UNEMPLOYMENT

Unemployment which is also known as joblessness, occurs when people are actively seeking work and without work. It refers to those individuals who are willing and able to work but have not been able to find employment.

Unemployment Rate

The unemployment rate is the fraction of the labor force that is unemployed. It is a measure of the percentage of unemployment individuals in a country’s workforce who have lost their jobs or unsuccessfully finding one and are still actively seeking work.

The formula for unemployment rate:

Unemployment Rate = Number of Unemployed / Total Labour Force

Labour Force

Normally, the labor force of a country consists of everyone of working age which is above 16 and below retirement. This included the people that are working and those who are not working but are looking for work. People that are not counted as labour force included housewives, retired people, prisoners, students and others.

*Malaysia Unemployment Rate

The unemployment rate in Malaysia was last reported at 3.3 percent in September of 2012, it was the highest since October 2011. Historically, from 1998 until 2012, Malaysia Unemployment Rate averaged 3.3 percent reaching an all-time high of 4.5 percent in March of 1999 and a record low of 2.8 percent in March of 2012. There were around 413,900 unemployed individual in the country at the end of September, higher than about 347,200 recorded in August. The unemployment rate can be defined as the number of people actively looking for a job as a percentage of the labour force.

Why does this matter?

Employment is an important source of personal income and has a major influence on the consumer spending and overall economic growth. To the unemployed, they may have to suffer a loss of status, experience nervous breakdown, bad health, divorce, and are more inclined to attempt suicide than the rest of the adult population. Also, long period of unemployment could reduce the value of human capital too. As for the society, with higher employment, people can enjoy fewer goods and services that they could have consumed.

Thus, the unemployment rate can provide considerable information about the state of the health of a particular business sectors or the economy. Conversely, fall or lowing unemployment may reflect an expanding economy and also, unemployment data can point to changes in certain industries. For these reasons, the unemployment rate is one of the most widely followed economic indicators.

WHY the unemployment rate is increasing???

There are three type of unemployment. 

Let’s take a look :)

1)   Frictional unemployment

-This type of unemployment arises because it takes time for workers to be matched with suitable jobs but some of them will feel it is hard to find a work suitable for them. WHY?? It is because teenagers nowadays are required too much. They wish have a high wages and a short working time. Besides that, workers also not fully informed about what jobs are available to them.

2)   Structural unemployment

-This type of unemployment arises from changes in the pattern of demand and supply in the economy. This is because some people are not good in using the high technological and cannot follow the technological up to date. Firms will always finding the employee good in skill. If the people not good in skill or technological things then they will hard to find a job. This is why the employment rates getting higher.

3)   Cyclical unemployment

-This type of unemployment is sometimes called as demand-deficient unemployment.  It arises because the economy is in recession. Economists describe cyclical unemployment as the result of businesses not having enough demand for labour to employ all those who are looking for work. The lack of employer demand comes from a lack of spending and consumption in the overall economy.