1.0 Introduction

The causes of being unemployment will greatly vary according to the situation whether the person is working or not. Unemployment can be happen even the person is currently working, yet had given signal to stop working in some company for some reason. Sometimes it can be voluntary with the person’s choice to become unemployed.

2.0 Body

The causes of unemployment can be divided into two major categories which is equilibrium and disequilibrium unemployment. There are five types of unemployment in equilibrium unemployment and three types in disequilibrium unemployment.

3.0 Equilibrium Unemployment

Equilibrium Unemployment is where can be caused because of people who are economically independent or the wages are too low for thus people don’t feel the need to be employed.

3.1 The causes of Equilibrium/Natural Unemployment

3.1.1 Frictional (search) Unemployment

It occurs during people leave their jobs like resign voluntarily, made redundant and also those temporarily unemployed while they are looking for a new job. Sometimes employers may be not offering their job to the first that applied, as they will search for other candidates. This unemployment takes place when both parties do not have the perfect knowledge as they move from one job to another. It is cause of immobility factor which is geographical and occupational immobility. Geographical immobility is where labour is unable to relocate to the job and occupational immobility is where labour unable to perform their job because of lack of knowledge, skill or even experience For example the unemployed will find a better offer without accepting the first offer.

3.1.2 Structural Unemployment

It takes part when all the structure of economy changes caused by expanding industries experiencing growth when other industries are contracting and also need to reduce their demand for the labour. This unemployment takes part because of the change in the demand pattern, which is cause by a change in taste, fashion or even competition from substitutes such as produced by other domestic industries or from the imported alternatives. For example, there is no more use and fashionable to wear the furs or the decline in the coal mining industry, so then consumers’ shift to alternative source of fuel.

3.1.3 Technological Unemployment

Takes part when the technological advantages resulted in the labour saving technical progress that allow all the same level of output to be produced with lesser units of labour. It is also often caused by the structural employment during the changes of method in production. The current employee will become redundant because of technological unemployment.