Unemployment in the UK - Essay Example

How does unemployment affect government revenues, furthermore how are these revenues significant in the government benefit payments (such as pensions)?”

Body
In some circumstances, a country’s labor market may be impacted by externalities. By the term externalities, it refers to the factors not emanating from inside the economy. The UK labor market in the 1970s, according to Erickson and others, was inflexible, caused by the economy’s lack of being competitive in the world market and it led to escalating levels of inflation. This caused an uphill task for the incoming government of the year 1979, which was a conservative government. The new government aimed at changing this by way of deregulation. This resultant situation after the employers faced lesser regulation was aimed at their offering new employment opportunities. Despite this bold move by the government, unemployment levels still remained high.

In the 1980s through 1990s decades, the labor market of the UK ensured that the employers’ needs were fully satiated since skilled labor would be applied cheaply. However, the levels of unemployment fixedly remained at approximately 2 million due to the fact that most of the workers could not still find jobs.

Unemployment, which this paper seeks to vividly explain and on the UK front, is that scenario in an economy, in which persons seeking to pay employment opportunities remain jobless. The definition of this term is sometimes an issue of controversy and triggers political discomfort in this nation of the UK as well as numerous other industrialized nations in the western world. In the year 2008, the rate of unemployment in the UK was 5.3% which constituted around 1,640,000 persons. (Erickson, et al 2009 p90)

The welfare reforms that are set by the governments like the UK and Scotland with the inclusion of variations proposed for the emergency budget, as well as the comprehensive expenditure review, may result in a negative impact upon the low-income earners’ households. Their lives are set to face more difficulties especially if the rates of unemployment remain at the high levels they are. Government expenditure to help people is going to eat into the amounts set aside for other benefits. Worse still, operational costs are as well as streams for revenue are going to be affected. (Great Britain, 2011 p162)

Conclusion
While concluding, it is good to note that the issue of unemployment is an aggregate economic issue. The case scenario spoken about is that of the UK where the problem still persists. As per Erickson and others’ book unemployment in 2008 in the UK was 5.3%, which translated to about 1,640,000 unemployed persons. The findings are in the bid to answer the study questions, “What are the downsides of unemployment in the UK? How does unemployment affect government revenues, furthermore how are these revenues significant in the government benefit payments (such as pensions)?”  Read More