Unemployment occurs when a skilled, unskilled or semiskilled individual is available and ready to do a job, but he or she is without work presently. Economics believe in the inevitability of unemployment. The natural rate of unemployment may be helpful because it prevents inflation. The current rise in unemployment is worsened by the existing worldwide economic crunch. Economies are doing poorly, therefore goods and services have inefficient demand. When producers do not have a ready market for their output, the demand for the labor input will be reduced so as to maximize profits at the lowest cost possible. Firms have been forced to layoff workers due to the existing restructuring programs aimed at dealing with the current economic crisis. Structural issues or hick ups and inefficient labor markets have also reduced the demand for labor force. The mismatch for laborers demand and supply may cause the skilled workforce not to get employed due to the disruptions caused by technologies and globalization. The use of technology is reducing the need for the labor input in production processes. Machines are said to do the work which could have been done manually by individuals and this lowers the demand for labor.

(Sloman, 2006 p.16-24)
Rigidities from outside, for example unionization, taxes, laws for minimum wages or other government regulations are discouraging employers from recruiting people. Labor unions force employers to respect workers rights and privileges. Employers will therefore tend to avoid unionized workforce, because they prove to be expensive to any business entity. The payment of taxes on the labor forces salaries may prove to be a burden to the organizations and they may therefore want to limit their labor force as much as possible. Voluntary decisions by the unemployed and the time taken to get a new job, have also been contributing to unemployment greatly. May professional laborers are choosy and may take sometime before they get a hob as per their career.

On the demand-side solving, government funds are necessary to trigger off employment. The government should bailout needy firms that may be faced with serious liquidity problems causing massive layoffs. Huge companies that have been greatly affected by the current economic crisis need to receive government donations for them to remain in operation and keep their labor force at work, avoiding an increase in unemployment. The government should also guarantee jobs at a living wage. This may be in the form of public work systems but it is a temporary measure. Government funding solution can only be utilized at times of crisis, because the private sector is considered superior in the employment field. Government bailout plans will cause an increased demand for goods and services, which causes an increase in the demand for labor resulting in high employment with increased wages.
Monetary policies can drive short-term economic growth causing an increased labor demand and this reverses the state of unemployment. The demand side solutions involve the eradication of minimum wages and the reduction of labor union powers. Firms should be allowed to hire at the wage that they can afford, considering that the economy is doing badly at present. The workforce should also be encouraged to consider career growth and development. Advancing in education helps one to have a competitive advantage for the limited jobs in the market. The supply side approach causes a long term growth in employment, because more workers are utilized. Cutting down of corporate taxes and reduction of regulations help in creating jobs hence reversing unemployment.


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