SUBJECT: INTERNATIONAL FINANCE

SEAT #: NAMES:
P19573086: RAMEEN SHAHBAZ:
P19573075: NAZIA UMER LAGHARI:
P19573104: SIDRA ASIF KHAN :
P19573078: NOOR UL AIN:
P19573072: NAJIA BATOL:
P19573113: SYEDA BATOOL FATIMA:
P19573119: ZOHA NAWAB:

TOPIC: UNEMPLOYMENT
“INTRODUCTION”:
Unemployment can be a terrible and wrenching life experience—like a serious automobile accident or a messy divorce—
whose consequences only someone who has gone through it can fully understand. For unemployed individuals and their
families, there is the day-to-day financial stress of not knowing from where the next paycheck is coming. There are painful
adjustments, like watching your savings account dwindle, selling a car and buying a cheaper one, or moving to a less expensive
place to live. Even when the unemployed person finds a new job, it may pay less than the previous one. For many people, their
job is an important part of their self-worth. When millions of unemployed but willing workers cannot find jobs, economic
resource are unused. An economy with high unemployment is like a company operating with a functional but unused factory.
The opportunity cost of unemployment is the output that the unemployed workers could have produced.
BACKGROUND:
The next global financial crisis has already started, in the form of nearly 75 million unemployed young people around the world. If
this mass of jobless youth does not find work, the consequences will be dramatic. Global changes in economic conditions and the
economic changes which have taken place in the Slovak Republic have caused the disappearance of many traditional employers and
the reorientation of production and services. The result has been that traditional manufacturing industries have disappeared and
have been replaced by newer ones. The setting up of new small businesses and the arrival of new foreign investors have logically led
to new demands and requirements concerning the knowledge, skills and competences of graduates. Education has a significant
impact on employment and unemployment in Slovakia: higher levels of qualifications have improved the chances of finding a job.
UNEMPLOYMENT:
Unemployment is a term referring to individuals who are employable and seeking a job but are unable to find a job.
Unemployment is defined as a situation where someone of working age is not able to get a job but would like to be full time employment.(27,
feb,2019,by Tavian patting)
The definition of an unemployed person is someone of working age (16 and up), jobless, able and available to work and activity looking for a job
(Paul Krugman)
Unemployed persons include those who did not work at all during survey week and who were looking for work (Charles d Stewart)
“people who don't have a job have actively looked for work in the past four week”(The U.S bureau of labor statistic)
The unemployment rate conveys the percentage of persons in the labor force who are unemployed.
 Unemployment , also refer to as joblessness, occur when people are without work and activity seeking employment.
Unemployment, according to the ‘OECD’ (Organization for economic corporations and development) is person above a specified age
( usually 15) not being in paid employment or self employment but currently available for work during the reference period. ( organization of
economics corporation and development)
Unemployment occurs when a person who is actively searching for employment is unable first work. Employment is used as a
measure of the health of the economy.

TYPES OF UNEMPLOYMENT:
There are basically four types of Unemployment.
1=Demand deficient unemployment:
This is the best cause of unemployment that happens especially during a recession.
2=Frictional unemployment:
frictional unemployment refers to workers who are in between jobs An example is a worker who recently quit or was fired and is looking for a job.
3=STRUCTURAL UNEMPLOYMENT:
Structural unemployment happens when the skill set of a worker does not match the skills demand of the jobs available or if the worker cannot reach
the geographical location of a job.
4= VOLUNTARY UNEMPLOYMENT:

Voluntary unemployment happens when a worker decides to leave a job because it is no longer financially fulfilling .
How Economists Define and Compute Unemployment Rate:

Newspaper or television reports typically describe unemployment as a percentage or a rate. A recent report might have said, for
example, from August 2009 to November 2009, the U.S. unemployment rate rose from 9.7% to 10.0%, but by June 2010, it had fallen to
9.5%. At a glance, the changes between the percentages may seem small. However, remember that the U.S. economy has about 160
million adults (as of the beginning of 2017) who either have jobs or are looking for them. A rise or fall of just 0.1% in the
unemployment rate of 160 million potential workers translates into 160,000 people, which is roughly the total population of a city like
Syracuse, New York, Brownsville, Texas, or Pasadena, California. Large rises in the unemployment rate mean large numbers of job
losses. In November 2009, at the peak of the recession, about 15 million people were out of work. Even with the unemployment rate
now at 4.8% as of January 2017, about 7.6 million people who would like to have jobs are out of work .

The Bureau of Labor Statistics tracks and reports all data related to unemployment.

Who’s In or Out of the Labor Force?

Should we count everyone without a job as unemployed? Of course not. For example, we should not count children as unemployed. Surely,
we should not count the retired as unemployed. Many full-time college students have only a part-time job, or no job at all, but it seems
inappropriate to count them as suffering the pains of unemployment. Some people are not working because they are rearing children, ill, on
vacation, or on parental leave.
The point is that we do not just divide the adult population into employed and unemployed. A third group exists: people who do not have a
job, and for some reason—retirement, looking after children, taking a voluntary break before a new job—are not interested in having a job,
either. It also includes those who do want a job but have quit looking, often due to discouragement due to their inability to find suitable
employment. Economists refer to this third group of those who are not working and not looking for work as out of the labor force or not in
the labor force.

The U.S. unemployment rate, which is based on a monthly survey carried out by the U.S. Bureau of the Census, asks a series of questions
to divide the adult population into employed, unemployed, or not in the labor force.

To be classified as unemployed, a person must be without a job, currently available to work, and actively looking for work in the previous four
weeks. Thus, a person who does not have a job but who is not currently available to work or has not actively looked for work in the last four weeks
is counted as out of the labor force.
Employed: currently working for pay

Unemployed: Out of work and actively looking for a job

Out of the labor force: Out of paid work and not actively looking for a job

Labor force: the number of employed plus the unemployed

Calculating the Unemployment Rate

(Figure) shows the three-way division of the 16-and-over population. In January 2017, about 62.9% of the adult population was “in the labor
force”; that is, people are either employed or without a job but looking for work. We can divide those in the labor force into the employed
and the unemployed. (Figure) shows those values. The unemployment rate is not the percentage of the total adult population without jobs,
but rather the percentage of adults who are in the labor force but who do not have jobs:
Unemployment rate=Unemployed people Total labor force×100 Unemployment rate=Unemployed people Total labor force×100
Employed, Unemployed, and Out of the Labor Force Distribution of Adult Population (age 16 and older), January 2017
The total adult, working-age population in January 2017 was 254.1 million. Out of this total population, 152.1 were classified as
employed, and 7.6 million were classified as unemployed. The remaining 94.4 were classified as out of the labor force. As you will learn,
however, this seemingly simple chart does not tell the whole story.

U.S. Employment and Unemployment, January 2017(Source: https://data.bls.gov)

Total adult population over the age of 16 254.082 million

In the labor force 159.716 million (62.9%)

Employed 152.081 million

Unemployed 7.635 million

Out of the labor force 94.366 million (37.1%)

Unemployed 7.635 million

Out of the labor force 94.366 million (37.1%)

Unemployment is a real concern in all areas of the world. According to the Bureau of Labor Statistics, as of February 2018, there
are 6.7 million individuals in the United States who are unemployed. Some of these people might not want to work, but many
wish they had a job. The negative effects of unemployment on society outweigh the positive effects. There are several causes
for unemployment and it depends on prevailing conditions of economy and also on individual’s perception. The following are
some of the causes for unemployment:
Change in technology is one of the serious cause for unemployment. As the technology changes employers search for people with
latest technical caliber. They look for better substitutes. Job cuts due to change in the technology brings unemployment problem in
the society.
Recession is prime factor for unemployment in most of the countries. Because of the financial crisis in one country can affect the
other countries economy due to globalization.
Changes in the global Markets are another important factor. Any country economy adversely affect when its exports are down
the line due to changes in global markets, and increase in price. With this production suffers and companies unable to pay on
time and this increases the rate of unemployment.
Job dissatisfaction by many employees is another cause, this happens when less attention given by the employers on the performance
of employee. This leads to lack of interest and desire to work and unemployment becomes inevitable, as employees deliberately lose
their jobs.
Employment discrimination based on the caste, religion, race etc., in the companies, an employee loses the ease to work in the
organization.
Negative attitude by the employees towards the employers creates unhealthy environment in the organization. And this ultimately leads
to unemployment.
Positive Effects of Unemployment
The only positive effects of unemployment are individual effects.
It is not only the responsibility of the government to take initiation in reducing the unemployment problem, even individuals has to take
step to overcome this problem. Lot of adjustments are to be done by the individuals to come out of this situation. Without taking hasty
decisions like suicide, frustration they can plan and do proper adjustments like debt adjustments, expend their liquid assets when it is
required, cut down their expenditures and also encourage other family members to find jobs so that they can compensate in income
generation (Fritz, 2006).
An individual has to increase their capabilities and participate in proper counseling and training sessions to improve their performance
levels and enhance their skills. They have to think about self-employment apart their job with the help of their family members. This
also improves their standard of living (Fritz, 2006).

Negative Effects of Unemployment

Several policies have been made to reduce the unemployment problem in the economy. Government just needs to focus on execution of these
policies and work out hard in alleviating this problem. Government can expand capital projects like new roads, constructions of new hospitals and
major infrastructural projects which can become a platform in creation for more jobs in the economy. It increases income generation to the
economy (Fritz, 2006).

Reduction in taxation can bring higher purchasing power to the consumers. It gives some relaxation to consumers in spending their disposable income.
Government should take proper steps in investment decisions on huge projects like iron and steel, aviation etc., proper policies are to be made to boost up
these projects thereby creating employment opportunities. Proper recruitment, training and development are to be needed by every company in order to
increase the capabilities of employees, and to enhance their skills and shows great performance in upbringing of the organization. Government can take
initiation in reducing the interest rates and it enhances the demand for credit and improves savings by the individuals. Necessary steps are to be taken by the
government in increasing the productivity for the overall development of the country and reducing the unemployment problem in the economy (Fritz, 2006).
The negative effects far outweigh the positive effects when it comes to the impact unemployment has on society and the individual as well.
Not Enough Money: This is one of the adverse effects on the individual. Everything in the world costs money. If there is no source of
income, you're going to have to settle and go without. If an unemployed individual has a family, it's difficult. Sure, there are
unemployment benefits, but they aren't going to pay for extra things to do with your family and travel to new places.
Health Issues: This is another individual negative effect, but an important one. Being unemployed can lead to depression, low self-
esteem, anxiety and other mental health issues, especially if an individual truly wants a job but can't find employment. Tension can
occur, causing stress and strain on the body.
Economic Issues: During unemployment, there is no income, which leads to poverty. The burden of debt will increase, leading to
economic problems. When there is unemployment, the state and the federal governments have to step in and pay unemployment
benefits. By needing to pay more of these benefits, the government must borrow money to pay the benefits or reduce spending in
other areas.
Social Issues: Many crimes are committed by individuals who are unemployed and living in poverty. When unemployment rates increase, crime rates
tend to rise. According to the study in the Journal of Quantitative Criminology in 2016, individuals who are unemployed for socially unacceptable
reasons and don't wish to seek out job opportunities are more likely to engage in burglary or robbery.

CONCLUSION:
Unemployment is a serious issue for any economy. It creates negative affects to unemployed as they are jobless and suffer from worse prospects to find new
job and those who are employed feel less secure to keep their jobs in future. However for overall development of economy, government and individuals has
to take initiative steps in increasing the productivity and improving the standard of living.