Unemplyment; Simple; 10 points!?

Question

Unemployment is harmful. Do you afree? Give economic reasons for your answers. (6 Mark question)

GCSE Year 11

Answer 1

Unemployment is harmful to the economy because on the one hand it means someone isn't working and therefore isn't contributing to the Gross Domestic Product, and on the other, they're a net drain on public funds because they cost unemployment benefits and they cost money to care for (healthcare, etc) but they don't contribute anything back through taxes.

Unemployment is harmful to the individual because while they're out of work, they're not gaining any experience and other people are learning more than they are.  Also, since they're not earning any money, their savings are being reduced, or they're having to live off state benefits which are likely to be quite low.

A small amount of unemployment is unavoidable - the theoretical minimum unemployment is still bigger than zero for a number of reasons, such as people who are unable to work for various reasons and people who are between jobs at the moment (this is referred to as frictional unemployment) and so are temporarily unemployed.

The worst kind of unemployment is long-term unemployment where an individual has no work for a year or more.  When such a person wants to get back into a job, they make have difficulties because they have lost experience and employers are worried about why they were unemployed for so long and whether they will be able to get used to working again.

Note that there is a big difference between unemployment (where you do nothing economically productive) and self employment, where you may not be earning a salary, but you're working on one of your own projects which is either making you money at the moment, or will make you money at some point in the future.  Just because you don't work for a company doesn't make you unemployed.