Unemployment (Research Paper Sample)

TITLE: ECONOMICS
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Unemployment rate is the percentage of the total population in terms of labour force that is currently not employed but is actively and aggressively looking for jobs and is also willing to work. I.e., the number of unemployment people divided by the total of people who are employed and unemployed (the labour force of that country or region). Different countries have set their acceptable or normal unemployment rate which always varies from time to time according to the prevailing economic and financial conditions. This rate is determined by extremely many factors including the age of the labour force the number of jobs available in the economy and the entirety number of hours worked matched up to the entirety number of hours one would have liked to work.
There are several types of unemployment including, frictional, cyclical, induced seasonal and structural. Financial crisis causes cyclical unemployment, which is caused, by the imbalance between the types of skills potential employees are offering compared to what employers are demanding or shifts in the demand across regions of an economy due to changes in consumer tastes or competition.
Cyclical unemployment is caused by the life cycles of business and nations. Global financial crisis on the other hand, are the problems that affect financial institutions, leading to high interest rates and losses in the values and prices of the stock markets majorly in all countries. For example, in the United States the monthly unemployment rate was on an average of approximately 5.6% between the year 2000 and 2004. This rate is used as an indicator of how well the economy is doing and also predicts the future market trends. Despite the increase in output after the year 2009 financial crisis, the unemployment rate remains at a historical high level in most countries. According to the latest report, the joblessness pace in the United States has finally settled at 8% in the most recent months.
Unemployment rose sharply in the European countries and other countries since 2007 as a consequence of the worldwide monetary emergency. The groups that were mostly affected were men and the youth compared to women. This continued for three years continuously and the figure of jobless individuals amplified each month because it was little in 2007.
However, after the global financial crisis the rapidity of the augment has held back. In European countries, the unemployment rate rose from the low 7.2% in March 2008 to 9.5 % in May 2009 in the European area. In the similar phase, the pace in the EU rushed from 6.7 % to 8.9 %. The joblessness rate in May 2009 is the uppermost ever since May 1999 for the euro area, whilst for the EU it is the maximum since June 2005. Once more Spain pilots this list of not so advantageous status, with a youth joblessness rate that went up to 46.6% in 2011. Some policymaker’s talk of a “lost generation” as this group is not targeted for jobs programs.
The most recent global financial crisis was in between the year 2007 and 2008 where countries around the world had to face hard financial problems which financial analysts and economists made conclusions that it was the worst since the Great Depression experienced in 1930s. Statistics from the International Labour Organisation (ILO) estimated that the global number of unemployed people increased from 180 million people in the year 2007 to approximately 215 million in early 2009. An outstanding example is in The United States, where the unemployment rate increased to a new record of 9.5% in the year 2009 though it started declining from the year 2010 to 8.8% in the year 2010 according to the Bureau of statistics of the United States.
This crisis led to increased unemployment rates as many firms and organisations had to either close down, cut down their costs to survive by retrenching employees and people being evicted from their houses as it also affected the housing sector. This also resulted to the loss of income for the citizens of these countries, the respective governments also experienced a reduction in the collection of their taxes and the governments were under pressure to spend more money on social amenities, which was a necessity for the middle class population who were mostly hit by the crisis.
These problems also led to substantial debts, and low growth in the developing countries and people could not afford food as prices had shot up leading to devastating drought and displacement. Important businesses, which were the backbone of the robust economies, faced setbacks which led the buyers of commodities and services paying more which therefore reduced their wealth. In these two years only, the cost of the financial crisis was estimated to be in Trillions of US dollars.
The impact of this financial crisis has been particularly pronounced in most countries as most of them experienced a decrease in their GDP (Gross Domestic Product) and also in their labour force. Significantly, unemployment rate was mostly felt by the youth who were in informal jobs who were the first lot to face the wrath financial problems. All organisations had to cut down on their costs and therefore, closed downs all their plans to employ and in return offered unjustifiable jobs with low incomes, without benefits or allowances and in contract basis only.
According to the United States government, the unemployment rate has been one of the major concerns to the Congress because of its consequences and impact on their budget. This is accredited to the actuality that elevated joblessness rate leads to the growth in the budget deficit due to lower revenue and increased recurrent expenditure. Following the economic catastrophe, the joblessness rate in the European Union and the United States has become ever more, the same in acutely many elements. The 2007-2008 financial crises led to the 2008-2009 global recession which is still causing delays in the employment effects because of the dramatic consequences on labour markets of many countries in the world.
The share of long-term unemployment equally grew faster in the US, thereby reaching levels close to those in the EU. Finally, the US labour market seems to be losing vigour since not only downsizing rates have spiked with the crisis, but hiring rates have also fallen significantly. These are indications that the US labour is in the process of becoming more "European" in terms of size, composition and dynamics. The brief report above compares the unemployment response to the crisis in the US and Europe, analyses the composition and duration of unemployment, the extent and progress of labour market gap and decomposes job market flows in and out of unemployment in the two world regions.
The conclusion of the analysis is that the observed convergence in the unemployment situation may not be long-lasting as it is the result of a mixture of factors that will partly play in opposite directions looking forward. The most critical and worrying issue right now is the likelihood of the last global financial crisis happening again. Analysts are not too optimistic and are considering that a substantial and more devastating crisis is in the pipeline due to the problems of the last crisis which remain unresolved up to now as all these factors are all interconnected.
Recently, President Barrack Osama was re-elected for the second term amid high unemployment rate. Financial analysts have predicted that there will be an improvement on the economy and that the unemployment rate of 7.9% will also come down. It is predicted with the current trend, the unemployment rate will come down up to the normal 6% in the next two years though it will remain high in 2013. Americans had to pay 10.7% of their after tax revenue in interest on mortgages and other debts. This was down from 14% during the height of the financial crisis of the 2007 which is the lowest since 1993.
The global financial conditions are generally stable and therefore, economists predict that the economy will grow by 2.3% in the year 2013 though the economy will not be strong to accommodate or create many job opportunities. During the financial crisis, The United States borrowed funds to sustain its current expenditure. Economists and financial analysts note that most world economies will recover fully following the financial crisis though it will be slow.
On the other hand, analysts are warning that there may be a looming decline in the economic growth globally due to the challenge of accommodating the unemployment rate that is ever increasing more than the jobs that are being created. Most member states currently have large amounts in terms of long term borrowing which increased mostly in the year 2011 which banks gave out in high interest rates though leaving them with no liquid money. Some governments tried to help those others that were mostly hit by the crisis, for example, Greece, but this was characterised by the concerns of likelihood to default.
The unemployment rates in most youths who had different education backgrounds and levels from job descriptions were more pronounced. The only labour force that did not feel much impact was the experts and top level management as they were not retrenched. The youth who had low achievement for example, those who had done only post-secondary education by attending some college or polytechnic were most hit. The impact of the crisis is however, most visible from the recent graduates who contribute most on the unemployment rate. These are the young people who are aged between 18-30 years and have just finished their education and are now looking for their first jobs, and they are frustrated because they cannot find any.
There is a good improvement noted in the last four years that in most countries, unemployment rate is declining ,and more middle cla...