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BE3208
Macroeconomics

Assignment #01:
Individual report

Program Title: Diploma in Business Studies

Group Code and ID: DBSS10 - 22FTB1073
Name: Faizan Asyraf Bin Muhammad Fadilah

Essay Title:
Why unemployment is a serious issue?

Date of Submission
31th August 2023

Module Lecturer:
Dayangku Hajah Norhasnidah Binti Pengiran Haji Pungut
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Table of Contents
1. Introduction ...................................................................................................... 2
2. Contents about unemployment issues ............................................................. 3
2.1 The reasons of unemployment are serious problem ................................... 3
2.2 Types of unemployment .............................................................................. 3
2.2.1 Structural Unemployment ...................................................................... 3
2.2.2 Cyclical unemployment ........................................................................... 3
2.2.3 Frictional unemployment ........................................................................ 4
2.2.4 Seasonal Unemployment ........................................................................ 4
2.2.5 Long-Term Unemployment ..................................................................... 4
2.3 Negative impact of unemployment ............................................................. 5
2.3.1 Loss of productivity and a decline in the economy.................................. 5
2.3.2 Poverty and income imbalance ............................................................... 5
2.4 Challenges of facing unemployment rises.................................................... 6
2.4.1 Problems with mental health .................................................................. 6
2.4.2 Financial difficulties ................................................................................ 6
2.5 Recommendation for reducing unemployment issues on people and
economy............................................................................................................. 7
2.5.1 Creating jobs and sustainable companies ............................................... 7
2.5.2 Support programs for Youth Employment .............................................. 7
2.5.3 Continuous evaluation and Monitoring................................................... 8
3. Case study: Unemployment rate in United Kingdom (from 2000-2023)........... 9
4. Conclusion ....................................................................................................... 12
5. References ....................................................................................................... 13
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1. Introduction
Unemployment plays the situation where one is with no a job and constantly looking for work. It
is a financial data that observes the amount of the workforce that currently does not have a job
but continues to search for work. Unemployment is a key serious of the condition of a business
and is often utilized to assess the general financial condition of a country. Unemployment is also
a big problem that affects people, their families, their towns, and even whole countries. It causes
problems on many levels, including the economic, social, and psychological. This piece goes into
detail about the reason unemployment is a big problem and what it means for the future.
Unemployment is also a long a cause of major concern for communities across the world,
unemployment is a widespread complex problem. This tough issue not only conflicts with
everyday actions of people but it also has widespread effects on businesses, communities, and
general well-being. This piece discusses the complexities of unemployed people, as well as its
beginnings, effects, and possible cures, stressing the instant requirement for a unified approach
to solve this important problem.
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2. Contents about unemployment issues

2.1 The reasons of unemployment are serious problem

Unemployment is a big problem because it has many different effects on the economy, society,
and people's lives. The economy suffers when a large number of people are not working, because
they are not using their full potential. This leads to lower production levels, slower economic
growth, and less revenue generation altogether. This, in turn, makes people spend less, brings in
less tax money for governments, and makes social welfare systems work harder, which affects
the security and growth of national economies (Team, 2023).

2.2 Types of unemployment

2.2.1 Structural Unemployment

These happen when the structure of the economy changes and certain industries or skills become
outdated. For example, job displacement brought on by automation and technological
improvements may result in the unemployment of employees without the necessary skills (Team,
2023).

2.2.2 Cyclical unemployment

This is a kind of unemployment brought on by financial crisis or recessions, which result in lower
consumer spending and shrinking company. Employers terminate workers as demand for their
goods and services declines, which feeds cyclical unemployment. Businesses can choose to
reduce their output as a result, which might result in loss of employment and cancellations.
Contrarily, cyclical unemployment often falls down during times of economic expansion and
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prosperity as more jobs become available as a consequence of a rise in consumer demand for
products and services (Team, 2023).

2.2.3 Frictional unemployment

Financial unemployment is characterized by temporary unemployment experienced by those
who are changing jobs or are just starting their careers. The informational imbalance and length
of the job hunt are often the causes. It shows the amount of time people devote to looking for
new employment possibilities, changing occupations, or joining the labor for the initial time.
While initiatives that optimize job comparison, provide career counseling, and increase skills
might assist people reduce the length of their employment changes while contributing to a more
effective labor market, frictional unemployment is often less problematic than other types of
unemployment (CFI Team, 2022).

2.2.4 Seasonal Unemployment

It is when the seasonal variations in demand might affect several sectors. Workers that receive
time off when less busy periods and rehired after demand spikes experience seasonal
unemployment. It is closely related to the seasonality of certain professions or businesses, when
demand for products and services changes considerably throughout the year as a result of
variables like the climate, weekends, or economic cycles. As firms recruit and fire employees in
response to shifting demand patterns, seasonal unemployment is often transient and anticipated
within these sectors.

2.2.5 Long-Term Unemployment

A person's abilities, self-esteem, and general well-being may be negatively impacted by extended
spells of unemployment. Long-term unemployment is the result of continuous defines of
unemployment. This kind of unemployed status is more prevalent and worrisome since it might
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seriously harm families, individuals, and the entire financial system. Because prolonged
unemployment may result in skill loss, a reduction in employability, and negative psychological
and social consequences, it often presents more difficulties than short-term unemployment.

2.3 Negative impact of unemployment

2.3.1 Loss of productivity and a decline in the economy

When a lot of people are out of work, the way people spend their money as a whole
improvement. People who do not have jobs have less money to spend, so they do not buy as
many goods and services. The decline in spending by customers affects businesses, which then
have less money coming in and make less money. As businesses cut back on their operations
because of lower demand, it might have to cut off more workers or even close down completely.
This keeps the downward trend of decreased economic activity going.

2.3.2 Poverty and income imbalance

This effect is experienced most intensely by people who are already on the outside or at risk.
People who do not have access to good education, training, or strong social networks have a
harder time finding secure work. Because of this, these individuals are more likely to fall into
poverty, which keeps the cycle of disadvantage going and makes society's differences even
worse. Besides, it also led to higher case of crime that will cause the economy (CFI Team, 2022).
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2.4 Challenges of facing unemployment rises

2.4.1 Problems with mental health

When an individual is out of work and having trouble with their mental health, they face many
different and very serious problems. These problems affect not only the person's mental health,
but also their families, neighborhoods, and society as a whole. Unemployment, which often
comes with feeling unsafe, financial stress, and a lack of purpose, can lead to a number of mental
health problems that affect a person's emotional balance, sense of self, and quality of life as a
whole (Editorial Team, 2021).

2.4.2 Financial difficulties

When there is unemployment, the main cause of financial problems is a hard problem that has
big effects on people, families, and society as a whole. Unemployment interrupts the steady flow
of money that helps people make a living and promotes economic well-being. This has a negative
impact on the financial system, mental health, and community. Unemployment can also make it
hard for people to get simple services because they do not have enough money. This can make
individual health problems worse and put a big financial burden on individual in the long run. In
a similar way, having smaller access to schooling and ways to improve skills could make it harder
to improve adaptability and lessen the chances of getting a job in the future (Editorial Team, 2021).
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2.5 Recommendation for reducing unemployment issues on

people and economy

2.5.1 Creating jobs and sustainable companies

As a way to deal with the complicated problem of unemployment, the recommendation to
establish jobs and grow the economy is a varied and active approach that seeks to promote long-
term economic expansion while also creating a wide range of job possibilities. This strategy
directive acknowledges that a strong economy and a drop in unemployment go hand in hand. It
says that a strong economy creates jobs, brings more people into the labor force, and makes
society as a whole healthier and happier. Putting money into development and research efforts
to encourage innovation in these fields may give rise to new possibilities for businesses and job
opportunities. These methods use the power of creating jobs and growing the economy to help
with the problems caused by unemployment. By creating an environment that encourages
creativity, innovation, entrepreneurship, and investing, communities can produce long-term job
opportunities, improve people's lives, and make a contribution to a strong and growing economy
(Mukherjee, 2015).

2.5.2 Support programs for Youth Employment

The advice to create youth employment support programs represents a strategic priority in
tackling the complex and enduring issue of unemployment, especially among young people
entering the workforce. The goal of this combination strategy is to provide targeted interventions
that provide young people the skills, opportunity, and guidance they need to succeed in the job
market. It recognizes the specific weaknesses and expectations of this group and attempts to
address them. By doing this, these programmed try to close the gap between getting an
education and getting a job. They do this by making it easier for young people to get jobs and by
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letting them use their full potential to help with personal growth, social progress, and economic
growth.

2.5.3 Continuous evaluation and Monitoring

The recommendation to use ongoing evaluation and monitoring as a strategic way to deal with
unemployment problems involves an ongoing and constant process that involves structured
evaluation, assessment, and change of policies meant to deal with unemployment problems. This
multifaceted strategy is the key to making policies that are effective and responsive. It provides
a framework that encourages making decisions based on evidence, being flexible, and getting the
best results possible in the job field. Moreover, methods for ongoing evaluation and monitoring
can help at the results of efforts to reduce unemployment (Mukherjee, 2015).
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3. Case study: Unemployment rate in United Kingdom

(from 2000-2023)

Unemployment rate in United Kingdom (Figure 1) (Asthana, 2023)

The unemployment rate in the United Kingdom (UK) (figure 1) from 2000 to 2023 illustrates how
factors related to the economy, policy responses, and outside influences work together to impact
labour market trends in an elaborate and changing global environment.

2000–2007: Stability before the financial crisis

In the beginning of the 2000s, the UK economy was relatively stable and growing. The
unemployment rate stayed around 5% for most of this time, which shows a healthy job market
with a fair demand for skills. The financial industry of the country made a big difference in the
country's economic growth, which led to more jobs in many areas. Some of the negative impacts
were slow wage growth, unequal incomes, problems with housing affordability, a possible
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mismatch between skills, and a dependence on financial companies. Even though unemployment
was low and the economy was growing, these things showed that there were still worries about
living standards, differences, and risks.

2008-2009: Effects of the Global Financial Crisis

In 2008, the world’s financial disaster was a turning point. As the crisis got worse, banking
institutions failed and the economy shrank. As a result of this change, there was a rise in
unemployment because businesses had to lay off workers because demand was going down. The
jobless rate in the UK went from about 5% in the year 2008 to about 8% in 2009, which is an
enormous rise in a short amount of time. The UK had an economic crisis that led to a sharp
increase in joblessness, common loss of employment across industries, bank failures, less
spending by consumers, and a decrease in economic activity. The crisis caused financial
instability, a recession, and big problems with keeping jobs and growing the economy.

2010–2013: Budget cuts and a slow recovery

During this time, the jobless rate rose to between 8 and 9 percent. But slow recovery efforts and
growing economies around the world helped the jobless rate go down, and by 2013, it was below
7%. The UK had to deal with the negative effects of spending reductions and an insufficient
recovery in its economy. Budget reductions led to cuts in public sector jobs and spending, which
impact essential services. After the financial crisis, the slow recovery led to long-term
unemployment, few new jobs, and financial instability, which affects both individuals and the
economy as a whole.

2014–2019: Continued improvement and Uncertain caused by Brexit

Throughout the second half of the 2010s, the jobless rate went down steadily. The economy of
the United Kingdom gained up speed, and unemployment fell to about 4%, which shows that the
labour market is doing pretty well. But this time was additionally influenced by the
unpredictability regarding Brexit, the UK’s choice for leaving the European Union. The UK's
economy kept getting better, and unemployment kept going down. But the uncertainty caused
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by Brexit negotiations made things worse. Businesses were unwilling to invest, and the strength
of the labour market was tested because trade agreements and the economy were changing.

2020 to 2021: COVID-19 Pandemic Disturbance

During 2020 and 2021, the COVID-19 pandemic had a lot of negative impacts on the UK. Such as
restrictions, shutdowns of businesses, and less economic activity caused unemployment to rise
quickly. Disruptions in many sectors caused a lot of people to lose their jobs, the economy to
shrink, and it became hard to keep employment conditions stable. As a result, unemployment
rates went up to about 5–6%, which shows how quickly the pandemic affected the job market (J,
2022).

2022–2023: Recovery and after the pandemic approach

In 2022 and 2023, the UK had issues getting its economy back on track after the pandemic. Even
though unemployment slowly went down, there were still a lot of unknowns because of problems
in the global supply chain, developing employment trends, and possible changes in customer
behavior. To figure out how to deal with the world after a pandemic, people had to deal with
these complicated issues. This was necessary to keep the economy stable and keep adding jobs
(J, 2022).

In summary, this case study shows how complicated the relationship is between economic
factors, policy choices, and external shocks when it comes to a nation's rate of unemployment.
It shows how important it is for policy responses to be flexible and how hard it can be to deal
with things that did not happen as planned. It also gives useful insights into the many different
ways that unemployment trends can change in an economy that is always changing (Asthana,
2023).
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4. Conclusion
In conclusion, the problem of unemployment is a lot bigger than just numbers. Its effects go
beyond economics and reach into the basic structure of communities and the daily lives of
individuals. Unemployment is not merely a statistic, but also a problem with economic, social,
and personal aspects. Additionally, this discussion is also talked about why unemployment is
definitely a serious problem that needs close attention, strategic actions, and teamwork. The
case study of the UK's unemployed rate from 2000 to 2023 are also showing that unemployment
trends change over time. The way the rate changed during times of security, disaster, and
regaining shows how world events, governmental responses, and outside shocks can have a big
effect on how the labour market works. This real-world example shows how important it is to
have flexible tactics and government that responds to improvements. To deal with
unemployment, it should require the need to work together to create an environment that
encourages creativity, adaptability, and inclusion. Societies can deal with the problems
associated with unemployment and prepare the path for a more fair and successful future by
promoting a combination of strategies that gives people more power, makes the most of their
economic potential, and keeps their communities together.
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5. References

• Team, C. (2023) Unemployment, Corporate Finance Institute. Available at:

https://corporatefinanceinstitute.com/resources/economics/unemployment/ (Accessed:

22 August 2023).

• Editorial Team, I. (2021) How unemployment affects individuals and the economy - indeed,

Effects of Unemployment on Individuals, Society and the Economy. Available at:

https://www.indeed.com/career-advice/career-development/effects-unemployment

(Accessed: 22 August 2023).

• Mukherjee, S. (2015) Top 6 strategies to reduce unemployment, Economics Discussion.

Available at: https://www.economicsdiscussion.net/unemployment/top-6-strategies-to-

reduce-unemployment/10115 (Accessed: 22 August 2023).

• Asthana, A. (2023a) UK payroll numbers fall as unemployment rate rises to 3.9%, The

Guardian. Available at: https://www.theguardian.com/business/2023/may/16/uk-

payroll-fall-unemployment-rate-rises (Accessed: 22 August 2023).

• J, F. (2022) United Kingdom unemployment rate July 2023 data - 1971-2022 historical,

United Kingdom Unemployment Rate - July 2023 Data - 1971-2022 Historical. Available

at: https://tradingeconomics.com/united-kingdom/unemployment-rate (Accessed: 22

August 2023).