Some businesses will benefit as consumers switch spending from higher priced goods to cheaper substitutes e.g. Aldi, Domino's Pizza
It should be easier to fill job vacancies as the pool of available labour increases
Wages may be static or even decrease meaning lower costs so higher profits
1 of 5
Rising unemployment
Disadvantages
Fewer people in work may mean less demand for goods and services and a fall in profitability
Businesses selling income elastic goods and services may see a bigger drop in sales as rising unemployment means less income for many people, so they will have less disposable income
2 of 5
Falling unemployment
Advantages
More people in work should mean greater demand for businesses and increased sales and profitability
Businesses selling income elastic goods and services such as exotic holidays and designer goods are likely to benefit as falling unemployment means more income for many people
3 of 5
Falling unemployment
Disadvantages
Sellers of cheaper substitutes may see sales fall as spending is switched back to higher priced goods
It may be harder to recruit workers as the pool of available labour shrinks
There is likely to be upward pressure on wages and other employment expenses meaning high costs
4 of 5
Costs to the economy
Can be seen as an opportunity cost. The alternative is employment, whcih would contribute to our GDP. Unemployment represents a loss of potential output, growth and income
Benefits and financial aid unemployed people receive is a direct cost to the economy. It could be seen a an opportunity cost, because this money could have been used elsewhere, such in health or in education
Strain on our finances becuase the government is spending money on benefits and receiving less tax revenue. Unemployed don't pay direct tax (income tax) and because they are often on reduced incomes, they don't pay as much indirect tex (VAT)
Areas of high unemployment can sometimes lead to socail problems in terms of housing, education, health issues, crime and family problems. These social costs can lead to the need for increased government intervention and spending
It can exert a high personal toll on the individual in terms of depression and health problems
The long term unemployed often need greater help in finding work again, maybe retraining. Even is they have skills, they may lose their work habit and become discouraged
Comments
No comments have yet been made