Table of Contents TOC o “1-2” h z u 1

Table of Contents

TOC o “1-2” h z u 1.INTRODUCTION PAGEREF _Toc525633875 h 22.LITERATURE REVIEW PAGEREF _Toc525633877 h 22.1Types of unemployment PAGEREF _Toc525633878 h 22.2Causes and remedies of unemployment both demand and supply side PAGEREF _Toc525633879 h 32.2.1Demand side PAGEREF _Toc525633880 h 32.2.2 Supply side PAGEREF _Toc525633881 h 33.CRITICAL ANALYSIS PAGEREF _Toc525633882 h 63.1Socioeconomic effects of unemployment on individuals and government. PAGEREF _Toc525633883 h 64.CONCLUSION PAGEREF _Toc525633884 h 7

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Unemployment is one of the foremost problem in South Africa and is described as an economic issue. It is a server problem prevailing in developing as well as developed countries. Unemployment has a serious about effect on the living standards of people and socioeconomic status of the nation. (Bartley, M 1994). Unemployment refers to a situation where a person older than 15 and younger than 65 is currently searching for employment and is unable to find it. The rate of unemployment is obtained by expressing the number of unemployment persons as a percentage of the labour force. Unemployment is arguably the most significant obstacle to poverty in reduction in South Africa. (Ligthelm, 2006:30). The incident of unemployment falls must harshly South Africans who are generally low-skilled and have little to no experience of format employment (National planning, 2011:12)
Unemployment rate = No of persons unemployed / Total labour force

2.1Types of unemployment

Seasonal unemployment
When the company must hire more or extra workers during busy days (Christmases
Easter periods)
Frictional unemployment

Sometimes also called search unemployment it increases because it takes time to find a job or move from one job to another.

Cyclical unemployment
When the economy is booming companies hires more people and when economy is at recession companies experience drop of sales and in result they retrench more people.

Structural unemployment

People lose their jobs because of mismatch between worker qualification and job requirements, and sometimes it’s because of globalization and technology e.g. (when ATM was introduced many bank tellers lost their jobs)

2.2Causes and remedies of unemployment both demand and supply side

2.1Demand side

Causes of cyclical unemployment

Decrease personal consumption: When goods and services decrease, or sales drops business revenues also decrease then companies are forced to retrench employees to maintain their profit margins. Employees are retrenched because the is no enough production in the business.
Remedies of cyclical unemployment

Expansionary monetary policy: decrease interest rates for households and businesses to have more money to spend. It results in making credit card payments and loans cheaper.

Spending: spending on public works projects create construction jobs.

2.2.2 Supply side

Cause of frictional unemployment

Booming period in the economy increase frictional unemployment because during this stage employees are not afraid to quit their jobs because they know it will be easy for them to find better jobs.

Remedies of frictional unemployment

Relocating of industries and services
Bring better information to employees about the job ? Educational advice

Demand-side unemployment is known as cyclical unemployment, as it is the unemployment that occurs due to an economic slowdown/recession. In a recession, there is a fall in output and this leads to lower demand for workers. Cyclical unemployment is also known as the consequence of demand-side factor which causes a decline on any of the components of aggregate demand. Cause of demand side unemployment includes economic recession in a major trading partner, unforeseen tax increases or cuts to welfare benefits, and financial crisis causing bank lending or credit to fall. Monetary and fiscal policy can be used to increase AD and therefore increase economic growth. For example, if the MPC cut interest rates, this makes borrowing cheaper and therefore encourages investment and consumption. This will cause a rise in AD. If there is spare capacity in the economy, then there will be an increase in Real Output; as firms produce more they will demand more workers and this will reduce demand deficient unemployment. Demand side policies completely fail to reduce unemployment; however, monetarists argue that rising demand only causes a temporary fall in unemployment.

Frictional, structural and seasonal are all known as the supply-side unemployment. This are caused by problems with the supply side of the economy. It also affect short run aggregate supply and can also affect a country’s long-run productive potential, supply-side unemployment are caused by things that include the steep rise in oil and gas prices or other commodities, Political strikes, natural disasters causing sharp fall in production, and unexpected breakthroughs in production technology. This is because unemployment may be due entirely to supply side factors. For example, frictional, structural and powerful unions. To reduce supply side unemployment requires supply side policies. E.g. if government increased flexibility of labour markets it may help reduce structural unemployment.

3.1Socioeconomic effects of unemployment on individuals and government.
Unemployment financial costs

The government has to pay the unemployed some benefits. The greater the number of the unemployed the more money the government has to shell out. Therefore, the nation not only has to deal with the lost income and decreased production but also the additional cost. (Badiru & Mohao; 2016)

Tension over taxes rises
Unemployment also brings up discontent and frustration amongst the tax paying citizens. To meet the demand of the unemployment, the government will have to increase taxes. (Ndlhovu, 2010)

Decrease in the economic growth (spending power)
The spending power of an unemployed person and their family will decrease drastically thus affecting the economy growth. ( Ademola, Abdulsalam S, Badiro &
Mohao : the impact of unemployment on economic growth; 2016)
Mental health Mental health problems like: low self-confidence, feeling unworthy, depression and hopelessness the loss of income and frustration involved in it, the unemployed may develop negative attitude towards common things in life and may feel that all senses of purpose is lost. (Ndlhovu; 2010)
Lose of skills usage
Cause the unemployed won’t be putting their skills into usage they might lose them if they stay unemployed for a long period of time. (Ndlhovu ;2010)
Due to people being unemployed they might have to engage into criminal activities just to survive.
In conclusion unemployment is a serious issue in South Africa and it keeps on increasing poverty in the society. Unemployment has a serious about effect on the living standards of people and socioeconomic status of the nation. People lose their jobs because of lack qualification and job requirements.

Reference list
Ademola, Abdulsalam S, Badiro, Mohao (2016) The impact of unemployment and inflation on economic growth (1981-2014) International journal of business and economic sciences and applied research Vol.9,Iss 1 page 47-55.
Amandeo, K .2018. Frictional unemployment with examples, causes, and rates: when unemployment is good thing.http://www.the of access:7 MAY.2018 Amandeo, K .2018.Cyclical unemployment, its causes ,and effects :The solution when unemployment spirals out of control.http://www.the of access:29 Mar.2018
Amandeo, K .2018.Structural unemployment ,its causes ,and examples: Why it’s harder to find a job now some industries .http :www.the of access:6 Jul.2018
Bartley M 1994. Unemployment and ill health : Understanding the relationship, journal of Epidemiology and community health, Vol 47,no4,pp333-336
Mohr, P. & Fourie, L.2004.Economics for South African students. Pretoria: Van Schaik.
Ndlhovu D. (2010) 2016,from
Yu D.(2013,March) youth unemployment in south Africa. Development of Southern Africa Vol.30 .

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