General Grounds of Unemployment

There are economic conditions in the country that could become general causes for unemployment. Although several business events and policies were created to protect both employers and employees, there are instances when such measures lead to unpleasant figures in the employment state of a nation.

One such measure is the actions made by labor unions. These are groups of workers who come jointly to strongly appeal to company management of their respective employers for an increase in wages and other benefits. Labor unions chiefly force organizations to pay their workers higher than what they are presently receiving. Due to the minimum wage laws imposed in the country, it is natural for employees to seek increase in salaries annually especially when the economy is in crisis. This is alright when the organization is constantly getting huge profits from their business. However, when a company is fairly performing, it may not be able to provide the demands of their workers. This is the reason why some organizations opt to layoff some employees in order to sustain the needs of the more effective employees as well as to save on overhead costs.

Raising minimum wage laws on the other hand will still cause unemployment on some instances. When rank and file employees’ minimum wages according to law is increased, employers will also be forced to increase the minimum wages of higher position employees. This scenario has a similar effect with that of actions made by labor unions. Every time an organization is forced to increase expenditures on salaries and benefits they will also have to take measures to recuperate money spent by removing some employees and discontinuing new hires for the firm.

Another common business method observed in the corporate world is efficiency wages. This is the method done by organizations when they desire to give their employees beyond the equilibrium wages. This is a good measure of rewarding loyal employees. However, when it is done beyond the limits of the organization, more people may be applying for jobs than what is available. If this is widespread in the society then unemployment rate may go up due to workers applying only to organizations that offer the highest salaries.