Level of Unemployment in UK - Essay Example

Introduction The complications of unemployment are one that not only affects individuals and businesses. There is also a strong impact on social living standards and the economy. The several layers of problems that occur then lead to difficulties in the overall economy and standards of living. Finding ways to solve the specific complications of poverty begins with understanding the specific definitions of what it means to not only the individual but also the economy and social standards. As more is understood about rising levels of unemployment, individuals, social areas and the government can begin to respond in an effective and conducive manner. This change will lead to a change in standards for living while supporting different needs for individuals. Definition of Unemployment The basic definition of unemployment is when an individual doesn’t have a job and is nonworking. This definition leads the individual into a specific status that defines them as unemployed because they don’t hold a regular job and have inactivity in terms of finding a job. However, there are different measurements that are used for the unemployed because of the level of activity that is defined as well as the conditions in which different individuals are under. When looking at the overall idea of unemployment, it is defined by including anyone who is not performing a series of activities in the labor field or through a job. However, there are different levels that are included in this, specifically which is measured by the frequency in which one is unemployed as well as the basic structure that they rely on to receive monetary needs over a period of time (Brandolini, et al, 153, 2006). The structure of unemployment through the basic definition is defined by measurements that determine the frequency in which an individual is out of a job. This is defined first by an unemployment cell, which is divided by the amount of time one is out of a job as well as the frequency in which this occurs. This is also measured through the region in which one is in, specifically because it provides a comparison in the economic levels and demands for employment. The first measurement is known as seasonal unemployment, in which demands change based on labor intensive markets for each time frame. Most levels of employment that are offered seasonally include outdoor jobs and labor intensive options. The second type of unemployment is frictional, also referred to as demand – deficient unemployment. When the economy begins to emerge, temporary employment becomes available. This particular type of unemployment is one that becomes inconsistent and is based only on the needs of corporations depending on the supply and demand. The third type is demand, which is similar to the frictional unemployment and is based on the levels of demand within the economy. The last type of unemployment is known as structural and occurs because of the expectations of a specific job. For instance, an individual may work in a job that is temporary and which will end after a specific period of time because of expected changes in the workplace (Thirlwall, 325, 2008). Economic Costs The definition and types of unemployment are detrimental not only to individuals but also to the economy as a whole. The first way in which this is seen is through the waste of economic resources through the lack of individuals that are contributing to the economy as a whole. The ability to use individuals as a resource is one that creates a set of values for those that are in the workforce. The value that is a part of the job then is able to create more innovation and opportunity to those that are within the UK or other region. It has been known that in times of economic growth, there have also been higher levels of consistent employment, specifically because production and individuals as resources are able to contribute to the economy. It has been found that equity values and the amount of employment directly affect the GDP that is resourced in a country, which directly impacts the community and growth of the economy over a period of time (McGrattan, Prescott, 767, 2005). The second factor that employment affects is related to the amount of money that has to be contributed to those that aren’t employed. The UK government is known for contributing a specific amount to those who don’t have a job, specifically because there is the need to provide monetary support for living. Welfare costs, tax revenue and fiscal costs all contribute to this. Eventually, this leads to raising taxes and cuts on public spending, specifically because there has to be support to those who are unemployed. In the UK the current rates of employment is at 72.3%. This increased by an average of 160,000 through the year 2010 with self – employment rising to 59,000. Unemployment was at 7.8%, which was a slight decrease from past years. However, there is still an average of 20,800 people claiming Job Allowance and welfare with inactivity of those not seeking employment staying at 21.3%. When comparing this to taxes and welfare, it can be seen that an average of 4.9 million are claiming unemployment and an average of 84,000 individuals are claiming welfare (Office for National Statistics, http://www.statistics.gov.uk/cci/nugget.asp?id=12, 2010). When the numbers of unemployment rise to the average of 21.3%, it directly moves into an impact on taxes. Those who claim Job Allowance, welfare or unemployment also require tax assistance for living. Others in the economy are then directly impacted by the change in taxes because of the requirements for those that are no longer employed. The third economic change that occurs comes from the overall alternatives that occur in the community. As unemployment rises, it not only creates a lack of resources within the government and businesses, but also begins to alter the human resources in the community. Those who are unemployed are required to cut back on living standards within the community. In a current survey (Nickell, Quintini, 202, 2002), it was found that the human resources are continuing to decline which is also changing the economy. A time span since 1997 was surveyed for those who were unemployed. The longer that the individuals remained unemployed, the less likely they would be able to move into a specific job because their skills were no longer applicable. More importantly, this loss of human resources directly affected the macro economy with the inability to provide opportunity to those who were unemployed. For both individuals, society and the government, this has led to a continuous problem within the economy. The result is a cycle of unemployment that can’t decline and which causes increases in poverty and other complications with standards of living (Nickell, Quintini, 202, 2002). Social Costs Another complication that has arisen from unemployment is based on the social changes that occur. Standards of living and rises in poverty directly impact not only the economy, but also the way of living for those who are unemployed. It is known that one of the main contributions to poverty is income based, which leads to relative poverty among families. Those who are at levels of severe poverty are currently numbering 40%, all which is based on levels of unemployment. Median incomes include 40 – 60% and often comprises of those who are unemployed but finding temporary employment or part time alternatives. It is known that those affected most by this are families, children and single parents, all which are unable to meet living standards because of the current conditions (Brewer et al, 4, 2008). One area of social impact that occurs among those that have lost employment is based on individual alterations that begin to arise. As the standard of living goes down with unemployment, so do individual benefits. One area that notes this is the worsening health that comes from those who don’t have monetary resources to receive the assistance that they need. It is known that those who don’t have these resources will also have to battle problems with fewer resources. In turn, this affects personal needs, such as health and family affairs. Those who are facing unemployment are known to have a difference in health by an average of 20% (see appendix B). The differences show that those who are unemployed also have several difficulties with maintaining health. Other personal problems, such as a rise in family difficulties, become a central component of those who are unemployed (Marmot, Wilkinson, 79, 2006). The concepts that are related to health and social standards then reach different complications with the unemployment. Individual and societal struggles are known to accumulate with those that are facing unemployment. When an individual or group of people continues to remain in the cycle of not having a job, they will move into a specific standard of living. The concept of being devalued, problems within the family and lower standards of living are known to accumulate with the problems of unemployment. Through a current research study, (Kposowa, 127, 2001), it was found that continuous unemployment led to risks for psychological problems, including depression and suicide. It was also found that the longer one felt devalued and out of a job, the more likely they would be led to severe risks pertaining to psychological disorders. Unemployment is specifically related to high levels of suicide, typically among men, followed by other severe disorders that take place as a result of the standards of living (Kposowa, 127, 2001). Solving Unemployment The several complications that are associated with unemployment with individual, social and economic trends have led several to trying to find ways to solve the problem. A current policy that is being implemented is related to a welfare reform combined with eliminating the cycle of poverty and unemployment among families. This is known to be the strongest policy currently in the UK as it tackles some of the core issues of poverty and unemployment. New employment measures, policies for the unemployed and programs that will assist those who are unemployed are being considered. Employment measures are being regulated by the standards that it takes for those who are interested in finding a job but don’t have the same skills. The programs that follow this are based on training and education that is offered through welfare programs, specifically to help not only the unemployed, but also to train children of families that live in poverty. The concept is to offer training for skills needed in the market while offering new opportunities for entrepreneurs and small to medium sized businesses. The several programs are designed to assist individuals to find their own way out of unemployment and into fields of work that are both consistent and which offer opportunity to overcome poverty (Moon, 301, 2003). Another concept that is being implemented is related to what is known as the New Deal. This is based on the New Labor Government and is creating a workforce agenda for policies in the labor market. The main concept is to provide more equal opportunities to the unemployed while creating different approaches to assisting those out of work to find jobs. Employment subsidies are defined within this, specifically which offer more benefits to those who can find a job while providing more on job training. This is also combined with changing the rates of income taxes and offering tax credits to the unemployed. By doing this, there will be more opportunities for those that are unemployed to move within the workforce while having other monetary means of assistance, rather than being provided welfare without any force to assist in finding jobs (Daguerre, Gooby, 25, 2004). Conclusion The complications that are a part of unemployment have created the need to reform and shape the country with new opportunities. The economic alterations as well as the social and individual implications all show different depths of complexities that are associated with unemployment. To alter this, new policies and labor force measures have to be taken, all which will offer new opportunities to those who are actively unemployed. Attempting to change the monetary opportunities, training and development of the labor market will not only help individuals who are unemployed, but will also create new opportunity to change standards of living and to assist with a boost in the economy. References Brandolini, Andrea, Piero Cipollone, Eliana Viviano. (2006). “Does the Ilo Definition Capture All Unemployment?” Journal of the European Economic Association (4), (1). Brewer, Mike, Alastair Muriel, David Phillips, Luke Sibieta. (2008). “Poverty and Inequality in the UK: 2008.” The Institute for Fiscal Studies. Daguerre, Anne, Peter Gooby. (2004). “Neglecting Europe: Explaining the Predominance of American Ideas in New Labour’s Welfare Policies Since 1997.” Journal of European Social Policy. (14), (1). Kposowa, Augustine. (2001). Unemployment and Suicide: a Cohort Analysis of Social Factors Predicting Suicide.” Psychological Medicine (31), (1). Marmot, MG, Richard Wilkinson. (2006). Social Determinants of Health. New York: Oxford University Press. McGrattan, Ellen, Edward Prescott. (2005). “Taxes, Regulations, and the Value of U.S and UK Corporations.” Review of Economic Studies (72), (3). Moon, Jeremy. (2003). “Policy Change in Direct Government Responses to UK Unempoyment.” Journal of Public Policy (13). Nickell, Stephen, Glenda Qunitini. (2002). “The Recent Performance of the UK Labor Market.” Oxford Review of Economic Policy (18). Thirlwall, AP. (2008). “Types of Unemployment in the Regions of Great Britain.” The Manchester School (42), (4). Appendix A – employment and unemployment rates Appendix B Read More