Essay About Rate Of Unemployment And Module Code

Tackling Global Challenges and Developing an Ethical Perspective
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Module Code – MBAM954Module Name – Tackling Global Challenges and Developing an Ethical Perspective Candidate Number – 062558Word Count – 2878
Types of Unemployment and their Levels The type of unemployment explained above, i.e. when individuals lose their jobs as a result of a downturn in demand it is called Cyclical Unemployment and is caused by a demand deficient. If this decline in persistent and the unemployment becomes long term it is called Keynesian Unemployment. This theory has its roots in the publication ‘The General Theory of Unemployment, Interest and Money’ by John Maynard Keynes’ (Keynes, 1936). Various supply side factors like higher rates of unemployment during a particular season, structural changes in the economy like closing of mines, a person trying to find a job after graduation, job opportunities being available but in an area an individual cannot relocate to or just a choice to not work also contribute to the rate of unemployment. These are considered natural factors of unemployment. It is important to understand that while unemployment is also caused by natural factors it is usually higher when it is caused by the demand deficient factors. This can also be seen in the graph explained below. Given below is a graph of the percentage of unemployment in the United Kingdom from 1971 to 2016. The idea behind choosing such a long timeline is to be able to cover both different periods of recession and otherwise.[pic 1]From this we infer that the spikes in unemployment in the years 1981, 1991 and 2011 caused by recession show demand deficient unemployment and are way higher than the unemployment that occurs during a period of economic growth where only the natural factors of unemployment are in play (Office for National Statistics, 2018).Implications of Unemployment on BusinessSpending Power This is one of the most obvious effect of unemployment. We can safely say that the spending power of an individual without a steady income will decrease. We should also keep in mind that this would also mean a decrease in the spending capacity of his / her This will also lead to the loss of tax revenue. People not being able to spend will in turn hinder the economy from growing. Financial Costs to the GovernmentAnother effect of unemployment on the economy is that when the rate of unemployment in a country rises the amount of money to be paid by the government as compensation also rises. Below is a chart showing us the monthly unemployment benefits paid in the United Kingdom from 2013 – 2104 to 2018 – 2019 (in million GBP). [pic 2]Looking at the chart we can clearly say that the problem of unemployment turns out to be expensive for a government and the amount spent reduces as the unemployment rates reduce (Public Expenditure Benefits, 2018, p. 76). This can also be compared with the details given in the previous graph where we can see that the percentage of unemployment has been reducing from 2014. Increased spending on unemployment