Causes, Effects, and Remarkable Solutions for Unemployment

Causes/Effects/Solutions of Unemployment

What is Unemployment?

Unemployment is a broad term that refers to the people who are willing to work but can not find a job that is of their interest and would use the skills that they have.

5 Types of Unemployment

1. Demand-Deficient Unemployment

This is the most important type of unemployment which takes place between a recession.

During a recession, there is a decrease in the demand of products and services which results in organizations laying off employees due to less production.

2. Frictional Unemployment

This type of unemployment includes people who are struggling between different jobs. For example, if an employer fires a person from a job or or if he quit himself and is now looking for a job during a period which is not recession dependent.

This person is trying to look for a job where he can use his skills to the utmost which is a good thing because only then he can be productive as well as efficient.

3. Structural Unemployment

This type of unemployment is the most common one where the people are working on jobs which does not utilise their skills as their skills do not match the job description.

The jobs that are open, are unavailable to find a suitable candidate.

Structural unemployment also includes the people who get the job but are unable to reach the particular location of that job due to a number of reasons.

For example, someone gets a job abroad but could not get work visa because of some visa restriction.

4. Voluntary Unemployment

This is a type of unemployment where a working person willingly leaves his job because he thinks that there is no financial growth in the job.

Sometimes the pay someone is getting does not cover the expenses of his living which is why they leave the job and look for another one.

5. Cyclical Unemployment

It is a type of unemployment which depends on the economic cycle.

If the economy is doing well and there are a lot of job opportunities in the market as the businesses are expanding, then the cyclical unemployment will be at its lowest and vice versa.

What Causes Unemployment?

1. Unemployment in Rural Areas

Developing countries face unemployment because most of the population lives in rural areas. Agriculture is the only prime job available there.

The people living in rural areas are unable to get educated which is why they do not get proper company-level jobs.

Rural people get an unemployment benefit when some of them leave for urban areas looking for jobs.

Causes of Rural Unemployment:

  • Population is very high in Rural areas.
  • The land for agriculture is limited, therefore, more pressure on it.
  • There is a particular season of agriculture, there are no jobs available throughout the year. This is also called seasonal unemployment.
  • People still using the old and traditional ways of agriculture; no advancements.
  • The mind-set of staying at home and not going to a proper workplace.
  • Lack of proper tools and machinery for irrigation.
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2. Frictional Unemployment

When a person leaves a job to find a better one, it takes time. They may come across a lot of job opportunities but they want something of their interest and something that uses their skills well.

Causes of Frictional Unemployment:

  • A work place that does not give inner satisfaction causes the person to quit the job and find a better one.
  • Some personal reasons also lead to frictional unemployment such as someone getting married, someone who is relocating, or even someone who wants a break and wants to spend some time with the family.
  • Some people have a financial back-up and can afford to stay unemployed for some time.

3. Unemployment in Urban Areas

One of the main reasons of unemployment in Urban areas is when the unemployed people from rural areas come looking for jobs.

Also, some people can not find jobs that are suitable for them which results in high unemployment.

Even in Urban areas, there are illiterate people who are willing to work in factories or industries but are unable to find work. This is known as Industrial unemployment.

Moreover, educated people are also struggling in terms of finding jobs as per how qualified they are.

Technological advancements mean that more employers are now laying off workers as the machines are now doing their work.

Causes of Urban Unemployment:

  • A Young worker is preferred over older workers.
  • People with physical or mental disabilities suffer in terms of getting jobs.
  • Innovations and advancements have taken over a lot of labor work.
  • Migration of rural people to the urban areas have also increased the level of unemployment.

4. Gender Discrimination

It is shocking to see that even in today’s time, gender discrimination exists! Some people still want to keep the positions of men and women different at work place.

Women are not treated equal to men in so many organisations. Moreover, a man and woman doing the same job are paid differently stating that man is the breadwinner of the house. Hence, the man should be paid more than the woman.

Furthermore, there are regions who do not hire women as women there are said to stay at home and build a family rather than going to the office for work.

5. Financial Crisis

If we look back in time, we can see the destruction that took place with the introduction of the coronavirus. So many people were laid off because of the financial positions of the companies they were working in. A case in point is transportation sector.

That period had destroyed so many businesses and the businesses had to let go of people in order to survive the pandemic period. This has lead to a high unemployment rate almost everywhere around the globe.

Adverse Effects of Unemployment

1. Effects of Unemployment on an Individual

Nobody can survive without a job. An individual has to fulfill the basic necessities which is why an unemployed individual suffers and faces a difficult time.

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1.1 Reduced Income

Not having a job means not having an income. Unemployed people have to live on their savings and if they do not have enough saved, they turn to other people for money.

Nobody likes borrowing money from others or taking a loan from the bank. But, in order to fulfil their expenses they have to find ways.

For the individuals who are the sole earner of their family, they go through a lot of stress during their unemployed phase. Therefore, they end up taking their own lives which increases the suicide rate of the country.

1.2 Health Problems

A prolonged period of unemployment significantly affects the health of an individual. It can be an individual’s physical as well as mental health.

The most common health problems that arise are headaches, migraines, high blood pressure, heart diseases, diabetes, and so on. This is an extremely undesirable aspect of unemployment which not only increases the hospital visits but also the expenses of an individual.

Unemployed people lose their health insurance, as there is no unemployment insurance for them. Hence, no access to free health care. So, when an individual avoids going to the doctor because he is not willing to spend, then his health is at a great risk.

Unemployment increases the risk of depression and anxiety as well. Studies have shown that unemployed people have low mental health than those who are employed.

1.3 Disturbed Relationships

Unemployed people not only have themselves to look after but also have their families whose needs are to be fulfilled. When an individual fails to do so, his family starts to dislike him.

The children start behaving rudely which disturbs the mental health of an individual. It creates mental stress within him. Research has shown disturbed spouse-relationships as well if one of them faces long term unemployment.

2. Effects of Unemployment on the Society

Countries and cities with a high unemployment rate have a negative impact on the society. Poverty will increase, the living standards of people will change.

Self-esteem of people is also challenged because being unemployed scares them as they have no social security.

Societies who have a high rate of unemployment will have a direct impact on the way its people live their lives. Children will not be able to go to schools, people will not be able to use public transport and other services, and so on.

3. Effects of Unemployment on the Economy

As a whole, a country’s economy suffers in the during unemployment. When people have no income, they will not spend much which means less contribution to the country’s economy.

When people will buy less, the companies will produce less. Likewise, people will not want to spend on the services as well which again means less contribution towards the economy.

With a decreased demand and supply, more people will lose their jobs because there will be less production in the factories. This leads to organisations earning less revenue, hence, the country’s economy is affected. It can even lead towards the country facing great recession.

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Solutions for Unemployment

1. Entrepreneurship

Nothing is better than being your own boss! One of the creative solutions to unemployment is starting your own business as an entrepreneur and become an employed person.

Starting your own business will help you get employed as well as create job opportunities for others as well.

Think of something that interests you and list down your skills. Then start your own venture by turning your thoughts into action. With your new business, you can aid in the economic growth of the country as well as help people get wages.

2. Enhance your Skills

A skill is something that will take you to high levels of financial independence and benefit you throughout your life. Take the time of unemployment and use it to enhance your skills and even learn new skills.

It is fast-changing world where technological advancements are taking place so, one needs to stay updated with them and seek more employment opportunities.

The world is becoming digital and so we all need to work on digital skills no matter what field interests us. Every business is getting digitalised nowadays. Learning the digital skills might give you an edge over others in the market.

3. Grab those Internship Opportunities!

If you find an internship opportunity, you should avail it. Youth unemployment rate is also high because they do not believe in the power of internships.

It not only adds experience to your resume but also helps you understand different working environments.

If the job suits you well and you have gained the expertise of it, you might get a permanent position in the company too.

Doing an internship might also make you realise what you really want to do and what you do not want to do. It might end up being a potential job for you!

4. Socialise and Build a Network

Socialising and having a big network is vital nowadays. Whether you are searching for a job or even if you are looking for someone to start a business with, your network will be an advantage for you.

If you start a new venture, you can promote your business among your friends, family, and the other people in your network. It will help you spread awareness about your business. The bigger the network, the easier it will be for you.

5. Keep your Resume Updated

Updating your resume time to time is important. Even if you learn a new skill or do a new coarse, write it in your resume. Promoting yourself and your work is what the resume is all about.


Unemployment is a very crucial issue globally. Developing countries struggle more than the developed countries in order to resolve the issue of unemployment.

This article is written in detail covering all the aspects of unemployment.

Government also has an important role in decreasing unemployment and with suitable measures, it will be successful in doing so.

A country’s economy can only get better once the people have a suitable source of income through good jobs. The government should be able to encourage companies to create more jobs for its people.

Employment will result in low poverty levels and higher living standards.

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