The Key Causes of Unemployment

There are many causes for unemployment, and it is vital that we understand them all to be effective in combating this great social evil. Only by offering solutions to tackle the causes of unemployment can we really solve the problem; treating the symptoms is not enough and will have the same effect as a painkiller: you numb the pain but the problem doesn’t go away and, what’s more worrying, painkillers are addictive, and so are solutions for the symptoms of unemployment as opposed to the causes.

The vicious effect thus created means that you will have more and more unemployment and you will never do anything about it because “it doesn’t hurt” and then, suddenly, one day it does “hurt”, and there’s little to be done about it.

1. Recessions

When the economy is not growing, then jobs aren't being created and unemployment rises. Combating recessions is done through a prudent fiscal policy that includes incentives to invest and to spend money, including lower taxation and interest rates. An independent Bank of England would keep an eye on interest rates to ensure inflation does not rise too much and bring the United Kingdom back to the days of stagflation.

Recessions are a reason why Conservatives want sustainable growth with a prudent fiscal policy. Recklessness in public finances means that a recession strikes harder and does a lot more damage. We will follow a policy line designed to ensure that the economy is growing and creating jobs, as outlined in the Conservative manifesto, and that means that if the world economy takes a turn for the worse, we are ready to deal with it and the blow will be softened.

2. Over-Regulation

Over-regulation is an important cause for unemployment. Too much burden on a business’ shoulders and that business cannot afford to expand and, with its expansion, to create more jobs. Because of this, if you are unemployed, it will be almost impossible for you to find work, and this will be especially critical for students and for anyone who finds him or herself out of work when they are middle aged.

There is too much paperwork involved to do anything; there are too many regulations that stifle job creation efforts. This leads to a two-tier system, usually, with those who are already employed having a job for life, and those who do not have a job are unable to find anything, and are forced to live on welfare. There are too few job offers for the demand, a shortage that leads to poverty and chronic unemployment.

This means that adding burdens to the economy will not create new jobs. It will, in fact, make the amount of new jobs being created decrease.

3. Skills

To be able to handle a certain job, a person needs a set number of skills. If the person does not have the skills for a job, then he or she either gets training or he or she is unable to get that job. When the types of jobs in a certain area change, then people without the right skills are either able to move to a different area or they are unable to find work. In the meantime, these new jobs are filled up with new people, who do have the skills these require. A technology shift can lead to this sort of unemployment, which is structural in nature.

The wrong approach to this problem would be to keep the old jobs going forever, because that situation is unsustainable. A lot of money will be spent and the people get to keep their jobs, but they are not given the possibility to improve their situation.

The way to solve this issue is through training. This means a Government needs to ensure that there are training opportunities for the people. One way is to give incentives to companies to train their employees in-house, and a good incentive to achieve this outcome is to make expenses with training at least partially tax deductible. But not just for businesses. Giving people the opportunity to deduct from their own taxes the expenses they make to improve themselves is also a simple, but worthwhile, initiative. The effects of this policy on job creation are maximized because businesses, not the Government, know what skills they need, and businesses are the ones creating jobs. Naturally, the situation of those who, due to important concerns, perhaps related to age will be taken into consideration when drawing up the plan.

4. Lack of Information

A source of unemployment that cannot be overlooked is the lack of information about available jobs. If people don’t know that jobs are there, then they will not take them. It is also important that, when people do know about possible employment opportunities for them, they are able to take them. Dissemination of information is fundamental in any market, and in the job market it is fundamental as well. The obvious solution for this problem is to be able to bring information to the people who need it. Local employment service centers will provide the employment information.


Post a Comment