Unemployment is a state whereby people are willing to work at the current wage rates but cannot secure jobs. Since 1980, United Kingdom has recorded a decline in the employment level in the economy. This research paper will evaluate the reasons why unemployment in United Kingdom has been high.
Depression in the region has been a major cause of unemployment in the United Kingdom economy. During depression, economic activities are usually low. United Kingdom experienced recession in the years 1981 and 1991. Recession during these periods has had several negative effects. The demand for various products in the economy has been declining. Inflation during the period has been on the rise. As a result, the low demand and high inflation in the economy has discouraged investment in the economy. The effect of this is that fewer workers are needed to produce the goods that are required in the economy. As a result, unemployment has remained low due to depression (businesscasestudies.co.uk).
Structural changes in the United Kingdom economy have had a big impact on unemployment. During 1080s, the technology used by many firms in United Kingdom changed. This meant that firms could do without many employees. The adaptation of this technology made many people redundant. People had to learn new skills so that they could be employed in other sectors of the economy. This had to take some time. In addition, people were required to move in different geographical areas in search for new jobs. However, technology has been changing rapidly leading to structural changes in the economy necessitating fewer employees. This aspect has led to a rise in the unemployment level in the economy. Structural changes in the economy have been a major factor behind increased unemployment in United Kingdom (mpra.ub.uni-muenchen.de/7646/).
United Kingdom during the period adopted a system whereby the unemployed were given some benefits. The sick and the disabled individuals received some benefits that helped them to maintain their daily living. This has facilitated unemployment level in the United Kingdom. These benefits have made some people reluctant to seeking jobs since they are aware that they will receive benefits whether they work or not. Many people in United Kingdom have failed to seek jobs because of the benefits in place. In addition, the government counts the people who receive benefits as employed and therefore the records of unemployment are low according to the government. The funds that could be used to generate job creating activities are used to benefit the unemployed thereby creating more unemployment. In addition, the fact that the government receives low records on the levels of unemployment due to the program has made it less responsive to unemployment issues. This is why unemployment has been on the rise in United Kingdom (politics.co.uk/reference/unemployment).
Credit contraction in the United Kingdom has facilitated unemployment. The government has put in place restrictions on credit creation. This has the impact of reducing the purchasing power of individuals since consumers do not access credit. This discourages investment hence unemployment. In addition, unavailability of credit means that investors have no funds to invest in the economy. The low level of investment in the economy has facilitated the low level of employment in United Kingdom (revisionguru.co.uk/economics/unemp3.html).
In conclusion, the above factors are the major facilitators of unemployment in the United Kingdom economy. The arguments by the government that the high level of immigration in the economy was causing unemployment have been disapproved. Even though immigration has caused unemployment in the economy, its effects have been less and mostly on non-skilled workers (tutor2u.net/economics/content/topics/unemp/unempcause).
References.
http://mpra.ub.uni-muenchen.de/7646/
