Structural unemployment: causes, difference from frictional unemployment

The type of unemployment caused by the decline of certain types of industries and changes in production processes is called structural. Its main reasons are two: a change in the structure of demand for various products, as well as changes in the sectoral structure of the economy. Demand for products is constantly changing, while in one case it increases, in the second case there is a sharp drop. This leads to the fact that employment is reduced, workers have to be fired. Structural unemployment can also be caused by changes in the industrial structure of production. Over time, there is a disappearance of once important and necessary industries, for example, such as the production of black and white TVs or locomotives. They are replaced by more modern ones - the production of computer equipment, mobile phones, LCD TVs, etc. In this connection, the demand for professions in the economy is changing. For example, such professions as coachman, glassblower and lantern have disappeared, and instead of them there appeared the professions of a designer, programmer, marketer, etc. Thus, structural unemployment indicates that there is a discrepancy between the structure of the workforce and the structure of jobs. Simply put, those people who have a profession and the level of qualifications can be dismissed, and only because they do not meet the modern requirements of the industry structure.

Structural unemployment unites those people who lost their jobs due to a change in the structure of demand for various industrial products. When there is a rise in the development of a particular industry, the demand for its products sharply increases, and, therefore, there is a need to expand the staff. When the demand for industrial products falls, production has to be reduced, and workers are dismissed. The level of structural unemployment is calculated as the ratio of the number of all structural unemployed to the total number of the entire workforce, which is expressed as a percentage.

Structural unemployment is very often compared with frictional unemployment. And yet, both these species have significant differences from each other. Perhaps the most important difference is that frictional unemployed people have skills that they can use, but structural unemployed people will not be able to get a job without prior retraining, as the skills that they already have are not in demand. Both of these types of unemployment are related chiefly - the search for work, only this search has its duration. Structural unemployment can last a very long time, so it is simply impossible to find work in modern industries without the same retraining and retraining. In the case of frictional unemployed people, they can find a job much faster, often it takes only 2-3 days. At the same time, both types of unemployment are a natural and inevitable phenomenon, even in the most highly developed countries. And this is due to all the same structure of demand and sectoral structure, which is characterized by constant variability, the greatest attention to which is provided by scientific and technological progress. In this regard, the development of the economy will then fall, then rise, thereby provoking the preservation of structural unemployment. There is an opinion that any unemployment is an indispensable phenomenon for the normal functioning of the economy. With this statement you can argue, because the very concept of unemployment can not be completely positive, especially if its indicators increase dramatically. High structural unemployment indicates violations in the management and organization of labor.