(a) What is unemployment of labour?. (b) With an example each, explain the following types of unemployment: (i) frictional unemployment; (ii) structural une...

(a) Unemployment of labour is a situation in which people who are able and willing to work at the prevailing wage rate are unable to find paid employment.

(b) Types of unemployment:

• (i) Frictional unemployment occurs when workers are temporarily out of work while moving between jobs or searching for a first job. Example: a graduate who has left one firm and is still searching for a better job.
• (ii) Structural unemployment occurs when there is a permanent change in the structure of the economy or in technology, so that workers' skills are no longer needed. Example: typists who lost their jobs when computers replaced typewriters.
• (iii) Seasonal unemployment occurs when workers are laid off during the off-season of an activity that operates only at certain times of the year. Example: farm labourers who are idle during the dry season when there is no planting or harvesting.

(c) Four causes of unemployment:

1. Rapid population growth that produces more job seekers than the economy can absorb.
2. Low level of industrial and economic activity (few industries), so few jobs are created.
3. Use of capital-intensive (labour-saving) technology that reduces the number of workers needed.
4. Defective education system that produces graduates whose skills do not match the needs of employers.

Other valid causes include a general fall in aggregate demand (economic recession) and rural to urban migration.