INTRODUCTION
Many countries are faced with unemployment and its subsequent effects on its economy. When the rates of unemployment become high, the governments are pushed to shoulder the cost of many social services since their citizens are incapable of paying for them. More importantly, a high unemployment rate due the lowered demands and high interest can influence the exchange rate. The exchange rate is among the determinants of a country’s economic stability and influences the country’s trade with the global market. As such, unemployment should be lowered through fiscal and monetary policies that can stabilize a lower exchange rate and facilitate a global financial system. Furthermore, there are many who views that high rates of unemployment can be attributed to the citizens or the lack of opportunities. However, there are also many who views that higher unemployment rates are the result of policies that are unable to help citizens acquire employment. As such, this paper will discuss unemployment and possible macroeconomic policies to help reduce it.
UNEMPLOYMENT
Unemployment or the failure to secure jobs is a growing concern around the world for a long time now. Unemployment affects many aspects, making it relevant to combat it. For instance, unemployment makes one unable to make necessary purchases and avail of much needed services that can stimulate the economy. In some countries, the government aid the unemployed by providing financial assistance that the taxpayers shoulder. This cost can be likewise used in other important matters that could help more people. High unemployment does not only affect the unemployed individuals. In the long run, a high rate of unemployment causes a country to have a reduced standard of living due to the inefficient allocation of resources and the decline in a country’s GDP. Furthermore, a high unemployment can be an indication that a country has high interest rates due to the absence of appropriate policies. This high interest rate influences the exchange rate of a country negatively and cause noncompetitive trades with the global market. Obviously, a high rate of unemployment slows down the economic growth of a certain country and greatly impacts the people living in it (Buck). Unemployment puts people in a position where they are forced to push until they affect the economy of the country and its global financial system. Unemployment is not only a problem for the government and those who are unemployed, but also for everyone under the scope of the society. Being employed does not make one safe from the effects of unemployment. Thus, unemployment should be a concern for everyone.
PROPOSED SOLUTION
There are many proposed solutions that are directed to combat high unemployment rates. For instance, many propose that in order to reduce unemployment, people should be made more qualified. That is, they should undergo programs that can probably increase their chance of getting hired. However, this solution does not take into account that it only makes the citizens equally competitive while the demands for labor could still be low. Despite one’s competitiveness, no job will be available for him or her unless the government creates policies that could allow firms or companies to have high demands for labor work. In short, making the people better or competitive does not open more job opportunities and open the country to global trades. As such, policies should focus on creating more jobs for the unemployed ones through the intervention of the government.
Aside from fiscal policies, the government should also use monetary policies to reduce unemployment. This means that the government should facilitate lowering interest rates so that people may be encouraged to borrow, invest and spend. Thus, helping fiscal policies to become more effective. If people were given the confidence to spend through monetary policies, the government can be rest assured that their fiscal policies will work in increasing the demand for labor. More importantly, lowering interest rates can also pave the way for competitive export products which can likewise open up more demands (Pettinger).
CONCLUSION
The intervention of the government through fiscal and monetary policies is the best course of action to reduce unemployment that can harm a country’s exchange and compromise its global financial system since these measures directly address the problem with the lowered demand for labor. These policies do not only reduce unemployment, but also targets key components of the country’s economy.
Works Cited
Buck, John. "The Importance of Low Unemployment." Economic Perspectives. N.p., 2008. Web. 27 July 2016.
Pettinger, Tejvan. “Policies for Reducing Unemployment.” Economics Help. N.p., 2014. Web. 27 July 2016.
