Unemployment is a cost to a country. Unemployment rate can fluctuate in a country due to various reasons. Sometimes the supply may be more than demand. In this case even the educated remain unemployed. Unemployment is not only a cost but also a loss to the country. The country loses on taxes and the ability of a productive individual. Some countries even pay unemployment benefits to support the individual. When unemployment rate is it can cause a large impact on the economy. GDP levels remain low and growth stagnates. There are many reasons for unemployment. Here are different types of unemployment.
Classical unemployment takes place when the wages are higher than the equilibrium level causing the supply of labour force to be more than the demanding level. Business will be reluctant to hire because there is a risk factor and they might even lay off existing employees. This happens when the minimum wage is increased. When the minimum wage is increased the wage rate is actually higher than the value of labour therefore it is a loss to the employer.On the other hand when wages fall the employed would drop off rather than going to work. This is true in countries that have public welfare that support the unemployed. Generally higher wages results in the worker purchasing more goods and services due to higher income resulting in the company profiting and hiring more workers. This in turn reduces unemployment rate. Further higher wages are an incentive for the youth to work. They could start through internship in Korea for foreigners and climb up the ladder.
Cyclical unemployment is also known as Keynesian unemployment. This occurs when the demand for employees is greater than the supply. When this occurs it is likely the demand for all goods and services fall, resulting in losses for the employer. The losses will be supplemented by layoffs resulting in unemployment. This issue can be circumvented by the government through reducing interest rates to increase purchasing and encouraging the youth to work part time or in marketing, management finance internship Thailand https://internsinasia.com/ depending on their majors.
Structural unemployment occurs when the skilled required by the employer and the skills available does not match. This can cause unemployment when most of the labour is trained for a specific job and the jobs available require different skills.Technological unemployment all falls within this category where technology replaces labour or when labour become efficient they need fewer workers to produce the same output.