The impact of unemployment

One evening, while having coffee with a friend, we noticed the coffee shop was unusually empty. "Do you think this place can survive without customers?" my friend asked. This question reminded me of the Principles of Macroeconomics, a subject I was teaching that semester.

"This is an example of cyclical unemployment," I explained. "When consumers don’t spend, businesses like this coffee shop struggle to generate revenue and are forced to let employees go.

But how can people spend if they don't have jobs?" This is a crucial economic question.

Before researching into the consequences of unemployment, it is important to understand its various types.

According to noted economists, unemployment manifests in several forms.

Voluntary unemployment is where individuals are jobless not because jobs are unavailable, but because they have not found positions that meet their preferences. Another is disguised unemployment, when more people are employed than necessary, resulting in zero marginal productivity for some workers. Classical unemployment happens when wages are too low to meet workers' expectations, leading them to remain unemployed.

Understanding these types prompts critical questions: Who is responsible for unemployment? Is it the financial system, monetary policy, fiscal policy, capitalism, wars, or technology? In addition, what are the societal costs of unemployment?

Regardless of its type, the impacts and costs of unemployment are significant and cannot be ignored.

Dean (1961) highlighted the social isolation that often accompanies joblessness, describing it as a profound sense of loneliness.

Unemployed individuals may withdraw from social groups due to feelings of worthlessness and lack of close relationships. They often believe they are unnoticed and disconnected from others.

If you find yourself isolated, where would you go? What would you do? Without a job, meeting your demand for social engagement and self-worth is difficult.

Stephen Fineman explored the impact of unemployment on professionals and managers, who are typically less vulnerable to joblessness. He examined their experiences of adjustment and the emotional legacy unemployment leaves behind.

Unemployed individuals face various challenges, such as stress, strain, and failure to solve problems, but they may also experience relief from strain in the absence of job responsibilities. These experiences affect not only the individuals but also their families and friends.

Both Sinha and Pylee addressed the unemployment crisis haunting their country, noting the diverse perspectives on its severity and solutions. They pointed out that unemployment among educated youth is particularly problematic, posing significant challenges for both the government and society.

Governments at both central and state levels often concede to public demands without implementing effective solutions, sometimes exacerbating the problem by establishing more institutions.

The issue of unemployment demands serious attention from policymakers and business owners. Economic problems like these have far-reaching negative impacts on societies.

Unemployment, in all its forms, has a domino effect on both the economy and the social stuff of a community. From reduced consumer spending leading to business closures to the personal struggles of those affected, the ripple effects are extensive.

Addressing unemployment requires a multifaceted approach, incorporating effective economic policies, social support systems, and a collective effort from both the public and private sectors to create a resilient and inclusive economy.

Unemployed individuals constitute a substantial and underutilised resource within the labour market, representing potential human capital that remains untapped.

It is perplexing why capitalists and business owners often overlook this critical segment of the economy, failing to recognise the value and contributions these individuals could bring to the workforce.

One must question the reasons behind the apparent reluctance to engage with this pool of labour. Is it truly, so challenging to develop and implement strategies that create jobs and integrate these individuals into productive roles within the economy?

Mohammed Anwar Al Balushi

Academic Lecturer and Advisor

Oman College of Management and Technology