UNEMPLOYMENT

What is Unemployment?

One of the biggest problems facing Canada and any country is the waste of its human resources.

Canadians aged 15 and over who are without work and are actively seeking employment are classified as unemployed

What is Unemployment?

Unemployment rate – is % of members of the labour force who are unemployed

discouraged workers are not officially unemployed because they give up looking for work even though they still want to work

Full employment Canada is not 0% because people always looking for a better job or temporarily out of work

Egypt Currently has a 13.4% unemployment rate.

What is Unemployment?

Regional rates – traditionally unemployment rates have been highest in Atlantic Canada & Quebec and lowest in Ontario and Alberta

Unemployed Young adults – ages 15-24 > ages

Unemployed Women > Unemployed Men

Types of Unemployment

Seasonal – loss of jobs due to changes in the climate and other seasonal conditions (e.g. construction, farming, fishing)

Frictional – temporarily unemployed due to the time required to change jobs (e.g. students leaving school)

Types of Unemployment

• Structural – is the loss of jobs due to:1. long-term changes in consumer demand

(e.g. horses to cars)2. the decline in natural resources (e.g. cod

on Atlantic coast)3. the development of new technologies

(e.g. farm machinery)4. shifts in trade between nations (e.g.

NAFTA)

Types of Unemployment

• Retraining and education is the key solution• Cyclical / Inadequate-Demand

1. trough – low point of business cycle with high unemployment

2. recovery – improving employment as spending increases

3. peak – high levels of employment because of high spending

4. recession – high prices and decreasing demand lead to lower levels of employment

Example: Great Depression

1930s saw a prolonged period of high unemployment (>20%) in Canada and throughout the world that caused great misery

Unemployment Since 1945

Canada has not seen the return of the Great Depression, but still faced the problem of the business cycle with unemployment rates hitting 12% in the early 80s over 10% in the early 90s

Macro & Micro-Economics

macro-economics is the study of the economy as a whole (e.g. consumption)

micro-economics is the study of the economic actions of individuals and groups of individuals (e.g. consumers in Cairo)

The Leaky Bucket Example

• simple bucket – a model of how an economy functions

• simple economy I – all consumption (C) is spent by businesses on productive resources

• simple economy II, with savings (S) – leakage from bucket of savings

• simple economy III, with savings, and investment (I) – injection of investment offsets the leakage of savings

The Leaky Bucket

• causes of changes in savings – influenced by income and spending patterns

• causes of changes in investment – future expectations, interest rates

1. S = I Equilibrium and stability2. S < I Expanding economy as injections

> leakages3. S > I Contracting economy as leakages

> injections

The Leaky Bucket

simple economy IV, with government injections – injection of government spending (G) is offset by leakage taxation (T)

simple economy V, with foreign trade – injection of exports (X) make up 25% of Canadian income and are offset by leakage of imports (M) which are directly related to income levels

The Leaky Bucket

• Summary1. M + T + S = X + G + I Equilibrium and

stability2. M + T + S < X + G + I Expanding

economy as injections > leakages3. M + T + S > X + G + I Contracting

economy as leakages > injections

The Leaky Bucket