Unemployment has become one of the major problems of countries all over the world. Labour market policies
are responsible for a great extend to increase or decrease the level of unemployment in a particular country. Before
we discuss labour market and unemployment, one should have a clear idea about the labour market and what
unemployment actually means. Labour market is the system of relationships between the supply of people available
for employment and the available Jobs (dest 2007 [online]). Unemployment is the measure of the number of people that are without jobs in an economy.
Analysis of Labour
In this world of competition, the labour markets have worked best in the
states of flexibility. It has been seen that in most of the developed countries of the world the labour market has
shifted towards more flexibility in terms of employment. But this is not actually possible in the underdeveloped countries.
The state of the labour market in these underdeveloped nations is rather unstable hence; greater efforts are being
carried out to stabilize rather than making it a flexible one. The labour markets in these countries are actually taking
help of the various labour market institutions to handle the problem of unemployment in their economies. The scenario
of the developing countries is an intermediate between the two. The labour market in the developing countries is actually
finding an intermediate path between the flexibility and job stability (Lange Thomas nd).
Labour Market Policies and Unemployment
Labour market policies play a great role in deciding the level of unemployment in an economy. For example,
if we look at the statistics of UK for the state of unemployment, we see that the scenario
of unemployment has improved drastically within the country (Pettinger2006). According to the statistics, the number of unemployed
people in UK in 1992 was around 3 million
while it has reduced drastically to a figure of 1 million in the year 2007. The reason behind the excellent result is the
policy of the labour market in UK.
The labour market in the UK is
much more flexible as compared to any other European country. The rules for getting employment are easy. This encourages people
to set up new business and hire people. Moreover, the impact of labour unions is very minimal in the UK labour market which has further helped in curbing the problem of unemployment.
Poor labour market policies can increase the problem of unemployment
in an economy. Sometimes the flaws in the labour market policies that are actually meant to protect the people from
the unemployment give rise to higher unemployment (fgn.unisg2007 [online]). In some of the countries in the labour
market policies, there is a clause to pay the people a minimum amount when they are in a state of unemployment. On
the other hand, they are taxed when they get a job. This is actually creating a bigger state of unemployment in the
economies. A better way out is that the labour market policy should be modified and create better avenues of to avoid
unemployment in the labour market.
Dest.gov.au (2007). Available:
www.dest.gov.au. Last accessed 25 October 2007
Available: www.fgn.unisg.ch Last accessed 25 October 2007
Falling unemployment in UK
by Richard Pettinger
Active labour market policies and Unemployment by Lange, Thomas