Economic Conditions that Cause Unemployment

A country that is facing reducing figures in its growth domestic product or GDP will immediately experience unpleasant economic conditions such as unemployment. Increasing unemployment rate seen in consecutive quarters will become a factor as well once the country experiences recession. There are situations which will result to unemployment. The following are some of the conditions in the economy that causes unemployment.

Many companies today, in their effort to save on wage costs, trim down employment to make way for the use of machineries, equipment, and computers to increase production in a little time. For example, a company that previously has thousands of employees will only have to employ close to a hundred who have the skills and expertise in operating machines and computers. Lesser salary expenses and a little more on electricity will give business sectors higher earnings as they do not have to pay a lot for employee salary, medical benefits, life insurance, and other forms of compensation.

Population can also become a factor for unemployment. For example, if more business sectors will provide a low supply of new jobs while more unemployed workers or new graduates continue to search for jobs, then the unemployment rate will also increase. Countries with large populations but low availability of jobs normally have very high unemployment rates.

As more US firms desire to save on wage costs, employment of workers from outside the country has become rampant. A huge availability of workers especially for English speaking countries in Asia has allowed many US firms to pay for services made by Asian workers. For example, over the course of the last decade, numerous US firms have placed their headquarters in the Philippines where they employ English, Chinese, and Spanish speaking employees to become customer service representatives for their clients all over the world who can make business transactions by phone. Payment for wages is generally lower in the Asian region versus paying in the West.