How Unemployment Affects the Economic Conditions of a Country

When unemployment rates go up, the government will be challenged as it becomes a manifestation that it has fell short in ensuring that its citizens have stable jobs that will provide stable incomes for their households. People can become anxious and confused every time unemployment rates ho higher than normal. A person who has lost his job due to a general downturn in business among many industries will not only suffer the effects of unemployment. Even a person who is still keeping a job can be threatened with unpleasant conditions in the economy, fearing that at any point in time he is not immune to unemployment.

The government on the one hand will also suffer from the effects of increasing unemployment rates. Every time a worker is out of a job due to reasons not of his own fault, he becomes eligible to file for unemployment insurance claims to help temporarily support his financial needs while he is out of stable income. The government will have to pay for the unemployment benefits. Although this is a common measurement to help ensure that unemployed workers will not have a hard time to make both ends meet, a sudden increase in unemployment insurance (UI) filings can affect the financial security of the government. The longer appropriate jobs are unavailable for jobseekers, the more the government will need to pay and the longer as well it will have to pay for UI.

It is naturally common to analyze unemployment in how it affects a household. When unemployment rates go up, most households will be forced to slow down on expenses. To save on expenditures, households will take measures to live within their means while their breadwinners are still looking for a job. This will also affect the business of retailers because when consumers save, their income will also go down. The “needs” are given more focus than the “wants”.

Recession will then occur when unemployment along with other economic conditions repeatedly reduces the growth domestic product of the country. Of course, when a person is unemployed, then he does not have enough buying power to consume more than enough basic goods and services available in the market because he does not have more than enough money to shell out.