Structural unemployment is a common phenomenon in every economy. It can be seen during technological advances, changing government policies, or globalization, where the skills of employees’ skills and job requirements don’t match.
It is a crucial issue for the economy, as it affects those with low education or skills who are largely unable to adjust to these changes. It can affect an economy’s ability to create jobs and use resources efficiently, as well as its capacity for innovation.
By understanding the causes of structural unemployment, governments, and businesses can work together to develop policies and strategies to help create job opportunities for those affected by it.
What is Structural Unemployment
Structural unemployment refers to a mismatch between the jobs available and the skill levels of the unemployed – it’s not about a lack of jobs, but the inability of the workforce to fill them.
This could be due to technological advancements making certain skills obsolete, or geographical factors that separate job seekers from job opportunities. Structural unemployment is a long-term issue that requires a societal shift in education and training.
In simple words, structural unemployment is a situation where people lack the particular skills that are required in current job openings. It can be seen in any economy as there will always be some mismatch between available jobs and the skills of unemployed workers.
How Structural Unemployment Works
Many reasons can cause structural unemployment – some of the most common ones are
- Technological advancement
- Changes in consumer demand
- Globalization
- Industry changes
- Regulatory policies
- A mismatch between the skills of unemployed workers and the jobs available
- Geographical factors that separate job seekers from jobs
Structural unemployment can have a long-term effect on the economy as it affects those with lower education or skills who are largely unable to adapt. These job seekers fill a big chunk of the labor market so it can affect an entire economy.
Measuring and reducing structural unemployment can be complex but some steps can be taken.
How to Reduce Structural Unemployment
Reducing structural unemployment requires strategic interventions. Here are five potential solutions:
- Continues Learning
It can be hard to tell what trend or technology is coming. This is why jobseekers must stay up-to-date on news and trends in their industry, to be able to adapt and learn new skills quickly.
By continuously learning new skills and staying current, job seekers can stay competitive in the job market.
- Relocation
Geographical reasons are one of the most common causes of structural unemployment. To reduce it, people should consider relocating to areas with more job opportunities or where their skills are in demand.
Renting, sharing accommodation, or even taking a remote job can be other alternatives.
- Keeping up With the Trends
As mentioned earlier, technology and consumer demand are constantly changing. Jobseekers should look for new trends and be aware of their impact on the job market – this will help them stay ahead of the curve and remain competitive.
- Building Networks
One of the most common ways people find jobs is through their networks. Building a strong network of contacts in the industry can help job seekers get access to more job opportunities and better ones as well.
Social media websites like LinkedIn, Facebook, and Twitter are great platforms for connecting with potential employers.
- Minimizing Unemployment Benefits
Government plays a major role in reducing structural unemployment. One way they can do this is by minimizing unemployment benefits and encouraging job seekers to find work.
This will help create a stronger incentive for the unemployed to look for more suitable jobs that match their skills, rather than relying on government support.
Conclusion
Structural Unemployment is an important issue in every economy as it affects those with low education or skills. By understanding how it works both employees and employers can implement strategies to reduce it. It is a long-term effect that cannot be eliminated, but by taking the right steps, the impact of structural unemployment can be minimized.
Further questions
What's your question? Ask it in the discussion forum
Have an answer to the questions below? Post it here or in the forum
Read excerpts from columns that appeared in April, May and June 2024 in FP Comment. This in the second instalment in a series
For many companies in the EV space, the biggest question is what it will take to reverse the declining momentum and regain solid footing
