Employment is a very important indicator in macroeconomics. It is understood as the number of able-bodied adults (over 16 years old) having a job. Unfortunately, not all adult able-bodied people have jobs; there are also unemployed citizens. Unemployment in a market economy characterizes the number of working-age adults who are unemployed but are actively searching for it. The total number of unemployed and employed citizens is the labor force.
The calculation of unemployment is carried out using various indicators, but generally accepted, incl. and in the International Labor Organization, the unemployment rate is considered.
Unemployment in a market economy is a socio-economic phenomenon in which a certain proportion of the labor force is not used in the production of services and goods. At the same time, labor is understood as the number of employed and unemployed.
The following types of unemployment are distinguished:
- Friction
- Structural
- Institutional
- Cyclic
- Seasonal
Unemployment associated with the time spent on finding a new job relates to frictional unemployment. Its duration can be a period of time from 1 month to 3.
Frictional unemployment arises as a result of the dynamic development of the labor market. Some of the employees voluntarily decided to change their jobs, finding, for example, a higher paying or more interesting job. Another part of the employees is in active job search due to dismissal from their existing place of work. A third of workers only enter the labor market or enter it for the first time due to the natural displacement from the category of inactive population, from an economic point of view, to the opposite category.
Unemployment associated with technological changes in production and changing the structure of demand for workers - structural unemployment. It arises in the event that an employee who was fired from one industry cannot find work in another industry.
Structural unemployment arises when the territorial or sectoral structure of labor demand changes. Over time, in production technology and in the structure of consumer demand significant changes occur that are causing a change in the structure of total labor demand. If the demand for labor in a particular profession or in a certain region falls, then unemployment appears as a result. Workers discharged from production are not able to quickly change their qualifications and professions or change their place of residence, therefore they are forced to remain unemployed for some time.
Economists, as a rule, do not draw clear boundaries between structural and frictional unemployment, since in either case the laid-off workers are actively searching for a new job.
It is worth noting that these types of unemployment in the economy exist constantly, since it is impossible to completely reduce them to zero or destroy them. People will be looking for a new job, striving for financial well-being, and companies, in turn, will seek to hire the most qualified employees, as this is justified by their desire to maximize profits. That is, in a market economy, labor and supply indicators constantly fluctuate.
Since the existence of structural and frictional unemployment is inevitable, economists have formulated their sum as the natural level of unemployment
The natural unemployment rate implies a level of unemployment that corresponds to full employment (consists of a structural and frictional form of unemployment. The reasons for the natural unemployment rate are due to natural causes, such as migration, staff turnover, demographic reasons.
If the economy shows only a natural level of unemployment, then this situation is called full employment.
The reasons for the natural level of unemployment are the balanced labor markets, when the number of workers looking for is equal to the number of vacant jobs. Therefore, under full employment is not meant 100% lack of unemployment, but only a certain minimum required level of unemployment. The natural level of unemployment is to some extent a positive development.