Types of Unemployment and Their Causes

Types of Unemployment and Their Causes – Indonesia is one of the countries in the world with the largest population. How could it not be, the area in Indonesia is quite large from Sabang to Merauke with abundant natural resource wealth and human resource wealth. This should be an advantage for Indonesia, but in reality it has become a challenge which until now has not been properly resolved.

Natural wealth cannot be exploited optimally for the prosperity of the people. Human resource issues are no less important to be scrutinized and overcome. In fact, until now there are still many people in Indonesia who are unemployed or unemployed. The high birth rate is not matched by a large number of jobs, which means that the absorption of labor does not work as it should.

The Central Statistics Agency recorded that in February 2021 the unemployment rate was 6.26%. It is predicted that the unemployment rate will increase due to the impact of the Covid-19 pandemic in 2020-2021, namely 1.62 million people. This article will further discuss the definition of unemployment and its causes.

Definition of Unemployment

What is meant by unemployment? Unemployment is a person belonging to the labor force (ages between 15-64 years) who are not working or looking for work. If explained more specifically, the definition of unemployment is not only limited to not working or looking for work, but is even more complex. Unemployment can mean people who have found a job but have not yet started working or people who really don’t have a job because they feel they can’t get one.

The problem of unemployment in Indonesia is a serious issue that is a shared responsibility, not just the responsibility of the government. The high population in Indonesia is not proportional to the number of existing jobs so that those who are not absorbed into these jobs will become unemployed. In this article, we will not only discuss the definition of unemployment and its causes, but we will also learn about the types, impacts, and factors that cause unemployment, especially in Indonesia.

Types of Unemployment

After knowing the definition of unemployment, then what are the types of unemployment? Unemployment can be divided into two types, namely based on causes and based on its characteristics. The unemployment based on the cause is divided into 4.

1. Frictional Unemployment

The definition of frictional unemployment is a situation in which an area has an unemployment rate of 2 or 3 percent of the total workforce. Frictional unemployment is also known as normal unemployment, because the unemployed are not unable to get a job, but are looking for a job that is considered better than before.

A more comfortable job offer, a bigger salary, and an offer of benefits for work are the considerations for workers choosing to resign. Usually this happens when they get an offer to work at a bigger company with a bigger salary offer.

Another thing to consider may be because the new job will later be more in line with their abilities and expertise. Workers who choose to resign and look for a better job will have the status of frictional unemployment or normal unemployment.

2. Cyclical Unemployment

In the industrial world, the demand for production is not always high. There are times when consumer purchasing power decreases and causes the production of goods or services to also decrease. Prices will also decrease due to lack of enthusiasts. Circumstances like this encourage companies to increase worker efficiency. This is because it is impossible to maintain a number of employees that is not proportional to consumer demand for goods or services.

Losses are experienced continuously while they also have to pay employees. As a result, the company is trying to reduce the number of employees to minimize these losses. Workers or employees who are affected by this reduction are called cyclical unemployment.

3. Structural Unemployment

Structural unemployment is a condition where the emergence of unemployment due to changes in the structure of economic activity at a time. This occurs when the economic downturn in an industry or company is caused by high business competition.

This has led to the exclusion of several entrepreneurs, the exorbitantly high expenses, the losses suffered by companies due to the decline in export activities, and the emergence of competing goods from other parties. This causes the business to be reduced or possibly closed. As a result, workers will be unemployed. This is what is known as structural unemployment.

4. Technological unemployment

The use of technology continues to grow from time to time. Jobs that were previously carried out by humans are slowly being replaced by technological sophistication called robots.

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For example, in the canned food industry, which previously utilized human power, today it maximizes robot capabilities to make them more efficient and more effective because they can work faster. Such a situation triggers the emergence of unemployment because human labor has been replaced by technology. This condition is known as technological unemployment.

Types of Unemployment Based on Their Characteristics

Types of unemployment based on its characteristics can be divided into 4, namely.

1. Underemployment

Underemployment is a person who actually has a job, but working hours are different from workers in general. They only work based on requests from their employers for irregular periods, maybe one to two times a week or less than 7 to 8 hours per day. People who work part time or freelance are also known as underemployed.

2. Open Unemployment

Open unemployment is defined as a situation where the number of job availability is lower than the number of workers. Open unemployment will actually not have a job due to a decline in economic activity at one time, a reduction in the number of workers due to technological sophistication, as well as industrial setbacks or decline.

3. Hidden Unemployment

Hidden unemployment is a condition where the number of workers is more than what is needed. The excess number of workers causes activities to not run evenly, some are working and some are not working.

For example, the number of cafe maids is too much compared to actual needs. Some of them will work to serve customers, but many of them will be unemployed because they are already serving customers. This is known as hidden unemployment. They actually have a job, but do not work as it should be done.

Another example that can be found is in rural communities. The majority work as farmers with quite a lot of numbers. The number of fields that must be worked on by these farmers is not too large so that if done in large numbers not all of them will get the same share of the work.

4. Seasonal Unemployment

Usually people will work according to certain times. If they are not entering the working period, they will be unemployed. This is known as seasonal unemployment. This type of unemployment can be found in those who work in agriculture or fishing. When entering the harvest season, farmers will work full time to get large amounts of crops.

However, if one day their agricultural output is not optimal or there is a crop failure it will make them unemployed. The same goes for those who work as fishermen. When the season is not good for going to sea, fishermen cannot work so they have to be unemployed for some time and wait until the right time to go to sea. These things cause them to become seasonal unemployed.

Causes of High Unemployment Rate

After knowing the definition of unemployment and its causes and types of unemployment, then what are the causes of unemployment? The high unemployment rate in Indonesia is caused by many things. What are the causes, see the explanation below.

1. Unbalanced number of workers with the availability of jobs

The first reason for unemployment is the imbalance between the number of workers and the availability of jobs. The high number of residents cannot all be absorbed into the jobs that are already available. Only a few people who have skills and abilities in accordance with the field of work will be absorbed. For those who cannot compete, it has an impact on the small chance of getting a job.

2. Increasingly Sophisticated Technology

The advancement of technology in a country is something to be proud of. However, it does not always have a positive impact. Technological advances trigger the replacement of the human role in work because technology will be faster than humans. If not properly anticipated, technological sophistication will lead to high unemployment in the future.

3. Insufficient Skills

For those who do not have experience in work will have difficulty when looking for work. Job providers sometimes include requirements for having work experience so that for some fresh graduates this will make it difficult for them to get a job. For those who are less skilled in the field they want, they will find it difficult to compete to be able to get the job as expected.

4. Inadequate educational qualifications

Another cause of unemployment is caused by a person’s educational qualifications that do not match the demands of the job market. Educational background is a problem with the number of unemployed. First, low access to education causes people to be less competent in the world of work, even though education is useful for building character and work competence.

The second is that job opportunities that include all kinds of majors are still limited, so those with a minority educational background will find it difficult to get a job. However, this does not rule out the possibility that the majority of one type of education also contributes to the unemployment rate due to intense competition for a limited number of jobs.

5. Poverty

Many unemployment problems are caused by low levels of welfare. The poverty rate is directly proportional to the unemployment rate. In general, unemployment comes from those who are below the poverty line. Poverty also makes it difficult for a person to get facilities that support skills that can be used in the world of work.

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6. Mass layoffs

Termination of employment or layoffs also contributed to the high unemployment rate. Especially if layoffs are carried out on a large scale, many people will lose their jobs and become unemployed. The recent case was mass layoffs due to the Covid-19 pandemic some time ago, many workers were laid off and did not get income. This indicates that mass layoffs are quite a serious matter for workers if they do not prepare themselves by looking for alternative side jobs outside of their main job.

7. Unequal Employment

The concentration of work is more concentrated in cities, making it difficult for some people to access it. The distance between where you live and where you work can be a consideration for someone to take a job in the city. Even though the lure of a higher salary, expenses for transportation are also quite draining. While there are not too many jobs in the village or village. If employment opportunities are more evenly distributed or not only concentrated in cities, the unemployment rate in rural areas will decrease.

Impact of Unemployment

After knowing the definition of unemployment and its causes, the types of unemployment, and the causes of unemployment, then what are the impacts of the emergence of the phenomenon of unemployment? There are two impacts of unemployment, namely social and economic.

1. Social Impact

It is undeniable that unemployment can have an impact on social problems in society. Psychological burden will be felt by those who do not have a job, ranging from the emergence of inequality in social status to low welfare.

Low welfare causes the emergence of social problems that trigger an increase in crime rates. For example, robbery, theft, and mugging are committed by some people due to the difficulty they find work. The shortcut chosen is to take actions that are not justified by law. If this is not handled seriously it will damage the structure of social life in the midst of society.

2. Economic Impact

The emergence of unemployment can have an impact on economic life. The impact of not having a job will reduce the level of welfare in his life and can even lower a decent standard of living. Slow economic growth causes the country to suffer losses.

Because the budget for alleviating a prosperous life for the people will be bigger. For example, the provision of assistance to the poor will be higher if the unemployment rate is also high. Besides that, people’s purchasing power will also decrease resulting in lower taxes resulting from economic activities.

Factors Emerging Unemployment

In addition to knowing the definition of unemployment and its causes, types, causes, and effects of unemployment, we also need to know the factors that trigger unemployment? Here are some of them.

1. Information

Information about employment is important in order to reduce unemployment. However, not everyone can access this information due to limitations or uneven distribution of information, making it difficult for job seekers to find out.

2. Self Integrity

It must be admitted that the government has actually participated in trying to reduce the unemployment rate. Various trainings are provided to support the abilities of job seekers, both soft skills and hard skills. But it all comes back to the job seekers to spur themselves to develop their work skills. The culture of being lazy to work or what we hear more often with the word “mager” makes it difficult for most people to find work.

3. Salary or Wages

The issue of job well-being should also be considered. Giving wages that are not appropriate causes workers to prefer to quit their jobs to get a bigger income because they cannot make ends meet. If enough jobs are available, this is not a problem. It will be a problem when there are not many jobs that provide more salaries, this can be a factor in the emergence of unemployment.

4. Education

Education is a way for a person to be able to improve his abilities so that he has more skills at work. The taller a person is, the higher the chance of being able to work. People who have a bachelor’s level of education will certainly be more needed than people who only have a lower level of education such as high school or junior high school because they are seen as having broader abilities and knowledge.

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That is the subject of discussion about the definition of unemployment and its causes, types, impacts, and what factors trigger the emergence of unemployment in Indonesia. Unemployment does not only have an impact on the social sector but also the economy. Various parties must work together hand in hand to find a common solution because unemployment is a shared responsibility. Opening jobs or entrepreneurship can be a solution to reduce the high unemployment rate in society.