Friday, 7 October 2011

Will Technology Advancement caused higher Unemployment rate?

Over the past 10 to 30 years or so, it seem like the rate of unemployment is rising at a constant rate. how is this happen? I guess everyone knows the reason.  What is is unemployment means, according to unemployment is when Condition of a person who is able to work, is actively seeking work, but is unable to find any. Statistics on unemployment are collected and analyzed by government labor offices in most countries and are considered an important indicator of economic health.

According to Martin Ford writer of "The Lights in the Tunnel: Automation, Accelerating Technology and The Economy of the Future" stated that "in the past two decade, information technology has advance dramatically and is increasingly being employed to eliminate jobs of all types. Job automation technology, together with globalization, has been the primary force behind the stagnant wages and diminished opportunities for less educated workers we've seen recent years

Because technology is increasingly becoming an important part of our daily lives. Based on the recent research, it shows that technology always appear daily in the society (LuleĆ„ University of Technology, 2002-2003, Internet). Generally, there are three main terms which are necessary to define before discussing the issue. Unemployment is an economic condition generated by the fact that individuals actively seeking jobs remain unhired (Online Business Dictionary, 2007). Likewise, the meaning of inevitable is something that is certain to happen or cannot avoid and prevent (Oxford Advanced Learner’s Dictionary, 2000). Moreover, the change brought about by automation of the workplace, with its consequential impacts on employment such as training, skills of jobs. This is generally named technological advancement (The CCH Macquarie Dictionary of Business, 1993). In discussing whether or not unemployment is an “output” of technological advancement, it is necessary to mention both sides with reference to two countries in order to achieve judgments. In the beginning, machinize industries greatly diminish the labour force because of advancement. Nevertheless, it can be seen that the declining of workers is simply a short period effect. In addition, relatively high cost of advancing techniques generates a chain reaction such as unemployment whereas excogitating more advancement creates abundant job opportunities.

Now that we know what is the meaning of unemployment, now lets see what are the types of unemployment. according to there are basically 5 type or categories of unemployment and and each of these category of unemployment are derived from the causes of these unemployment. What are these categories of unemployment below are the definition and meaning of the 5 unemployment categories.

Frictional Unemployment
The type of unemployment caused by people move from job to job claimed the benefit in the meantime. according to investopedia, Unemployment that is always present in the economy, resulting from temporary transition made by worker and employers or from workers and employers having inconsistent and incomplete information.

Tow example of frictional unemployment. A first time job seeker may lack the resource and efficiency for finding the company that has the job that is available suitable for him or her, as a result of this person does not take other work, temporarily holding for the better job.

The other example is when a company abstains from hiring because it believes there are not enough qualified individuals available for the job, when in actuality there is.

So the quality of information available for the job seekers is crucial to the extent of the seriousness of friction unemployment. (

Structural Unemployment

Structural unemployment is the type of unemployment caused by or as a result of the decline of the industry and the inability of the former employees to move into job being created in the new industries. according to business dictionary it is no caused by lack of demand, but by changes in demands pattern or obsolescence of technology and requiring training of workers and a large investment in new capital equipment. 

For example; structural unemployment is the technological revolution. Computers may have eliminated jobs, but they also opened up new positions for those who have the skills to operate the computers. 

Seasonal Unemployment
Seasonal Unemployment is due to lack of demand during certain times of the year. For example, an agricultural worker may not be needed between the harvest and the next planting. Likewise, a restaurant in a resort town may reduce the number of wait staff after the busy season is over. Seasonal unemployment may lead some to pursue another career in the off-season or may lead others to a different place to look for jobs. (financial-dictionary).

Demand Deficiency
This occurs when there is insufficient demand in the economy to maintain a full employment, if demands falls, firm sells less and so reduce production. If they producing less, this leads to lower demand for workers. Either workers are fired or a firm cuts back on employment of new workers, In the worst case scenarios the fall in demand may be so great that  firm goes bankrupt and everyone is made redundant.

Demand deficiency unemployment is associated with the theory of J.M.Keynes who developed his general theory of money against a backdrop of the great depression.

Demand deficient unemployment may lead to a higher rate of long term unemployment. When people are made unemployment they will become de-skilled and demotivated. Therefore, they may find it more difficult to get work in the future. Therefore a period of cyclical unemployment could reduced long term productive capacity. (

Technological Unemployment
Technological Unemployment is the type of unemployment due to technical progress, this applies to a particular type of worker who's skill is made redundant because of changes in method of production, usually by substituting  machines for their service. Technical progress does not necessarily lead to rise in overall unemployment. In briefed, unemployment caused by the development of technology replace human efforts.
Does this means when the technology has advanced so rapidly, work has been simplified and processed by the intelligence of man made machine, what would become to those is lower income and academically less qualified?

In The Short Run
Basically it will just be a temporary phenomenon, wages will fall and the labor market will move back to equilibrium (

In The Long Run
Unemployment will be voluntary, voluntary as in resigned? I guess we have already reach at this level where rumor of a company/ employer direction which effect the productivity and psychology  had force certain staff (employee) to resign and seek a more secure job, even when the wages is far more lower than the wages offered by previous employer.

My personal opinion regardless of what caused of unemployment, the rate will always rise. though voluntary unemployed may occurred caused by a company's direction to modernized how a processes is executed thus replacing the current work force replaced by more technologically advance equipment, work station, machinery. I doubt in the long run it will create another job opportunity for those academically less qualified. even if the government efforts is there to improved the level of qualification in terms of academic qualification, still the motion toward a more hi-tech company will caused more highly qualified graduate to be unemployment due to the simplification of processes caused by advance technology. Should these happen a country economy will be affected caused by cautious spending from the community. business will affected in the long run directly affecting the country economic growth. Though this thought might be inaccurate, but who know what will happen to us in the long run say another 20 year  from now, by then a country's processes or most job has been taken over by computers which required less man power to operate.

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