There are three main classes of unemployment: cyclical, structural, and frictional. Cyclical unemployment is, unfortunately, most familiar. It occurs during an economic downturn and has been seen to be common in the banking sector in our country.
Frictional unemployment is the period when a person resigns from his or her current job before getting another one – this is also politely referred to as ‘between jobs’.
Structural unemployment happens when there is a paradigm shift in the skills needed in the workplace and it causes a category of people to become irrelevant.
This article will cover these main types of unemployment and show you how to stay on top of such a situation.
As mentioned earlier, cyclical unemployment has been seen in the Nigerian labor market on many occasions, especially in the banking sector.
Top banks in Nigeria have been known to lay off thousands of staff at the same time. This has left a lot of people hanging out to dry.
Cyclical unemployment is usually always caused by a number of things, but majorly an economic downturn. Other causes include cash flow within a company that can force a company to sell and be acquired by another company, or downsizes; and hereby laying off excess load.
HOW TO SURVIVE
It is very good to follow a career path and have a job.
However, the best position anyone can be in life is to have options. Create options for yourself. Be it a side gig, or skills that can get you another employment and get you back on your feet in the shortest possible time.
Structural unemployment exists when there is a shift in the economy and then this shift causes a disparity between needed skills and the skills possessed by the labor force.
This type of unemployment is most common during paradigm shifts. For example, the shift or move from analog processes to digital processes has pushed many professions out of business.
Autor et al. (2003), computers have displaced workers in a wide range of routine work, including many clerking and manufacturing jobs — work that is typically concentrated at the middle of the income distribution.
Accompanied with employment growth both at the top and bottom of the skill and income distribution, the automation of routine work has contributed to a hollowing-out of labour markets across the industrial world (Goos et al. 2009).
Many third world countries will face structural unemployment in this current era of the digital revolution.
An example of this is the industry’s replacement of machinery workers with robots. Professions like Typing, Cartography, and routine based profession has been made redundant by more computerized approach and automation.
Workers now need to learn how to manage the robots that replaced them. Those that don’t learn need retraining for other jobs or face long-term structural unemployment.
HOW TO SURVIVE THIS
Keep growing and learning. Keep yourself up to date with new technologies. For example, it is estimated that in this age of seamless translation from one language to another aided by technology, the future will not be about who understands human languages. It will be about who understands computer languages.
Frictional unemployment occurs when workers resign from or leave their current jobs without having new ones.
This can happen for many reasons, varying from individual to individual or scenario to scenario.
The reason could be a miscalculation, a risk, a naïve move, not fully ascertaining the new contract, poor workplace culture or people, or they’ve saved up enough money to enable them to seek a new job.
Frictional unemployment also occurs when students are looking for that first job or when mothers are returning to the workforce. It also happens when workers are fired or, in some cases, laid off due to business-specific reasons, such as a branch or business location closure.
Frictional unemployment is short-term and a natural part of the career journey. As a matter of fact, frictional unemployment is good for any economy, as it allows workers to move between, jobs and to jobs where they can be more productive.
HOW TO SURVIVE THIS
What to do when you’re between jobs plays an important role in this picture. Make use of your unemployment phase productively. Increasing your productivity level by learning and acquiring new skills, also, being mentally and emotionally balanced will help you thrive and manage this phase well, and even get the best of it.
Are you a Professional? Join this conversation and add the other types of unemployment you know. Also, share how they affect the economy and how to survive it.