Types of Unemployment

Three Main Types Plus Seven – Which Is the Worst?

The term unemployment refers to a state when a person is out of work or has been without a job for a certain period. Additionally, it also refers to a person who is searching for a job and has not been able to secure one. This usually happens to most graduates. In many countries many young people find it challenging to secure jobs after completion of a degree or diploma education.

The unemployment rate in these current times is higher than years before. This highlights tough economic times currently in the world. However, unemployment is caused by different issues such as peak season or a low number of jobs. Even with such reasons have you ever known that unemployment is categorized in different types.

  • Frictional or Search
  • Natural
  • Structural
  • Seasonal
  • Cyclical
  • Disguised
  • Voluntary
  • Classical
  • Long-term
  • Demand Deficient
  • Technological

The ten are types of employment different people are experiencing. Everyone has its own category. In this article, we will discuss them in detail and know what is the real cause of each of the unemployment type.

1. Cyclical Unemployment

When the demand for commodities or services reduces due to decrease in demand workers in such jobs will become unemployed. This is known as cyclical unemployment. A perfect example of cyclical unemployment is when the demand for furniture is low due to reduced low customer demand. Many furniture makers will become cyclically unemployed. Or when the demand for houses decreases due to cost of construction this means many masonry workers will become unemployed. In addition, this type of unemployment is brought by a decrease in demand for goods and services.

2. Natural Unemployment

This is a term associated with monetarist economists. It is defined as the rate of unemployment that still exists when the labor market is in equilibrium and includes seasonal, frictional and voluntary unemployment.

Natural Unemployment consists of two of the unemployment: frictional and structural.

3. Structural Unemployment

Job opportunities are available but the workers with the required skills are not available. Or the ones who are qualified don’t leave near and are not able to shift to those areas. This is what structural unemployment means. Additionally, structural unemployment can exist for many years. If you get to look at jobs such as manufacturing jobs in a continent such as Africa the number of skilled labors is low than the required number of the labor force. Hence, people leaving in other continents cannot move to Africa to take these jobs hence leading to structural unemployment. The only solution to this type of unemployment is when the government takes up the mantle to solve insufficient labor force which will reduce the unemployment rate.

4. Frictional or Search Unemployment

This is a short-term type of unemployment. Frictional unemployment doesn’t have any impact on the economy. In this type of unemployment, people are unemployed but get to have a job after a certain period. Some of the causes of this type of unemployment are usually due to new job vacancies, sickness, marriage, giving birth, or retirement. For example, if you get a well-paying job you will decide to quit your current job for the new one. Another good example of frictional unemployment is when you are pregnant and take a leave or decide to quit for you to take care of your newborn. However, after the child has grown you find a new job. Frictional unemployment helps organizations to hire more qualified workers.

5. Disguised Unemployment

This type of unemployment means that a greater number of workers are hired to perform a certain duty than the required number of workers. In simple it means that even if the additional workers are retrenched there will be no effect on productivity. Imagine if you have a job that needs seven people but you go on to hire ten people to perform that job. This will mean that you will be increasing your expenses while the productivity of the work remains the same.

When you remove the extra workers, the productivity will remain the same but you would have reduced your expenses. Currently, this type of unemployment is mostly in sectors such as agriculture and service where the job opportunities are few but the number of workers is high.

6. Seasonal Unemployment

Seasonal unemployment is brought by reduced demand for certain services over a certain time. This leads to the loss of jobs because such companies are not making enough money to enable them to pay all their workers. Hence, forces them to reduce the number of workers. For example, those workers employed in the tourism sector usually face this type of unemployment. When the number of tourists decreases which means a decrease in demand for essential services by specific tourism companies. When such an occurrence happens removal of workers happens which leads to unemployment.

7. Voluntary Unemployment

When a job is not well paying and you have too many expenses hence you don’t see the reason to continue working.  Furthermore, this type of unemployment is when a person is not able to find a job of his or her choice. Many people who are voluntarily unemployed are student fresh from campus and don’t have a job until when they get a job of their choice. Others who get affected are those who don’t want to work and aren’t looking for any job. When you don’t have information about new jobs you won’t be employed.

8. Technological Unemployment

Technological unemployment is caused by increased use of technology in companies. Many people become technological unemployed due to the use of current technology in the running of companies. Such companies that have been adversely affected is the automotive manufacturing sector. Countries such as Japan and Germany are using robots in many of their manufacturing companies. The use of these robots renders workers inefficient hence not useful to companies. The automation of services such as contacting customer service is currently done by robots which have made many people lose their jobs. So, with the increased use of technology in different sectors of the economy many workers become technologically unemployed.

9. Classical Unemployment

Also known as induced or real-wage unemployment this type of unemployment mainly affects people when governments impose regulations on companies and are not able to meet. Another reason that leads to classical unemployment is when workers unions are on strike due to salaries and other allowances. A perfect example of such is in 1995 when workers in France went to strike over certain labor issues and fighting for revolution in the public transport sector many people lost their jobs. Therefore, employees who get sacked from a job due to these reasons become classically unemployed.

10. Long-Term Unemployment

When you have been searching for a job for over six weeks without any success you become long-term unemployed. In this type of unemployment, one may lose hope and decide to stop looking for work. People spend a lot of cash to search for a job with no success. Currently, many people globally are long-term unemployed. The two main causes of this type of unemployment are structural and cyclical unemployment.

Which Type of Unemployment is Worse?

According to statistics, the worst type of unemployment is long-term unemployment. This is because it is caused by two main types of unemployment and leads to frustration. Many people under this type of unemployment find it hard to afford to pay for their daily expenses. However, those who are long-term unemployed usually become employed after searching for jobs for a long period.

Conclusion

If you have been employed or lack a job opportunity the above are what define your unemployment type. None of the above is good but try as much as possible to search for a job that will not make you be entitled as unemployed. Thanks for your time.

Sonia Kukreja

I am a mother of a lovely kid, and an avid fan technology, computing and management related topics. I hold a degree in MBA from well known management college in India. After completing my post graduation I thought to start a website where I can share management related concepts with rest of the people.
Sonia Kukreja