top-rated free essay

Unemployment Problem

By rinakoh Jan 27, 2013 1178 Words


Spain unemployment figure had hit up to 5 million people mark in the last quarter of 2011. The National Statistic Institute measure from 4.9 million in the third quarter to 5.3 million people is jobless at the end of December. This rate rose from 21.5% in the third quarter to 22.8%, one of the highest rates in nearly 17 years. Spain has already hit one of the highest rates in the 17-nation eurozone and is expected to step back to recession. This impact hit hard on 16-24 year-olds Spanish went out of job from 45.8% to now 48.6%. Now, Spain government is trying to improve the jobs market.

Spain GDP for the last five years

|Real GDP growth |[pic] |2001 | | | |2002 | | | |2003 | | | |2004 | | | |2005 | | | |2006 | | | |2007 | | | |2008 | | | | | | | |3.6% | | | |2.7% | | | |3.1% | | | |3.3% | | | |3.6% | | | |4% | | | |3.6% | | | |0.9% | | | | | | | |2009 | | | |2010 | | | |2011 | | | |2012* | | | | | | | | | | | | | | | | | | | | | | | |-3.7% | | | |-0.1% | | | |0.7% | | | |-1.8% | | | | | | | | | | | | | | | | | | | | |

This source is from Global Finance URL:

In this chart it had shown the Real GDP of Spain from 2001 to 2012 but we are going to discuss for the last five years from 2008 and till now 2012. What is GDP? In ( Parkin,2012 ), GDP or gross domestic product, is the market value of the final goods and services produced within a country in a given period. In 2008, Spain Real GDP was about 0.9% it seem like after 2007 it start to decline. In 2009, it had decline to negative 3.7% compare within these five years 2009 it will be the lowest GDP growth year. In 2010, although the GDP growth had increase 3.6 % but it stills a negative 1%. In 2011, the growth is increasing slowly at about 7% but in 2012 it had fall back to negative 1.8% and it rank second lowest growth.

Types of unemployment

In unemployment, it can classify into three types which are frictional unemployment, structural unemployment and lastly cyclical unemployment. Frictional unemployment is unemployment that arises from normal labour market turnover. The creation and destruction of jobs requires that unemployed workers search for new jobs. Increase in the number of people entering and re-entering the labour force and increase in unemployment benefits raise frictional unemployment. Frictional unemployment is a permanent and healthy phenomenon of a growing economy. Structural unemployment in unemployment created by changes in technology and foreign competition that change the skills needed to perform jobs or the locations of jobs. Structural unemployment lasts longer than frictional unemployment. Cyclical unemployment is the higher than normal. Unemployment at a business cycle trough and lower than normal unemployment at a business cycle peak. A worker lay off because the economy is in a recession and is then rehired when the expansion begins experiences cycle unemployment.

Youth labour market indicators in Spain, by age group. 2008 and 2012 (%)

|16-24 Years |2008 |2012 |Dif | |Active rate |50.9 |42.2 |-8.7 | |Employment rate |40.1 |20.3 |-19.8 | |Unemployment Rate |21.3 |52.0 |30.7 | |25 – 29 Years |2008 |2012 |Dif | |Active rate |86.1 |86.4 |0.3 | |Employment rate |76.4 |59.5 |-16.9 | |Unemployment Rate |11.3 |31.2 |19.9 | |16 – 29 Years |2008 |2012 |Dif | |Active rate |66.4 |60.7 |-5.7 | |Employment rate |56.1 |36.6 |-19.4 | |Unemployment Rate |15.6 |39.6 |24.1 |

The source is from Social Europe Journal URL:

Now, Spain is facing frictional unemployment and cyclical unemployment. From this chat above it had clearly shown that age from 16-24 year face e highest unemployment rate of 52% in 2012. That means this group of young adult either they are graduate cannot find any job or they are terminate by company due to they are young low skill and lack of experience. This group of people belong to frictional unemployment. During recession age group from 16-29 years unemployment rate had a sharp rise from 15.6% in 2008 to 39.6% in 2012, during this cycle it fluctuated a business cycle trough and lower than normal unemployment at a business cycle peak.

Impact on the society and economy of high unemployment

However, long term unemployment has been shown to lead not only financial hardship, poverty, dept, homelessness and crime but also several other often impact such as family tension and breakdown, social isolated, loss of confident and self-esteem and feeling of shame and stigma which all lead to the erosion of a healthy society. Furthermore, if young adult are consistently unemployed they may never learn marketable skill or the ones they have obtained through their education may become obsolete.

Nevertheless, the impact on the economy was also affected badly not only increase benefit payment and lost income-tax revenues. Relying on GDP growth rate to assess economic health but unemployment was so high and goods and services produce lesser and government have to spend more on the benefit and yet they can’t receive much income-tax. So government got to borrow money from banks to satisfy the needs and this will lead to deficit.

Measures used to solve unemployment problems

In conclusion, government have to solve unemployment problem by expansionary fiscal policy. Unemployment can be reduce by government spending , if government increase its spending of taxpayer money with the goal of increasing the demand of labour goods and services. This result in a temporary increase in output and temporary decrease in unemployment. When unemployment decreases, more people are able to buy goods and service, which in turn stimulates the economy and creates more jobs opportunities are created by producers and suppliers. Another way is to lower income tax on households and firms. Reducing taxes encourages producers to make more goods, invest more money, and people to work more since they retain of their earnings. If all these measures taken seriously, aggregate demand will increase and real GDP will also increase back to potential GDP. Without solving high unemployment problem the impact on society and economy will still remain the same, if this situation stay prolong the one who suffers the most are the entire citizen.

BBC News - Spain's unemployment total passes five million. (2012, January 27). BBC - Homepage. Retrieved from

Parkin, M. (2012). economics (10th ed.). united states: addison-wesley.

Rocha, F. (2012, June 4). The Economic Crisis and Youth Unemployment in Spain — Social Europe Journal. Social Europe Journal - Europe, politics, economics, globalization, political economy, and international relations. Retrieved from

Spain GDP Data & Country Report | Global Finance. (n.d.). Global Finance - The Best Banks | 192 Country Reports | GDP Data. Retrieved from

Cite This Document

Related Documents

  • Unemployment in Japan

    ...long term unemployment in Japan. According to Bloomberg, AFP on Business Times dated on 30 November 2011, it was mentioned the country faced a high unemployment rate at 4.5% in October 2011 which is higher than the 29 economists’ prediction. Our aim is to exam the causes of Japan’s long term unemployment in recent years in general and to und...

    Read More
  • Impact on Unemployment on Standard of Living

    ...If unemployment rises in a country, will its standard of living necessarily decline? Unemployment refers to the condition and extent of joblessness within an economy, and is measured in terms of the unemployment rate, which is the number of unemployed workers divided by the total civilian labor force. If unemployment rises in a country it wi...

    Read More
  • Carefully Explain Alternative Views on the Nature and Possible Causes of Unemployment and Evaluate the Effectiveness of Various Policy Measures to Combat It.

    ...that they are actively seeking a job but unable to find it. Unemployment usually occurs when there is a lack of demand for labour by firms in an economy. The most common types on unemployment are classical, structural, frictional and cyclical unemployment. The natural rate of unemployment refers to the lowest level of unemployment that can be...

    Read More
  • Inflation and Unemployment

    ...Macroeconomics help Name: Institution: Inflation is the rise in general prices of goods and services over a specific period of time. Unemployment is a state where people are able and willing to work at the ongoing market prices of labour but they are unable to secure a job. According to the Phillips curve, there is a consistent relation...

    Read More
  • unemployment problem

    ... Unemployment Problem in Australia Introduction According to the Labor government and the mainstream media, Australia has one of the lowest unemployment rates in the world. In reality, joblessness has risen to serious levels, and is worsening, in working class suburbs across Australia. Officially, the unemployment rate in Australia incre...

    Read More
  • Unemployment and Monetary Policy

    ...UNEMPLOYMENT Nowadays, some of the macroeconomics and policy makers assume that unemployment and inflation are too bad, because both of this factor able to reduce social welfare (Ruprah & Luengas, 2011). The growth and shocks in unemployment may be able to reduce of this deregulation of monetary policy that has been followed with high volum...

    Read More
  • Consequences of Unemployment on Society

    ...Research for the consequences of unemployment * Improve the current account position Less spending on imports Some products for the domestic market will be sold to the export market instead Good because it may increase AD * Hysterisis -The hysteresis effect describes a possible consequence of a country experiencing persistently h...

    Read More
  • Unemployment of Pakistan

    ...nature. Dependence on jobs to make money to buy food and shelter was the beginning of unemployment. Because it has not always been acknowledged or measured systematically, there are limited historical records on unemployment. Industrialization involves economies of scale that often prevent individuals from having the capital to create their own...

    Read More

Discover the Best Free Essays on StudyMode

Conquer writer's block once and for all.

High Quality Essays

Our library contains thousands of carefully selected free research papers and essays.

Popular Topics

No matter the topic you're researching, chances are we have it covered.