Economics

Economics

Spain exhibits one of the highest unemployment figures in the world. This is contradictory as it is one of the highly industrialized nations in the world and ranked as a developed nation. Current statistics show that Spain is churning out more than 0.2 million Spanish citizens out on a weekly basis. The number of unemployed persons in Spain has been steadily doubling for the last fiscal year. This makes the country to have the same number of unemployed personnel as France and Italy combined, with the rates of unemployment reaching highs that were last evidenced in 1993.

Currently, official statistics from the government of Spain indicate that about a fifth of the country’s total population is unemployed, which makes the figures of unemployed Spaniards to be close to 4.6 million. Previous figures from the last fiscal report indicated that the percentage of unemployed people in Spain was 19 percent and the actual figure was that 4.6 million people were actually jobless. The first quarter of the year usually presents very high unemployment figures, as there are low labor-intensive activities that are inclusive of construction, agriculture, and tourism.

Spain usually exhibits Demand-deficient or Cyclical unemployment. This kind of unemployment is characterized by the presence of too many willing and able potential employees than the available jobs. Keynesian economists believe that this type of unemployment usually occurs when there is disequilibrium in the economy. The term cyclical refers to the fact that it varies with the trade cycle. In Spain’s case, it is highest during the first quarter. During the second, third and fourth quarters, Spain’s economy is usually booming resulting to a rise in the number of available jobs. This means that many of the Spaniards are able to get employment opportunities available at the industries. This has the effect of lowering Demand-deficient unemployment. When the economy slows down, usually during the first quarter, the Demand-deficient unemployment reaches all time highs.

Spain could have the pleasure of implementing a couple of policies to reduce the high unemployment. They include:

  • Boost aggregate demand: The government implementing policies that could reduce inflation could realize this. This could include reducing taxes and increasing spending (Tudela, 2010).
  • Reduce the interest rates and let go of the Euro: As radical as it seems, the UK is practicing this and it gives it the freedom to reduce interest rates in accordance to the needs of its own economy rather than the needs of the EU. However, this action has the effect of causing exchange rate fluctuations and transaction costs (William & Scot, 2002).
  •  Supply side Policies: The Supply side Policies that the government may employ includes making it easier to hire workers. This may require the EU to alter the law governing employment. The government could also spend more in training and educating the youth. However, the results could take time to manifest and it is not a guaranteed way to reduce unemployment. The government could also offer subsidies on jobs. This means that could for example finance for the construction of new houses in an effort to boost employment (Cubbin, 2002).

Records from the government show that in the past 27 weeks, 5.4 million people had been deemed unemployed. These figures had soared drastically from the past government data that showed that only 0.5 million people were deemed jobless. The current figures show that 35.6% of America’s population is currently unemployed. Also from the records, the 8.5 million people had believed they had permanently lost their jobs, which was a rise of 0.4 million from the previous records that showed that 8.1 million people deemed themselves to have permanently lost their jobs.

The US economy is being plagued by structural unemployment. Structural unemployment occurs when the labor market is unable to absorb all the willing employees as they lack the necessary skills to perform the available jobs. This is mainly due to changes in the structure of the industry. Overtime, the economy of a nation does change resulting into a change in the type of industries. Possible causes of this could be the technological advancements, which render older ones to be obsolete. The tastes and preferences of the population could also change due to changes in fashion and times thereby rendering some commodities out of demand. The US economy has firms and investors who were once major employers in the past but currently they either have been edged out completely or are fizzling out. As an example, the recent economic recession has adversely affected the property market in the US. Most of the Americans have invested heavily in property and homes. The collapse of the market has the ripple effect in other industrial and economic sectors such as manufacturing and finance. This has consequently rendered many Americans to be out of business and thus jobless.

The US economy has been drastically affected by structural unemployment. However, several measures could be put in place to reduce structural unemployment. This includes:

  • Industry reform: The government can encourage research and innovation in the concerned industries. This can give the industries the dynamism that is reflective of the market and make them remain profitable for a long time. These could also create more jobs and help alleviate unemployment. The results of research and innovation are not realized very quickly with time, but so does structural unemployment (Sutton, 2001).
  • Retraining of staff: The government should offer training for company staff with the help of the respective companies. This would make the workers dynamic and relevant under economic and market changes. Staff should keep in touch with technological advancements through part time courses and presentations (Etro, 2009).

References

Cubbin, J. (2002). Market structure and performance: the empirical research. New York, NY: Routledge.

Etro, F. (2009). Endogenous Market Structures and the Macroeconomy. New York NY: Springer.

Sutton, J. (2001). Technology and market structure: Theory and history. New York, NY: MIT Press.

Tudela, F. (2010). Trading Triads: Unlocking the Secrets of Market Structure and Trading in Any Market. Hoboken, NJ: John Wiley and Sons.

William, B. and Scot, J. (2002). Market structure and technological change. New York, NY: Routledge.

 

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