Depressed industries and regions and methods of improvement
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Published: Mon, 5 Dec 2016
Unemployment which happen among depressed industries would falls into cyclical unemployment. This is because of depressed industries can also refer to the situation where there are many firms are facing bankruptcy and slow productivity growth due to economic slowdown and recession. There are also lower demands for services and goods which caused many firms in the industry to lay off workers and give less incentive to recruit new labors. Depressed industries clearly no longer need so many workers in order to survive in the recession period and avoid from facing bankruptcy. However, as the economy recover back from time of recession and occurred small economic growth, the depression of industry could be reduced, and begin rehiring workers. Usually, the length of time for cyclical unemployment spells is unpredictable, but this type of unemployment durations depends on how long does the business cycle takes. If wages and input prices are “sticky”, the economy may occur relatively long periods of unemployment that exists among depressed industries.
Unemployment problem in depressed industries that occur is caused by a decrease in aggregate demand. Therefore, government can try to increase the aggregate demand for money without causing inflation, by reducing interest rate, which could help to reduce the cost of borrowing and Bank Negara should allow loans taken easily than before, to encourage people to increase on their consumption spending. Besides that, government should reduce their taxes which in turn increase the availability and desirability of goods. Furthermore, investment could be increased with lower interest rates. Government should also give incentives to encourage firms on research and development activities. Research and development could help firms to increase their productivity. Finally, Malaysia net exports will also increased with the industry continuous producing goods and services.
Unemployment problem that occur among unskilled workers would refer to the structural types of unemployment. This is because, structural unemployment arises from a persistent mismatch between the jobs skills that workers needs to have to match with requirements of jobs. Therefore, due to the technological change and increasing needs of computer skills, many old workers with no computer literacy may face unemployment problem. Furthermore, structural unemployment which occurs among unskilled workers is slow and difficult to adjust between supply and demand for labor and reducing this type of unemployment may last for longer periods of time, as workers needs time to retraining and learn new skills to fulfill current job requirements. For example, unemployment rate of Malaysia is 3%, where the factors of unemployment are mostly associated with structural unemployment.
There are several strategies that government can do to reduce this type of unemployment by providing government training programs to the structurally unemployment to develop their skills which is marketable to current job needs and also incentives for those unemployed to join the training scheme. Malaysian government authority also can mitigate the problem by providing an infrastructure that offers training in these areas so that the demand for these jobs can be met. Furthermore technical colleges and institutes like polytechnic schools are also essential to ensure more Malaysian workers can have opportunity to increase their skills, which would help increases the supply of labor in skilled areas. Other than that, government can pay subsidies to firms to provide training for some displaced workers. Moreover, government can provide further schemes to reduce the number of long term unemployed by community service or working trials, and inducing prospective old workers to continue or resume their education would help to develop their skills and adapt themselves with the rapid technological changes in the industry.
Depressed geographical regions.
Unemployment problem that often occur among who living in the depressed geographical regions usually defined as geographical unemployment. This type of unemployment usually caused by the difficulty to move from an area that is low in job demand which also known as depressed geographical regions, to areas with high demand for labor. Geographical unemployment usually falls under the frictional unemployment due to the immobility of labor to move from one place to another. The lengths of time for this type of unemployment were usually temporary and short term. Once the government develop the underdeveloped region with more business center and factories as well as enable the mobility of people to move easily can help to reduce this type of unemployment problem. Normally, this type of unemployment occurred in the underdeveloped countries like Nigeria. If it is in Malaysia, usually depressed geographical regions occurs in rural areas, where the areas that people hardly to find a job.
There are several policies to reduce geographical unemployment which include regional incentives. Government can implement regional policy to increase the incentives for new businesses to locate in areas of high unemployment with large number of working age population and labor force. Therefore, it will help to reduce regional variations in unemployment caused by geographical mobility. Besides that, government should reduce geographical immobility by reducing barriers towards free movement of workers. With that, Malaysian government should increase or improve the efficiency of the public transport like LRT or KTM Commuter line to link one city to another. Thus, people from rural areas can move to urban areas to look for job easily with the efficiency of public transport.
Unemployment problems that often occur among teenagers were categorized as frictional unemployment. This is because, teenager is the people who often quit their jobs to relocate or to seek out better employment, this group of people are usually prepared for their brief periods of unemployment, and they do not stay unemployed for very long as the economy and the job market are stable. This type of unemployment have some benefits for both employee and employer as well as, it given chances for people to find the jobs that most suited their skills and knowledge, while it also expose employer to choose the best talent in the company. The frictional unemployment rate can fluctuate, depending on the time of year and economic circumstances. This type of unemployment usually last for short period of time and temporary, for example during the time after general examinations like SPM or STPM ended, there will be unemployment occurs where many students go in and out from the job to choose jobs that provide them higher wages.
There are several strategies that government can used to reduce frictional unemployment among teenagers as well as students, is by establishing a computerized national job centers like Jobstreet.com or JobsDB.com that would provide jobseekers and prospective employers with better information regarding the job scope and responsibilities as well as company details. Other than that, government can provide incentives to all companies to collaborate in organizing their booth for job fair event to look for potential employees. Job fair events would encourage teenagers walk in and exposed themselves to more firms and jobs that best suited them. Besides that, government can also implement apprenticeship programs in education institutions like universities and colleges in order to give them early exposure and hands on experience about jobs they will be doing after they graduated from school. Furthermore, government can also increase the incentive to search for suitable jobs by reducing unemployment benefits and lower taxes on wages could help in making more vacancies available and increase incentives for unemployed teenagers to search for jobs.
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