What causes Unemployment? Life Orientation Answers: First of all, Unemployment is caused by various reasons that come from both the demand side, or employer, and the supply side, or the worker. Demand-side reductions may be caused by high interest rates, global recession, and financial crisis. From the supply side, frictional unemployment and structural employment play a great role.
What causes Unemployment in (Life Orientation)
If you were asked, What causes Unemployment? (South African CAPS Life Orientation subject), you should list the following reasons (for exams, tests, assignments, and tasks)
- When jobs close down, people get retrenched.
- Companies try to save costs by hiring fewer people, so people are redundant.
- Factories close down because people don’t buy certain products any more.
- Poor market-related skills- people do not have skills they need for market to find job or there are jobs but not the people with the right skills to do them
- Corruption, which leads to ‘jobs for friends’ at overly high salaries and takes away jobs from the poor or better qualified
- Difficult for first-time or new entrants to enter labour market; people with experience are preferred
- Too many people have the same qualifications and too few posts.
- Buyers look for cheap imports and local people lose jobs as factories close down.
- When there are many unemployed people, fewer goods are produced and fewer services are provided.
- Investors become scared to invest their money because they may lose it, as not enough people will buy their goods or use their services
- In difficult economic conditions in the world or recession there will be less money available to spend on luxuries such as holidays, travel, hotel accommodation and eating out in restaurants. There will be less money to shop for luxury goods such as gifts. So hotels, restaurants and gift shops may go out of business. This leads to further unemployment, because the people, who work there, will then also be without work.
- Graduates’ beliefs in how much they are worth in the job market may lead them to ignore lower- paying jobs, which may be the only jobs available
- High costs of employment, so firms hire fewer people who do more work
- Jobseekers become discouraged and give up trying
- Lack of job search skills and information
- Mechanisation and computers reduce the number of people needed for jobs
- Higher demand than supply; meaning there are more job applicants than jobs available
Specific reasons for youth unemployment
There are specific reasons for youth unemployment. The reasons include:
- Businesses prefer employees who already have skills and experience to inexperienced and unskilled youth.
- Employers do not regard schooling as an accurate measure of abilities. Low pass marks for NSC are not acceptable in a competitive workplace.
- Expectations of youth may not match reality. Some youth would rather not work than do a job thought to be below their hopes.
- Lack of businesses that are willing to do on-the-job training
- Lack of entrepreneurial skills
- Lack of knowledge on how to apply for job or study, study loans and learnerships
- Lack of networking skills; not knowing whom to contact
- The youth do not have enough information about the role of FET colleges and their courses that lead to jobs.
- Poverty, which leads to lack of funds for further qualifications, and lack of money to pay for transport to job interviews, CV printing, airtime and online application access.
- Some young people make high wage demands at entry level, which workplaces are not willing to agree to.
- Some youth give up, and stop looking for jobs.
- There are too many recent university graduates with qualifications that do not match market needs.
- There are too few universities to accommodate all the applicants.
The effect or impact of unemployment:
- A job provides satisfaction, support and hope and fulfilment. Unemployment affects the unemployed not only financially, but also personally and socially.
- You will lose self esteem, self-respect and motivation. We have a loss of our sense of purpose in life
- Conflict in families
- Divorce or abuse of the unemployed person
- We feel we are losing control over our life
- Stress and uncertainty and depression
- Boredom and lack of motivation
- Increase of debt. Drug, tobacco and alcohol abuse
- Increased violence and abuse. In families where there are money problems, the chances of domestic violence and abuse are increased
- Relationships will be affected.
- Can lead to crime and social instability
- Causes poverty
- Less taxable income for government and less money to spend on education, hospitals, police and road.
- Hunger and Homelessness
- Lack of education and training
- Human trafficking
- HIV and Aids
- Child abuse
- Exclusion and loneliness