Measures to

Control
Unemployment
 Methods to control
unemployment

Monetary Direct Control

Fiscal Policy
Policy Measures
 Monetary Policy
Govt. Introduces Expansionary Monetary Policies which increase money supply in the
economy

Tools of Monetary Policy

a. Open Market Operations ( Purchase of Securities or Short Term Bonds) :

 Central Bank Purchases short term bonds or Govt. securities or treasury bills from individual and
institution.
 It increases money supply in the market which increases and purchasing power of individuals and
institutions.

b. Lowering the Reserves Requirement:

 It refers to the amount of reserves commercial banks are required to keep in central bank.
 During unemployment the central bank lowers this reserve requirement to increases cash resources
in the commercial banks which encourage them to offer loans to public and businesses person.
 Tools of Monetary Policy

c. Lowering the discount rate:

 Also known as bank rate.

 Decline in the discount rate is followed by decline in the other interest rates which lead to
increases borrowing and increased investment by private business person.

d. Lowering the interest rate:

 Central bank persuades commercial banks to decrease interest rates on the deposits of
public.
 It will reduce savings and increase the purchase of goods and services.
 Fiscal Policy
Govt. practices Expansionary Fiscal policy through Taxation and
Public Expenditure

a. Decrease in Taxes:
 Govt. reduces tax on the community to control unemployment.
 A reduction in excise duty, sales tax, service tax and other types of tax will increase
the consumption expenses of the people.
 Reduction in corporate tax and business tax will promote an increase in investment
which will increase the employment.

b. Increase in Government Expenditure:

 It affects the aggregate demand.
 When govt expends more on development projects that open up an workspace of
mass people thus decreases unemployment.
 Direct Control Measures
a. Providing training and technical education:
More training and education should be provided for the people who have difficulties in securing a job.
When individuals upgrade their skills and knowledge, they will be able to find job easily.

b. Development of New Land:

 Developing new land creates more job opportunities for people especially from rural areas.
 The development of new land is through govt agencies such as FIEDA, RISDA, FELCRA.
 it will reduce the urban-rural migration.

c. Job creation in various sectors in an economy:

 Diversification in an economy offers more job creation.
 If all sectors in an economy ( Transportation, finance, insurance, services, tourism, manufacturing, constitution
and others) expand, more job opportunities will be creates thus reduce unemployment.