Unemployment

Nowadays unemployment has become one of the biggest issue in every country. Especially for a growth-country like Indonesia where the government faces difficulty upon this problem. During periods of recession, an economy usually experiences a relatively high unemployment rate because it can cause deflation or inflation which affects the condition of the firms (investation, profit, employment). Unemployment occurs when a person who is actively searching for employment is unable to find work. A person usually considered as an unemployed when he has reached the age of labor force (15-64 years old) but have no work. But students who still doing their studies are not considered as unemployed because they are not labor force. Other people may claim to be unemployed in order to receive financial assistance, because some countries have public policy to give it as protection for the unemployed people. A person is considered employed if he or she has spent most of the previous week working at a paid job. When the rise of labor force within a country did not balanced with the rise of demand for labor force, it means the unemployment rate of that country is high. Unemployment rate is calculated as the percentage of the labor force that is unemployed.

Catagories of Unemployment There are two categories of unemployment; the employment based on the factor that caused it and the unemployment based on the work time. 1. The employment based on the factor that caused it a) Cyclical Unemployment Cyclical unemployment refers to unemployment that caused by the decrease of economic activity in a country. When there is a decrease on the economic activity (recession) the purchasing power will be low which force the firms to lessen or worst stop the production. The firms eventually will discharge their labors. b) The Natural Rate of Unemployment

The natural rate of unemployment is defined as the equilibrium rate of unemployment. It is where the aggregate supply of labor is in balance with the aggregate demand for labor force. This unemployment does not got away on its own even in the long run and it is the amount that the economy normallu experiences. c) Structural Unemployment Structural unemployment is the unemployment that caused by the unbalance of number of jobs available in some labor markets with the labor force who wants it. This unemployment also occurs because the change of economic structure within a country. d) Frictional Unemployment Frictional unemployment is the unemployment that results from the time that it takes to match workers with jobs. Usually the job givers always want good and high qualities from the work-seeker while the work-seekers want a good facility. In other words, it takes time for work-seekers to search for the jobs that suit their tastes and skills. e) Seasonal Unemployment Seasonal unemployment occurs when people are unemployed at certain times of the year because they work in industries where they are not needed all year round. For example: a farmer of rice plant will be temporary unemployed when the harvest time has ended. 2. The unemployment based on work time a) Open Unemployment Open unemployment occurs when a person is completely do not have work and trying to find one. b) Underemployment Underemployment refers to an employment situation that is insufficient in some important way for worker, relative to standard. This employment are divided into two types; voluntary underemployment and involuntary underemployment. c) Disguised Unemployment This unemployment does not affect aggregate output. Disguised unemployment also exists where part of the labor force is either left without work or is working in a reduntant manner where worker productivity is essentially zero.

The Impact of Unemployment for The National Economic 1. Reduces the supply and demand of aggregate 2. Lower the minimum wage 3. Lower the investation 4. Lower the national income 5. Lower the national welfare

The Impact of Unemployment for The Society 1. Increase the chance of criminality 2. Increase poverty 3. Many children whose father is unemployed will not taste education To create employment a country must have a great amount of national saving while the

national saving are actually depend on the national income. The more bigger national income a country has, more financial capital will it gain to invest to a new employment. This new employment will make the discouraged workers who had given up looking for jobs started to have motivations to searching jobs again.