What type of unemployment has affected Spain since 2008?
It should be known that the number of unemployed people in Spain has more than doubled over the last twelve months. The unemployment rate has reached a historic high of 20.7% for the world’s eight largest economies and this is a very bad position (McCarthy, 2011, p. 5). The country has been affected by demand-deficient unemployment since 2008. This is because of the global economic crisis and the collapse of its own building boom.
In 2008, the flow of cheap money stopped and this affected its economy as far as spending is concerned. In this case, people’s rate of spending dried up thereby affecting the economy. Demand-deficient unemployment is related to a poor economic cycle and this is what has been seen in Spain since 2008. It’s quite obvious that the demand for final goods is greatly affected because of a poor economy and this will ultimately reduce the demand for labor.
The country’s 4 million unemployed people do not have an income and can not create demand for goods in the economy and this leaves employers with no choice but to just lay off employees’ thereby increasing unemployment. Firms and companies in Spain have no requirement to hire more people and this is because of the state of the economy. This is because they will always want to maintain profitability and they can not be forced to employ people (Bized, 2011, p. 11). The government has various options that it can still use to stimulate demand in the economy and thereby create jobs.
Why do they think the USA is suffering from this type of unemployment?
Structural unemployment is defined by those people who will not find jobs because of a change in the structure of industries. Most of these economists think that the US is suffering from this type of unemployment because of various reasons. As a matter of fact, there is an argument that this type of unemployment is residual and this means that the economy will not be able to create jobs even if aggregate demand was on target. The US is facing an increase in structural unemployment because the country’s labor force has been slow to respond to the changing needs of the market (The Economist, 2010, p. 23).
In this case, there is a shift in the demand for skills and this has been going on for the last 30 years. Manufacturing jobs have been reducing as time goes by and this has created a shift that has reduced people in employment. Changes in technology mean that some tasks that were performed by people can be done by machines and this has reduced jobs in a broadway. Most of the affected people have been slow to respond to this shift in the job market.
Why is structural unemployment considered the most serious form of unemployment? What sort of measures can the government take to reduce it?
Structural unemployment is considered the most serious form of unemployment because of various underlying reasons. Structural unemployment is brought about by a shift and changes in industries and this means that some goods and services might not be demanded by the market implying that the whole industry will have to lose jobs (Bized, 2011, p. 9). Most of the people who are phased out by this form of unemployment will find it hard to get jobs and this might need more effort, money, and time.
In extreme cases, they can move to a different location where their skills are still needed but it is quite obvious that they will receive low wages. This form of unemployment is very serious because it can lead to social unrest from the affected people (Bized, 2011, p. 10). The government can take up a lot of measures to resolve this problem through government programs. Such programs will help those who have been affected to gain new skills that can continue making them competitive in the job market. As a matter of fact, the government should be fully involved in retraining programs for long term sustainability.
Reference list
Bized. (2011). Types of Unemployment – Which Type is Typical? Web.
McCarthy, A. (2011). When Spain’s unemployment problem gets ugly. Web.
The Economist. (2010). Is America facing an increase in structural unemployment? Web.