The knowledge and skills that a worker has is known as human capital. This knowledge is gained through education and experience. The better the knowledge and experience of the employee the better is the wage of the employee.
And the work done by the employee is satisfactory for the employer. The employer would have to put in less effort to teach the nature of the experienced and learned employee as compared to less skilled employee. And the training courses that would be conducted by the organization would further refine the skilled employee as compared to a less skilled employee.
Unemployment affects the whole economy, not just those unfortunate to be unemployed. The unemployed have skills and training that are not being utilized in production. National income and production could grow, if these people were gainfully working.
The number of unemployed people is a huge number and the amount of money that is being utilized to help these people is also huge which can be utilized elsewhere on a productive project, which further allows the countries economy to grow. Unemployment is also a social cost to our community as unemployment is associated with higher levels of family breakdowns, alcohol and drug abuse, and suicide.
According to Adrian Sinfield, when there is high unemployment, it can affect the society in a number of ways, such as
(1) The employed feel less secure;
(2) Workers are less willing to leave unsatisfactory jobs;
(3) Divisions in society increase;
(4) The prospect of equality of opportunity decreases.
(5) Some local areas can develop a culture of despair.
(6) Unemployment is linked to many social ills such as ill-health, premature death, attempted and actual suicide, marriage breakdown, child battering, racial conflicts and football hooliganism. Lea and Young also consider this to be one of the major reasons of the issues created in Britain in the 1980’s.
Chas Critcher, Bella Dicks and Dave Waddington in the early 1990s studied the effect of unemployment on two pit villages in Yorkshire using a questionnaire method. And from the results it was deducted that the whole community was suffering from high stress levels due to long term unemployment, and almost every family member had to cope with the consequences such as poverty etc. wives had to face male despair. All this led to the increase in the crimes. To fulfill the basic needs the individuals were more prone to committing crimes.
So to sum it up, all the disasters that can be caused by unemployment can all be overcome if a country focuses on making sound and effective labor policies and also makes sure that these measures are carried out and implemented.
The stronger the labor policies are the less would be the rate of unemployment. Focusing on the human capital is also a means of improving the level of the skilled workers. And once a person has attained a job, fringe benefits given to the employees motivate them to work even harder and with honesty.
So it would not be wrong if it is said that if an employee is satisfied with his job and his social status, he/she would have a sound mind which would definitely work more effectively and be more productive and innovative. And all this would definitely help the economy of a country grow and if the economy is strong the country flourishes even better.
That is the reason why many countries have learnt their lesson from the past and now are making many labor market policies and making sure the implementation of these policies to step towards a better tomorrow.
John A. Bishop, Andrew Grodner, Haiyong Liu, on February 9, 2006, retrieved on June 2009 from <http://unpan1.un.org/intradoc/groups/public/documents/APCITY/UNPAN023533.pdfs>
Marcello Estevão1, IMF Working Paper, 2003, retrieved on June 2009 from <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=481182>
Bernstein, Jared, and Ellen Houston. 2000. Crime and Work, retrieves from <www.epi.org/…/2000/080200/snapchart080200.gif >