Unemployment

There are a number of types of unemployment:

• Structural unemployment
• Cyclical unemployment
• Frictional unemployment

Structural unemployment

• Occurs when the economy changes and industries die out
• Training is needed to give the unemployed workers new skills
• Structural unemployment can affect businesses in the local area

Cyclical unemployment

• Caused by the business cycle
• Cyclical unemployment can lead to a decrease in sales meaning businesses need to look for new markets

Frictional unemployment

• Caused when people are temporarily out of work as they are moving jobs

Falling Unemployment

Businesses can also incur problems due to falls in the level of unemployment as there may be skills and labour shortages

If this is the case businesses can:

• Switch to capital intensive manufacturing systems
• Relocate overseas to exploit cheaper and more plentiful labour
• Invest in training schemes to develop employees skills