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How To Get Out Of A Jobless Situation

How To Get Out Of A Jobless Situation

Employment and economic growth have a direct correlation. A correlation exists between inflation and economic growth. Therefore, it follows that there must be a link between inflation and unemployment, according to common sense and financial theory. The Non-Aggressive Inflation Rate of Unemployment is a specific measure of this link (NAIRU). Unemployment is said to have a negligible effect on inflation at this rate. If unemployment falls below NAIRU, inflationary forces take hold.

Unemployment may be classified as "structural, frictional, or cyclical" using any of these terms.

Theoretically, some unemployment is caused by friction. It is inevitable as a consequence of many processes.

People change jobs when they are fired or when they want to advance in their careers.As a result, they are jobless throughout the time they are looking for new employment.

Newcomers to the workforce are added to the workforce on a regular basis. Generations come of age and are ready to enter the workforce. To get their first job, these new participants must be jobless.

Some occupations are, by definition, part-time or seasonal (for example, a hotel in a resort hotel).During specific periods of the year, these employees enter the ranks of the jobless and then leave them. Part-timers and those who like to work in the "grey" or "black" economy are among those who prefer to work that way. These people are either not included as jobless or don't disclose that they are, which distorts the real picture of unemployment.

Unemployment of the frictional kind is a good indicator of economic health. It suggests a rapidly evolving economy. It is an indication of mobility, flexibility, and adaptation in the workplace (part-time solutions and flexitime). When it comes to structural unemployment, this cannot be claimed. This type of unemployment is particularly concerning to governments and social planners.People's mental health is permanently affected, as are the economy and social cohesiveness. As a result, it is the most difficult to overcome.


In most cases, it is the outcome of long-term, structural changes in the economy that cannot be combated with a single, artificial intervention (employment initiated by the state or fiscal stimulus intended to encourage employment). A few of the things that contribute to the phenomenon:

New occupations spring up as a result of technological advancement, while older ones go away. New jobs are created as a result of the development of new technology. Time and effort are required to retrain certain employees (in which they might, technically, be defined as unemployed). As a result, many of the long-term jobless enter the ranks of structural unemployment.

New trends, mass purchasing patterns, and emphasis on particular items and services are all examples of changes in consumer preferences. Today's hottest thing will be tomorrow's most decomposed. These tectonic upheavals may and do affect whole industries.

Cross-border labor mobility is a key component of globalization, which is why it is actively promoted across the globe. Economic unions and trade agreements have social or labor sections. As a result of NAFTA, hundreds of thousands of new jobs were generated in Mexico and the United States. The largest reshaping of labor markets is taking place around the world, in wealthy and poor nations alike, as multinational corporations, global manufacturing processes, international commerce, and the development of international brands all contribute to the globalization of the economy. In Central and Eastern Europe and Southeast Asia, we have seen a marked decline in the dominance of trade unions and inexpensive labor, respectively. As a result, occupations (even those with specialized skills) are being relocated across national boundaries.

Many people are chronically jobless or only work part-time because they haven't completed the minimal education required to engage in today's workforce (senior high school). Many nations' structural unemployment is caused in great part by youth dropouts. Even people with the proper formal education are rendered superfluous and worthless by the new paradigm in nations that are in the process of moving from one economic system to the other. To illustrate, imagine a professor of economics who studied and taught from Marxist textbooks; in today's capitalist market system, he or she would be completely jobless despite having a doctorate in economics.

The cyclical kind of unemployment is the least harmful of the three types. At least in capitalist societies, this is the outcome of both economic cycles and fluctuations in aggregate demand for employees. This is considered an inevitable consequence of the free market economy. Unemployment benefits help ease the plight of those who have lost their jobs, but the real answer lies in breaking the cycle of unemployment rather than focusing on the problem in isolation.

Frictional and structural employment must exist for the "natural rate of employment" to be accurate. In the end, it's only the entire employment rate that remains. This is a complete fabrication. This means that the data that economists use is usually inaccurate and underestimates the issue. A good illustration of this would be the statistical omission of "discouraged employees" (those who despair and stop looking for work). In contrast to frictional unemployment, which is good news, structural unemployment is bad, and the government must fight it with all its might. Economic factors, on the other hand, provide political leaders with cover to disregard long-term structural unemployment.

However, the most serious issue is determining what the "natural" unemployment rate is and how it should be calculated. This is where NAIRU comes into play: the natural rate of unemployment might be regarded as that amount of unemployment that avoids undesirable economic impacts, such as inflation. According to a study in the United States, this figure was between 5 and 6 percent. These figures were derived over a lengthy period of employment and inflation records. In this situation, history was a poor guide since the world has changed. This tremendous shift from traditional manufacturing to the "Third Wave" sectors (information and knowledge) has allowed inflationary pressures to be outsourced or absorbed while employment has increased substantially without encouraging it. This was part of a new economic paradigm that declared the end of the business cycle and the inflationary boom-bust periods. But even if it was overblown, the "New Paradigm" did anticipate an explosion in financial asset values as well as an increase in productivity while keeping inflation at a manageable level (which was considered hitherto impossible). In the United States, unemployment has remained stable at less than 5% while inflation has gone undetected.Although it may not last, this is noteworthy. Inflation will begin to rise in the United States and the rest of the globe in 1998.

On the other hand, Macedonia Interethnic hostilities and the loss of almost all export markets are among the external shocks the country has endured since it was split from a federation, resulting in an economic siege, a monetary instability crisis, and a collapse of the financial system. It's no surprise that the official unemployment rate was so high (more than one third of the active workforce). Even if the true unemployment rate is lower (since many people in the underground economy aren't included), these are still alarming numbers.

Are we dealing with a long-term or a short-term problem? Is it possible that this problem is structural? New technology, new survival factors, new market systems, and a need for a new set of skills and new customer preferences are all contributing factors. It turns out that the majority of the unemployed in Macedonia (and in transition nations generally) are cyclical and frictional. There have been a large number of layoffs as a consequence of efficiency and productivity initiatives, which have led to this situation. However, the workforce has little problem adapting to the new post-transitional environment. To put it another way, there is a good mix of talents, a good education system, and a lot of mobility in the workforce. However, wages aren't going to rise because of the high unemployment rate. The crew has done an excellent job of adapting to the new environment.

Failures are the responsibility of the top echelons of management and, in particular, of the political hierarchy. Because they were unwilling or unable to change, they and their employees (=their constituents) ended up in a jobless quagmire because they didn't know how to deal with today's rapidly changing marketplace. It was possible to avert this awful situation.

Structural unemployment in Macedonia should not be any greater than in Germany, for any number of reasons. The size and wealth of the two economies are irrelevant to this topic. Both countries have experienced external shocks (Germany's unification, Macedonia's transition), but both are macroeconomically stable, and Macedonia has significant natural and human resources.Consequently, the comparison is relevant. Structural unemployment in Macedonia should be about 9 percent, with frictional unemployment (the economic cycle is turning up sharply, therefore cyclical unemployment is going to go down) adding another 5 percent, according to specific metrics and theoretical calculations. As a result, the natural rate of unemployment is about 15%.

Furthermore, Macedonia has the unique and advantageous situation of being free of inflation and wage pressures. Even if there is a large increase in employment, wage pressures will not arise. However, even then, pay is still absurd by Western standards and will be limited to the most highly trained individuals. So many people are vying for available positions ("an employers' market") that raising pay is more difficult (and, thus, generating inflationary pressures is all but non-existent). The concept of NAIRU in Macedonian is thus purely conceptual, with no real-world application. There is a twofold increase in economic (GDP) growth for every one percent increase in permanent Western employment.Macedonia must grow at a rate of 10% per year for the next five years in order to reduce the unemployment rate below 15% (including workforce additions).It's possible: So little work would be required to accomplish this growth (to add $300 million USD yearly to GDP=3 months of exports at today's pace) since Macedonia has such a low starting point.

Only the appropriate policy choices at the state level and the right managerial cadre can accomplish this level of unemployment, and these decisions and the exciting new vistas of the global market scene must be taken advantage of. In this area, Macedonia falls short, and here is where the country should focus its efforts.

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