The working age population of a country can be subdivided into two categories: the employed and the unemployed. In this article we discuss some of the events that lead to the various categories of unemployment. A snapshot of Fiji’s unemployment history is also given.
An unemployed person is one who does not have a job but is actively seeking one. There are various reasons why a person is unemployed. These reasons can be categorised by one of the five types of unemployment that exist in an economy during a particular time.
The first type of unemployment refers to cyclical unemployment. Cyclical unemployment occurs when an economy is in recession, that is, when there is a decline in total production and demand in an economy. During this time, employers may need fewer employees to meet the lower levels of demand. In a few extreme cases firms may even close down as they would find it extremely difficult to sustain a profitable business operation. As a result, several workers may be laid off. However, when the economy strengthens – the demand for goods and services returns. Employers, therefore, would hire more workers to meet the new higher levels of consumer demand. Naturally, the number of people employed increases during periods of healthy economic growth.