which implies that the accuracy and preciseness of the results are adequate.

References

Healey, J. (2015). Statistics. New York, NY: Cengage Learning.

Levine, G. (2014). Introductory statistics for psychology. Cambridge, MA: Academic Press.

Ogundare, J. (2015). Precision surveying. New York, NY: John Wiley & Sons.

U.S. Bureau of Labor Statistics, & U.S. Department of Labor. Metropolitan area employment and unemployment  February 2018. Web.

U.S. Bureau of Labor Statistics. Nonfarm payroll employment increased in 313 metropolitan areas for year ending 2018. The Economics Daily. Web.

U.S. Bureau of Labor Statistics. (2018b). Reliability of state and area estimates. Web.

Introduction

Unemployment is a serious problem in the modern world since it has social and economic consequences for individuals and the country. Crises and disruptions in the states economy can lead to the fact that it will no longer be able to create a sufficient number of jobs for citizens. Situations where the countrys labor force participation rate does not match the number of jobs, lead to economic decline and crises. Therefore, this paper will analyze the relationship between the state of the economy and the unemployment rate in a country.

Discussion

For each country, it is possible to determine its labor force participation rate. This indicator is the percentage of the population aged 16 and over working or actively looking for work (U.S. Bureau of Labor Statistics, n.d.). This rate shows how many labor resources a country has, which is important for producing goods and services and, consequently, maintaining its economy. For example, in 2008, the labor force participation rate in America was 66% (U.S. Bureau of Labor Statistics, n.d.). However, this rate gradually decreases, which may decrease the countrys economic potential. According to the U.S. Bureau of Labor Statistics (BLS), in 2022, the labor force participation rate was 62.3%. In addition, not all working-age people may have sufficient skills and qualifications to get a job. As a result, the unemployment rate is rising, leading to slow wage growth and potentially threatening inflation (Mankiw, 2019). Moreover, a country cannot always create sufficient jobs necessary to realize its labor potential.

A decrease in the labor force participation rate leads to an increase in unemployment. The unemployment rate is measured by dividing the total unemployed by the total labor force (U.S. Bureau of Labor Statistics, n.d.). U.S. Bureau of Labor Statistics regularly analyzes the labor market, identifying key indicators and providing an annual report on the employment situation. Therefore, the lower the percentage of non-disabled citizens looking for work, the higher the unemployment rate in the country can be. Moreover, the decline in the labor force participation rate demonstrates a decrease in the working potential of the country due to a decrease in the number of citizens who can work (Mankiw, 2019). At the same time, the unemployment rate decreases when non-disabled citizens find work. In this case, the number of unemployed people decreases while the level of the labor force remains unchanged. Moreover, this indicator may also decrease due to an increase in the percentage of the countrys labor force (Mankiw, 2019). For example, this can happen when new jobs are created for a population not previously interested in finding a job and employment.

In addition, a decrease in the labor force participation rate may indicate a deterioration in the labor market since the population is not interested in employment due to external circumstances. People who were previously interested in employment but did not actively seek work in the four weeks before the BLS survey are discouraged workers (Mankiw, 2019). These people are not included in the unemployment rate calculation because they are no longer considered a potential labor force. Therefore, excluding discouraged workers from the statistics lowers the unemployment rate, reported in the media. Although discouraged workers are not included in the calculation of the official unemployment rate, they are included in the alternative measures of labor underutilization (Mankiw, 2019, p. 573). These indicators are important in the analysis of the economic state of the country. A massive increase in the number of discouraged workers could lead to an absolute reduction in unemployment in the country. However, this situation indicates the countrys economic decline and the labor markets weakness.

The number of discouraged workers has increased due to the Covid-19 pandemic. According to the BLS, in 2008, 381,000 people lost interest in finding a job (U.S. Bureau of Labor Statistics, n.d.). In contrast, in 2022, this figure was 410 thousand people, which is still less than 458 thousand discouraged workers in 2021 (U.S. Bureau of Labor Statistics, n.d.). The increase in the number of citizens who are not interested in employment most often indicates a mismatch between citizens labor qualifications and skills and the jobs the government can create.

Another indicator that affects the unemployment rate in the short term is frictional unemployment. It arises from workers looking for a new job that will better suit their skills and qualifications and meet their wage needs (Mankiw, 2019). Frictional unemployment indicates that the countrys economy is developing and new job opportunities are being created. In such conditions, non-disabled citizens can change jobs in search of better conditions. Moreover, Mankiw (2019) argues that frictional unemployment is inevitable in some cases as the economy is constantly changing. Consequently, new jobs that may interest non-disabled people are constantly being formed based on consumer behavior or the development of international economic relations.

While frictional unemployment is short-term and indicates positive trends in the countrys economy, structural unemployment is a predominantly negative phenomenon. It is a situation where the number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one (Mankiw, 2019, p. 575). This type of unemployment is the most prevalent in todays economy. The main negative consequence of this type of unemployment is that, due to its duration, it negatively affects the overall level of unemployment in the country. Moreover, structural unemployment can result from technological and economic developments, resulting in increased competition in the labor market.

Another type of unemployment is the cyclical one that arises due to the cyclical development of the state economy, which is characterized by ups and downs (Mankiw, 2019). With the countrys economic state declining, companies cannot create a high demand for specialists and create new jobs. Consequently, several employees apply for one job at once, which the organization cannot employ due to a lack of resources. Moreover, in a deteriorating economy, companies are forced to lay off some workers they perceive as the least profitable, resulting in rising unemployment. The main task of the state in regulating cyclical unemployment is to stabilize the countrys economy to avoid sharp increases and decreases in jobs. The authorities can reduce unemployment through policies and various programs. First, the government supports the unemployed in obtaining the qualifications necessary for employment in available jobs. Secondly, the state offers financial support to people who move from regions with high unemployment. In addition, it is possible to reduce or shorten the duration of unemployment insurance in order to motivate citizens to search for work actively.

Unemployment insurance is provided for the unemployed, designed to protect their income in the event of a job loss. On the one hand, such protection of citizens by the state is a positive phenomenon that guarantees economic protection for citizens. However, this program results in the unemployed devote less effort to job search and are more likely to turn down unattractive job offers (Mankiw, 2019, p. 577). Since unemployment insurance payments stop as soon as a person finds a job, many are in no hurry to look for work, counting on government assistance. In addition, this insurance creates frictional unemployment as citizens can afford to spend more time looking for a new job (Mankiw, 2019). Therefore, the duration of obtaining unemployment insurance should be limited, for example, to 8 weeks. The Bureau of Labor Statistics considers the labor force participation rate only for citizens actively looking for work over the past four weeks. Unemployment insurance benefits normally last for 26 weeks (Mankiw, 2019). Limiting the duration of payments will reduce government spending on maintaining the income of the unemployed population.

Another factor affecting the countrys economy and unemployment is unions. On the one hand, they help firms respond efficiently to workers concerns by helping raise wages for employees and improving working conditions (Mankiw, 2019, p. 582). However, their harm to the countrys economy is much greater than it might seem. Unions can harm the economy by raising the unemployment rate. In most cases, wage increases for members of unions come at the expense of a reduction in the number of jobs. As a result, the company becomes more attractive to new employees but often has limited opportunities to create new jobs. That creates structural unemployment, which negatively affects the overall unemployment rate in the state.

Summary

• The countrys labor force participation rate and unemployment rate are interdependent indicators since the lower the unemployment rate and the higher the percentage of the labor force, the lower the percentage of unemployed people.
• Although an increase in the number of discouraged workers may reduce the unemployment rate, this is a negative phenomenon that indicates the deterioration of the countrys economy.
• Structural unemployment is the most common in todays economy.
• Structural unemployment due to a mismatch between the number of jobs and people willing to work is the most common in todays economy.
• Unemployment insurance can increase the unemployment rate as people are less interested in finding a job.
• Unions often harm the economy and unemployment because they only protect the interests of their members.

References

Mankiw, G.N. (2019). Principles of economics. Cengage.

U.S. Bureau of Labor Statistics (n.d.). Web.

People need a sufficient income to procure a life of full value, not to mention that self-realization is necessary for stable mental health. However, young people sometimes do not manage to find an occupation when they are at a mature age. The problem of youth unemployment has become a global socio-economic issue nowadays. The current paper investigates the possible causes of youth unemployment.

Many economic processes are inevitable, and so are economic crises causing difficulties with employment. That is why countries with higher rates of unemployment are usually those where a crisis has happened recently. However, it is unclear why there is youth unemployment instead of general unemployment in some communities. It seems that it is easier for employed people to save their job than for a recent student to find a sufficient occupation.

Moreover, immigrants often undergo more hardship in finding an occupation because of discrimination. Furthermore, although youth unemployment is primarily a socio-economical problem, one can also consider the psychological aspects of the issue. People have to overcome the difficult circumstances of being unemployed, which influences their mental state. Youth unemployment is also probably connected with insufficient skills and experience, as well as with the influence of closer relatives and friends. The crucial problem of youth unemployment is caused by a lack of motivation, qualification mismatch, social connections influence, and multicultural issues.

To start with, the lack of motivation for finding and maintaining is one of the reasons for youth unemployment. Young people have an unstable cognitive system, which can prevent them from making important life-changing decisions. Moreover, the anticipating of usual uncomfortable starting conditions can also be a reason for people to avoid any occupation (Hällsten, Edling, & Rydgren, 2017). In other words, young people have an unpleasant image of joining labor, which is why they prefer not to start. This avoidance is probably even stronger in families with a considerable income and where living with parents at a mature age is accepted as normal.

Another probable cause of youth unemployment is the lack of necessary qualifications among young people. This factor can be divided into two aspects, namely, formal education and experience. The educational system in some countries may be insufficient or not up-to-date for the actual job market. It has been shown that low school performance has a strong positive correlation with unemployment in youth (Doku, Acacio-Claro, Koivusilta, & Rimpelä, 2019). Moreover, graduates qualifications may be irrelevant to the current market demands, which obstructs school-to-work transition. Thus, if an educational institution does not provide relevant knowledge, young people have fewer chances to get a job.

As to the experience, it is common for firm managers to look for workers with relatively extensive experience in the position. In other words, employers would rather hire an employee with stable skills and abilities because it will save recourses that would have been spent on the training of an inexperienced worker (Dietrich & Möller, 2016). The problem is that young people hardly have an opportunity to get the necessary experience because they have to devote all of their time to studying. The problem becomes even more complicated because they need this education to get access to practice.

The social environment may also cause low employment of young people because they tend to repeat after each other. That is why if most of the people in a company of young people have a job, each of them will likely try to get an occupation more eagerly (Hällsten et al., 2017). Furthermore, examples of relatives and previous generations can be implicitly acquired by children. For instance, a significant correlation between parental socio-economic status (SES) and employment has been shown in the study by Doku et al. (2019). Moreover, the initial occupational contacts are often determined by the connections that closer employed relatives, such as parents, possess (Hällsten et al., 2017). Thus, youth unemployment is reproducible among close friends and relatives, and individuals careers can influence the occupation of other people.

Furthermore, multicultural issues can be considered as a possible factor of youth unemployment. Migration is happening worldwide, and immigrants in many countries are trying to find an opportunity to get money and homes. For young people, this aspect is of particular significance because they not only have to acquire professional skills but also to adapt to a foreign culture. Such conditions are often hardly bearable, which serves as an obstacle for both tasks. Consequently, young people from immigrant communities have to manage multiple issues that slow down their development. Moreover, it is more likely that local people will be hired in overpopulated places with a lack of jobs (Hällsten et al., 2017). Therefore, young immigrants face discrimination, even when they possess the necessary qualifications.

However, in some countries, it can be the case that youth unemployment is not a problem but a statistical description. Young people frequently change their jobs because they are in search of the working conditions they desire. According to Dietrich and Möller (2016), the constant changing of a workplace results in a higher aggregated unemployment rate. Therefore, young people may be in a reasonable process of searching for the place they belong to because there is no other way to get a vivid idea of a suitable occupation.

It is important to note that most of the studies are correlational and that is why caution should be taken when deriving conclusions about causal relations. Distinguishing between causes and effects is not a trivial task. When a correlation is made between young peoples unemployment and their friends, it is hard to say if friends influence their unwillingness to be unemployed, or if they just befriend unemployed people. Most of the factors suggested in the literature are connected, and it is unclear which one is primary. For example, SES is connected to access to technology, quality of education, and mental health. Suggesting one factor as the main cause must be done by someone who is competent enough and has clear reasoning.

To conclude, the problem of youth unemployment is multimodal because it includes economic, social, and psychological factors. There has been thorough research on the problem, and some presumable reasons were outlined. The prospect of looking for a job and starting from a low position causes anxiety about working and lowers motivation to make a career. Moreover, some educational systems provide irrelevant skills for current job demands, yet students spend most of their resources on studying and cannot get experience in their profession either.

This situation worsens in numerous multicultural societies because most employers prefer to hire local citizens instead of young immigrants. Although youth unemployment can sometimes be considered as a normal process of youth immersion into the labor market, it is crucial to take action to improve the situation where the situation is undoubtedly unfavorable.

References

Dietrich, H., & Möller, J. (2016). Youth unemployment in Europe  Business cycle and institutional effects. International Economics and Economic Policy, 13(1), 525.

Doku, D. T., Acacio-Claro, P. J., Koivusilta, L., & Rimpelä, A. (2019). Health and socioeconomic circumstances over three generations as predictors of youth unemployment trajectories. European Journal of Public Health, 29(3), 517523.

Hällsten, M., Edling, C., & Rydgren, J. (2017). Social capital, friendship networks, and youth unemployment. Social Science Research, 61, 234250.

Introduction

Unemployment rate refers to the percentage of people within the available labour force who do have jobs and are actively looking for one (Boyes & Melvin, 2005). Unemployment rates cannot be reduced to zero, which means every economy has some level of unemployment. However, these unemployment rates are of different natures and each has different causes. Various measures have been suggested as remedies for reducing unemployment. However, without determining the type of unemployment and its causes it is difficult to determine suitable solutions that will reduce the situation. The types of unemployment and their causes are explained below (Hughes & Perlman, 1984)

Types of unemployment and their causes

Frictional unemployment is a temporary lack of a job as a result of normal turnover within the labour market. These include: People who have been fired or quit their jobs voluntarily yet thy have marketable skills and are looking for new employment. Young graduates who are searching for their first employment. Short unemployment periods between projects, such as in construction industries, whereby workers are laid off on temporary basis.

Some unemployment periods are also seasonal, such as at the end of harvesting season where more farm workers are jobless as they wait for the next farming season. This type of unemployment is caused by the transition time taken by an employee before getting to a new job. It also results from lack of information, whereby a job seeker cannot be immediately matched with a job vacancy. It can be reduced by using improved methods of sharing job information, by listing vacancies on the internet (Tucker, 2008).

Structural unemployment: whereby jobs trained for are not there, either for a long-term situation or permanently. It is a situation where the skills of the unemployed do not match the requirements for the jobs available. This can happen in three situations: first lack of education or skills to available jobs. For instance, when graduates come out of college with skills and find that what they learnt is no longer marketable.

Shift in demand due to changes in consumer tastes and preferences lead to unemployment of some workers. Those who were producing products whose demand has gone down will be laid off by their companies. Additionally, Introduction of the latest technology may render some workers jobless. This is because some of the jobs performed by them are now done by computers. Structural unemployment can be reduced by retraining for new jobs (Tucker, 2008).

The last type of unemployment is cyclical unemployment; where business cycle is the cause for lack of jobs and it happens during recession. Recession is characterized by a fall in real GDP, as a result companies are forced to close down and workers are laid off. A fall in GDP is caused by reduction in consumer spending, investment as well as reduction in government spending. However, when real GDP goes up unemployment rates also increases. Therefore, to prevent such sharp swings in the rates of unemployment, the government should put up macro economic policies that moderate this type of unemployment (Baumol & Blinder, 2009).

Keynesian or classical assumptions in relation to the types of unemployment

Keynesian theory can be used to explain frictional and cyclical unemployment. Keynes was of the opinion that unemployment results from difference between productive capacity and aggregate demand of any economy. Aggregate demand refers to the income available to businesses, the government and the consumer, to use in purchasing goods and services. Gross Domestic Product refers to goods that have actually been produced. Therefore, when productive capacity is more than demand, the producers will reduce their output. This leads them to lay off some workers for a while resulting in frictional unemployment (Janda, Berry & Goldman, 2008)

Classical theory explains that when demand for goods and services surpass productive capacity people will be willing to pay for more to get goods and services. This will drive the prices up resulting in inflation. The consumers purchasing power will go down as result. Workers will in return demand for higher wages which drives cost of production up. In the end some workers will be laid off to reduce costs. This explains cyclical unemployment. When the inflation is corrected normal situation resumes but the cycle can happen again. In order to reduce unemployment levels, the classical theory, roots for the reduction of wages which will in turn reduce the costs of production. As a result producers will produce cheaper goods and services. However, the Keynesian theorists say that, government monetary and fiscal policies should be used. These will reduce inflation and increase producers ability to produce cheaper goods (Blaug, 1997).

Conclusion

It is clear that there are different types of unemployment situations and each has its own causes and solutions. Theorists have also tried to explain the various unemployment situations; however, they differ in the causes and solutions for the situations. Any government is supposed to study the unemployment situation in its economy and derive appropriate measures that will help to minimize the effects of the situation. The unemployed individuals should also be able to determine their unemployment situations; hence they will be able to apply appropriate remedies.

References List

Baumol, W. J. and Blinder, A. S., (2009). Economics: Principles and Policy. Mason, OH: Cengage Learning.

Blaug, M., (1997). Economic theory in retrospect. Cambridge: Cambridge University Press.

Boyes, W. and Melvin, M., (2005). Economics. Boston, MA: Cengage Learning.

Hughes, J. J, and Perlman, R., (1984). The economics of unemployment: a comparative analysis of Britain and the United States. Cambridge University Press.

Janda, K., Berry, J. M. and Goldman, J., (2008). The Challenge of Democracy: American Government in a Global World. Boston, MA: Cengage Learning.

Tucker, I. B., (2008). Macroeconomics for Today. Mason, OH: Cengage Learning.

Employment in the UK has shown a positive sign that many believe to be a mark of an economic turnaround. The unemployment rate has fallen considerably, and the rate of employment of women and that of youths has increased (UK unemployment falls by 125,000 to 2.34 million).

Analysts believe that the unemployment data presented by the Office of National Statistics (ONS) demonstrate that the rise in employment level demonstrates a strengthening of the fundamentals of the economy. This essay studies the change in the unemployment rate in the UK and the underlying reasons behind it.

Historically, since 1971, the unemployment rate had reached the lowest in 1973 and then again in 2005-06. However, the unemployment rate had climbed down from 2012 through 2013 (see figure 1). A closer look at the 2012-13 monthly data reveals that the unemployment rate in the UK has been continually declining since January 2012, except for a brief period from November 2012 to January 2013. From January 2012 to December 2013, the unemployment rate has declined by 13 percent from 8.4 percent to 7.3 percent, respectively (ONS).

A decline in the unemployment rate indicates the strengthening of the economy. Further, there has been a decline in the rate of people who are underemployed, increased long-term employment. Further, the wage rate to has shown a sign of increase. However, analysts believe that the increase in wage rate is not comparable with the increase in price inflation, which has reduced real income (Monaghan).

In 2014, the effect on real wages had eased marginally, with a fall in inflation by 2 percent (UK unemployment falls by 125,000 to 2.34 million). However, the fall in the unemployment rate has slowed down at the beginning of 2014, according to the data released by ONS (UK unemployment falls by 125,000 to 2.34 million). However, economists have grown apprehensive of the decline in the rate of fall in the unemployment rate in 2014, which was reduced from 7.2 percent decline to 7.1 percent.

Though, the most meaningful results can be drawn from quarterly figures for variation in monthly figures can be, at times, misleading. However, analysts believe that there has been a slowdown in the rate of fall of the unemployment rate (UK unemployment falls by 125,000 to 2.34 million).

In order to understand why there has been a decline in the unemployment rate in the UK, it is essential to understand the reasons affecting UK unemployment. Economic recession causes a cyclical deficiency in demand, resulting in a fall in the real GDP. A fall in aggregate demand in the economy causes a fall in production, reducing the demand for labor, hence, increasing unemployment. Further, structural change in the economy can reduce employment in the economy.

Youth unemployment is usually high as they lack skillsets for employment. Figure 3 shows that the unemployment rate among youths has decreased considerably. From January 2012 to January 2014, there has been 11.6 percent decline in the unemployment rate in the age group of 25-34 years. In the age group of 35-49 years, the unemployment rate in the above period has declined by 16 percent (ONS). This is a good sign as it indicates that long-term employment will increase, as more youth have found a place in the workforce.

Recent analysis suggests an increase in womens employment in the UK. Womens unemployment has declined considerably (UK unemployment falls by 125,000 to 2.34 million). Figure 4 shows the unemployment rate of women from 2012 to January 2014. This indicates that the unemployment rate of women has declined considerably. Overall, there has been a decline in 4 percent in the unemployment rate of a woman from 2012 and 2013, which is lesser than a decline of 9 percent among men and over the decline of 7 percent (ONS).

A detailed analysis of the change in unemployment rate based on age group shows that women unemployed in the age group of 25-34 has declined by 10 percent in 2013 as compared to 2012, while that of men has declined by 2 percent (ONS). In the age group of 35 to 49 years, the decline has been by 14 percent among men and 12 percent increase among women (ONS).

Such a sharp decline in the unemployment rate of women indicates that increasingly younger women are employed in the workforce. Though time-series data would show that the unemployment rate among women has declined considerably compared to the previous years, the overall decline is much less than the total decline in the unemployment rate.

The analysis shows that overall, there has been a decline in the unemployment rate in the UK from 2012 through 2014. However, the decline is more in the age group of 35 to 49. Further, there has been a decline in the unemployment rate of the age group 25 to 34. Further, women unemployment has contributed to the maximum decline in unemployment in this age group. Womens unemployment has declined, but the decline is much less than the overall decline in unemployment.

Works Cited

Monaghan, Angela. UK unemployment  what the economists say. 2014. The Guardian. Web.

ONS. Labour Market Statistics. 2014. Office of National Statistics. Web.

UK unemployment falls by 125,000 to 2.34 million. 2014. BBC News. Web.

Introduction

In recent years, the global market has changed due to the appearance of the COVID-19 pandemic. Therefore, developing a successful business has become a more significant challenge for many young entrepreneurs. In creating a venture, it is essential to understand the problem and what kind of opportunity this problem presents. Youth unemployment is the problem that gives opportunity to launch a venture.

Opportunity Recognition

The problem that I am going to address is unemployment among young people. This discovery arose due to a paper by Axelrad mentions International Labor Offices (ILO) statistics, according to which youth have the most problems finding their first job (Axelrad et al., 2018, p. 8). According to Axelrad., statistics is a critical assumption that shows that the youth (15-24) unemployment rate is much higher in most countries than that of adults (24-50). Their research confirmed that unemployment among young workers stems from the characteristics of the labor market (Axelrad et al., 2018, p. 9). The issue with engaging youth is probably their lack of skills for the desired position. This problem creates an opportunity to create a solution for both young people seeking jobs and employers hunting for young talents.

Business Model

The solution that is suggested for the youth unemployment problem is an online coaching service that connects young people with coaches and employers and service team. The name of the service is to be determined later. The role of each registered party is described in figure 1.

The benefit of using this Career Service for all parties is equal. The companies optimize time and financial resources for finding matching candidates. The coaches get an economic benefit and a flexible work schedule by using the service as their employer.

The business model that the career service will employ is the subscription based model. Figure 2 shows the rough vision of the capital flow in the company.

Opportunity Evaluation

The opportunity of building a technology business based on the youth unemployment problem is potentially profitable and potentially challenging. To determine this problems strong and weak points, I will use a SWOT analysis (S  strengths, W  weaknesses, O  opportunities, T  threats).

Strengths

Providing a solution to the youth unemployment problem might serve as a part of solving UNs SDG number one, No Poverty. According to the research conducted by Dahliah et al. (2021), if the community is employed and has income, and that income consequently meets the needs of the community, fewer people will be poor. Decreasing unemployment can help reduce poverty.

Weaknesses

According to Harvard Business Review, most start-ups fail because more than two third cannot deliver a return to the investors (Eisenmann, 2021). The problem is start-ups fail to meet real customer needs and make false starts. Career service also has a potential of not meeting customer needs (meaning three categories listed in figure 2).

Opportunities

As mentioned in Axelrad et al. research, this career service has the potential to become international because every country faces an unemployment issue. Therefore, the business has the opportunity of entering the global market.

Threats

The biggest threat to career service is competitors. Career service is a comparatively innovative product; however, it might have big companies like LinkedIn as its competitor during the MVP run due to similar functions.

Conclusion

To summarize, an opportunity to build a business based on the youth unemployment problem has both strengths and weaknesses, also opportunities for further development and threats in the face of competitors. Career service is a tech solution that unites young people seeking a job, employer companies, and professional coaches. The service team and coaches work collaboratively to match employers with young talents. Such an application might serve as part of the No Poverty SDG solution but also potentially fail as a start-up. I believe there is needed more research on this problem to identify whether this business solution will work or not.

References

Axelrad, H., Malul, M., & Luski, I. (2018). Unemployment among younger and older individuals: Does conventional data about unemployment tell us the whole story? Journal for labor market research, 52(1), 1-12,

Dahliah, D., & Nur, A. N. (2021). The influence of unemployment, human development index, and gross domestic product on the poverty level. Golden Ratio of Social Science and Education, 1(2), 95-108.

Eisenmann, T. (2021). Why start-ups fail. Harvard Business Review.

The leisure and hospitality sector is among the crucial industries for the US economy that consists of arts, entertainment, and recreation industries; food services and drinking places industries; hotels and other accommodations industries. Throughout the beginning of time, humans have engaged in leisure activities. From antiquity, musical ensembles, theatre, and athletics have been a component of culture. As the nations free time and personal earnings have increased, so has the arts, sports, and recreation business. There are around 125,500 establishments in this category, varying from museums and art galleries to fitness facilities. This business encompasses almost all activities that occupy a persons free time, barring the watching of animated pictures and video recordings.

This industrys varied array of activities may be divided into three major categories: live shows or events; scientific, artistic, or educational displays; and relaxation or leisure activities. Peoples time and money are competed for by leisure activities. Certain arts, music, and leisure activities have been eliminated as a consequence of recent state and municipal budget constraints. When the funding situation improves, many activities will resume, especially those that were formerly in great demand. Furthermore, due to the different interests of people, the number of sports-related engagements has been growing in popularity, leading to the formation of new leagues and fan possibilities.

The subsector of food services and drinking establishments prepares customer-ordered meals, snacks, and drinks for on-premises and off-premises ingestion. There is a variety of businesses in these industries. Others provide different mixes of seats, waiter/waitress service, and other facilities such as minimal entertainment. The subsectors industries are categorized according to the kind and degree of services offered. The industry categories include full-service restaurants, limited-service eateries, specialty food companies, such as food service providers, catering and mobile food facilities, and drinking establishments. Food businesses and drinking establishments may be the most prevalent and well-known businesses in the world. This category encompasses all sorts of restaurants, from quick food joints to fine dining venues. In addition, they incorporate café, caterers, restaurants, and fast food contractors that provide food services in institutions such as colleges, sports stadiums, and hospitals.

For visitors, vacationers, and others, the accommodation subsector provides lodging or short-term lodgings. There is a variety of businesses in these industries. Some provide solely housing, while others also provide food, laundry facilities, and recreational amenities. Even though the supply of additional services produces higher income, lodging businesses are categorized in this subsector. Different establishments provide a variety of additional services. Hotels and other lodgings are as diverse as the many business and leisure tourists they serve. There are five-star hotels, youth hostels, and recreational vehicle parks within the scope of this business. Others offer longer visits by offering meal service, leisure activities, and conference facilities in addition to a place to sleep. Among crucial actors within the industry, Hyatt, Hilton, McDonalds, KFC, and Starbucks are to be mentioned.

The unemployment rate refers to the proportion of the working population without a job. It is a trailing sign, meaning that it often increases or drops in the wake of shifting economic circumstances rather than forecasting them (Anderson & Perez, 2022). When the economy is in bad health and jobs are few, the unemployment rate may be anticipated to climb. As the economy expands at a good pace and employment is generally numerous, it may be anticipated to decline. The US unemployment rate is issued on the first Friday of each month for the prior month. Current and previous versions of the report are accessible on the Bureau of Labor Statistics webpage. Users are able to build and download tables displaying any of the aforementioned labor market metrics for a particular period range.

Unemployment is among the most closely-watched metrics for economic stability, along with GDP and inflation. This indicator has an inverse association with the financial markets and inflation, two important economic indicators. For leisure and hospitality businesses, low unemployment rates tend to be related to a higher average salary, owing to the lower labor supply. In certain cases, this may lead to inflation when businesses raise pricing to account for higher labor expenses. Reduced unemployment also seems to be followed by increasing stock values since the population has more discretionary money.

Graph 1 shows the fluctuations of the unemployment rate within the scope of the explored industry over the period of January 2000 to January 2023. It seems apparent that the highest unemployment rate for the industry was in April 2020  39.3%  due to the outbreak of Covid-19. The leisure and hospitality sector was among the spheres that were affected by the pandemic to the greatest extent. However, it seems that the industry has recovered, given the unemployment rate of 6% as of January 2023.

From 2021 through 2031, the Bureau of Labor Statistics forecasts that the US economy will generate 8.3 million jobs (2022). Of these, 1,9 million employees, or 23,1 percent of all predicted new positions, are anticipated to be in the leisure and hospitality sector. This is substantial expected growth for a sector that accounted for 8.9% of overall employment in 2021. The recovery from the COVID-19 pandemic is responsible for this sectors expected growth, which is the quickest of any industry at 1,3 percent each year.

References

US Bureau of Labor Statistics. (2022). Leisure and hospitality projected to mostly recover pandemic-driven employment losses. Web.

FRED. (2023). Unemployment rate  Leisure and hospitality, private wage and salary workers. Web.

Anderson, S., & Perez, Y. (2022). What is the unemployment rate? Rates by state. Investopedia. Web.