Combating Unemployment Essay

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Combating Unemployment

“Of all the aspects of social misery, nothing is as heartbreaking as unemployment.” (Addams 1910)
Unemployment has long been a headache macroeconomic issue for all the governments around the world and is defined as people in working age but without job for the past four weeks according to International Labor Organization. In late 2009 the number of people unemployed or willing to work reached highest 8.2% since 1997. These increases are not start with the recession but since 2005, (Boardman 2010:105). Regarding the costs of unemployment it is not merely the problems of the unemployed themselves but also concern national output, government taxes, human resources and even social turbulence. Therefore this
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For example, lower the work hour or bargaining higher real wage. These would push up the cost for business; therefore the employers may cut the number of labors to maintain its business revenue. Moreover, nation minimum wage rate set above equilibrium wage has the same effect of union power. The major high unemployment between 80s and 90s were blamed by the conservative government in the UK (Sloman2007:422). The pervious example of unemployment was falling because the Thatcher’s government passes the legislation to curtailed union power and decided to reject of a national minimum in the late 90s in combination with the monetary policy to sustain the fall in unemployment wage (Werding2006:211). The monetary policy is about the UK government set a goal of increase inflation rate and the UK central bank simply influencing market by increasing the money supply growth to achieve that. If money supply increase then interest rate will decrease enhance more investment in the UK, eventually GDP increase and unemployment decrease. Also, as inflation increase, the money demands for foreigner market will decease enhance exchange rate decline and export of a nation increase, thus improve account of balance of payment. The rejection of minimum wage and diminish of union power enables the employers to have a lower cost of labors at a market-clearing level. That mean the firm could produce products with a cheaper cost or

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