The Many Faces of Unemployment: Understanding Its Types

The Many Faces of Unemployment: Understanding Its Types

 Growing up, my local stationery shop was part of my weekly routine. The owner greeted me by name and we often talked about my latest school projects or favorite books.  During one of my visits, I noticed the shopkeeper’s son, who used to work part-time, wasn’t there anymore. Curious, I asked, and the owner and learned that the previous part-timer had decided to stop working and focus on his studies. Though I had heard other students his age resume studying full-time, it never occurred to me that this was a type of unemployment – specifically voluntary unemployment.  I began to notice my perception of unemployment was extremely distorted. I believed that those who were fired or dismissed are unemployed, but it turns out unemployment can be voluntary, and there are different types of it.

Unemployment is when someone is willing and able to work but can’t find a job. The unemployment rate is calculated as:

Unemployment Rate = (Number of Unemployed Individuals / Labor Force) × 100

So, what causes unemployment? There are different reasons for it—some voluntary, some due to workers no longer being needed, and others caused by factors like a lack of demand or technological changes.

Now, lets dive into the types of unemployment:

Frictional Unemployment

Imagine you decide to take some time off after quitting a stressful marketing job to become a farmer! The short gap between leaving one job and finding another is frictional unemployment—you’re not permanently out of work, just looking for something new.

Seasonal Unemployment

Now that you’re a farmer, you’re busy during the harvest season. But once the harvest ends, there’s not much work to do, so you’re out of work during the winter months until it’s time to plant again. That’s seasonal unemployment.

Structural Unemployment

Let’s say you’ve been farming for years using traditional methods, but now modern techniques like automated machinery are becoming popular. With machines doing most of the work, there’s less demand for manual labor, and your traditional skills aren’t needed anymore. This is structural unemployment.

Cyclical Unemployment

Now, as a modern-tech farmer, you’re doing great when the economy is booming, with high demand for crops. But when a recession hits, the demand for food drops, crop prices fall, and you may need to lay off workers or reduce production. This is cyclical unemployment, caused by an economic downturn.

Thinking back to the stationery shop, I now realize how unemployment isn’t just about being fired or laid off—it’s more nuanced than that. Whether it’s temporary frictional unemployment or the more challenging structural unemployment, these concepts shape the lives of individuals and economies alike. Much like the shopkeeper’s son choosing a new path, unemployment often leads to transitions that can bring growth and change. Understanding these types helps us see the bigger picture of why people may be out of work and what can be done to help them. In the next article, we’ll delve deeper into the causes of unemployment which were briefly mentioned above, so stay tuned! 

Written by Tehreem Ali

Edited by Riya Kalapurakkal