Home Macroeconomics Structural Unemployment and Its Effects

Structural Unemployment and Its Effects

by Jackson B

Structural Unemployment is a type of involuntary unemployment caused due to a mismatch between the present skills of workers in a certain industry, and the skill requirements of employers. Structural Unemployment is commonly caused by new technological advances which make some worker’s skills obsolete.

Employment in industries like construction and engineering, is also considered to be a form of structural unemployment. The basic reason for this is the fact that construction and engineering are considered as industries which require a lot of skill. In such industries people who are trained in their field are very rarely hired on full time basis.

Most of the structural unemployment in the construction industry can be attributed to the reduction of the number of skilled workers over the past couple of decades. This is due to various reasons such as demarcations of work in construction as well as a change in the nature of construction itself.

In construction there are two major categories of workers: those who are trained and those who are not trained. These categories are called on-the-job trainees and those who are not trainees. On-the-job trainees are considered to be structural unemployment as they cannot get employed as a permanent employee because there is an increased competition in such areas.

If we look at it from the point of view of a worker, the question is “who is in need of training or retraining?” The answer is, most of the people as it has been estimated that approximately 85% of all construction workers in the United States of America are not trained.

This type of structural unemployment can be termed as unemployment of people who are not trained to perform a particular job. This is also considered structural unemployment since most of them are not capable of performing tasks required of them by their employers. This is one of the main reasons which makes these people unemployed.

Due to the reduced demand of people, there has been an increase in the supply of labor especially if you look at the present scenario where many countries have launched new job creation schemes. Some of these schemes are called “jobs for young people” where people in this category are given a chance to work and get trained in order to get a better paying job.

However this is not an effective solution as structural unemployment cannot be eliminated by the introduction of jobs for young people and this only works for a certain period of time. At this stage when there is no job, they would have to go back to their home state looking for another job in which they will find it difficult to find one.

It has been observed that there are more than three quarters of workers in this category of structural unemployment. It is the result of the reduction in the number of skilled workers in a country and the increasing supply of unskilled workers, which leads to the decrease in their skills.

The best way to tackle structural unemployment is to increase the supply of skilled workers, which will help in eliminating structural unemployment. In most cases this does not happen due to lack of money but mainly due to lack of awareness on the part of employers on the fact that the demand for skilled workers is going up.

To increase the supply of skilled workers is not a problem as many employment agencies have come forward to help in such a scenario. As a result of this increase in demand, many employment agencies have come into existence and offer services at affordable rates. to meet the needs of the construction industry.

Such agencies also advertise on billboards and other mediums to attract more people to their services. They offer job vacancies and offer help with jobs which are classified under the heading of “skilled workers” and then ask for salary quotes.