In Economic Essay Example | Topics and Well Written Essays - 1000 words

In Economic - Essay Example After losing job, consequently, people lose their sources of income. Therefore, to characterize the degree of the working population, the term "unemployment rate" - the ratio of the number of people to the value of national workforces – is used. One can distinguish three types of unemployment. Frictional unemployment is generated by a constant rate of population movement between areas, from profession to profession. Such unemployment exists even at full employment due to job changing and looking for the best work (it is often regarded as voluntary unemployment). Structural unemployment results from technological changes in the economy, long-term shifts in consumer demand or relocation of jobs from one district to another. In this case, even skilled workers remain jobless. Cyclic unemployment is caused by a generally low demand for labor in all sectors and regions; such type of unemployment is a result of slowdown in economic activity in the country. In general, such involuntar y unemployment negatively affects the morale of man; it is also harmful for the psyche. Unfortunately, this type of unemployment prevails in the United Kingdom nowadays. The country is still getting through the effects of the recent world’s crisis, which occurred in 2008 and resulted in large-scale global economy recession. Suffice it to recollect the strikes occurred against the backdrop of a sharp rise in unemployment in the UK (the strike of workers of a refinery plant in Lindsey, Lincolnshire, 2009; the strike of employees of a steel mill in Corus, Redcar). In 2009, there were nearly 2 million unemployed people in the UK (Trading Economics.com, 2009). It is believed that there is so-called natural (normal) unemployment rate, which determines the maximum possible level of employment. In the United Kingdom it is 4 % (Trading Economics.com, 2011). The downsides of unemployment in the UK are the lag of GNP, compared to the amount that the society would have at its potential, loss of income for lots of people, loss of national output, uneven distribution of the costs of unemployment among different social groups, a great many of workers lose their skills. â€Å"High unemployment has an impact on government expenditure, taxation and the level of government borrowing. An increase in unemployment results in higher benefit payments and lower tax revenues. If any person is unemployed, he or she receives benefits, consequently - pay no income tax. It is obvious that when people spend less, they contribute less to the government in indirect taxes. This rise in government spending along with the fall in tax revenues may result in a higher government borrowing requirement (so-called public sector net cash requirement)† (Davidson, 2009). Office for National Statistics UK unveiled data on unemployment in the country (February - April 2011). The unemployment rate for the three months is to remain at the level of January - March and will make 7, 8%, according to analysts (UK National Statistics, 2011). Past two years, countries around the world pursue a policy of fiscal stimulus package, unprecedented in scope - at least for a time of peace. In Greece, the USA, India, Britain and some other states budget deficit exceeded 10% of GDP (UK National Statistics, 2010). Naturally, â€Å"this is a classic Keynesian response to economic downturn - when demand in the private sector is reduced, the state must fill the gap to prevent economic collapse†