Effects of Unemployment on Society and the Economy


Unemployment is one of the biggest problems of our economy. In most cases, we believe that the unemployment is a situation only in the developing and the under-developed countries, but strong traces of unemployment are also in developed countries. When we talk about unemployment, most of us fail to understand what real unemployment is. Before we see the effects of unemployment on the economy, let us see what unemployment is.


What is unemployment?

If you are under the impression that unemployment is the state where people do not go for employment, then you are just like a lot of people out there who misunderstood the term. If a person is not employed and isn’t looking for employment, then he wishes to stay unemployed so that can’t count as unemployment. Unemployment is a situation where the educated people who are looking for a prospective job and are willing to work do not get a job. That is what you call unemployment.

There are different types of unemployment. Even an employed person will fall into the unemployed category if he either under-employed or has fallen into the clutches of disguised unemployment. So what are these terms? When a person doesn’t find a suitable job, he settles for anything that comes his way. He works at a place for meager employments deserves better salary but is still earning less due to lack of employment opportunities. On the other hand, you get a job where there are already adequate people employed. So if a job requires 3 men and you go in there as the fourth guy, you are probably doing nothing. This is because that job requires only 3 men, efficiency is when that count reduces to 2 and not to 4. This is disguised unemployment.

Effects of unemployment:

  • Society can function well only if it comprises of people who are in an equal position or else they simply stop to coexist. This the first problem with unemployment. Human beings are dependent on each other to fulfill our social and economic needs, but due to this economic disparity, the society ceases to function.
  • Unemployed people will not have adequate funds to function in this economy. Though they have their demands and needs to be fulfilled, they will not be able to meet it, due to the insufficiency of funds. So demands aren’t met.
  • If you are not trying to meet your demands, it reflects that your purchasing power is probably less and it takes a toll on the economy for sure. Because if the purchasing power of every unemployed individual reduces and stops at a point, there will be no one to purchase or at least we will be left with very less number of individuals who can buy and balance the production of the nation. But that will not provide the government with the necessary income.
  • Unemployment also increases crime rates in the economy. What you need is what you call your virtue. So when need increases and your sources decrease, it results in crime where the needy take what they want.

This means unemployment, if not nipped in the bud, can ruin the whole economy and disrupt its functions.