Introduction
What is unemployment? Unemployment
is the situation when people willing and able to work are unable to find
employment, with the most common types being structural unemployment,
demand-deficient unemployment, frictional unemployment, and seasonal
unemployment. This essay explains the likely types of unemployment in Singapore that
could challenge sustainable economic growth. Unemployment in Singapore that
could affect sustainable growth is likely to be brought about by the following
major factors: changes in the underlying structure of the economy and cyclical
factors.
Body of Essay
The
first likely form of unemployment in Singapore that could challenge
sustainable growth would be structural unemployment. Structural unemployment
occurs when there is a mismatch of skills and knowledge. For instance,
structural unemployment occurs when workers in sunset industries, with
declining demand for their products, are unable to be reemployed in new, growth
industries, with increasing demand for those new and probably high-tech products,
due to a mismatch of skills, talents, and training for the new changed
production structures. Also, for example, in Singapore in the 1980s, there was a
shift from low-end production to higher-end production and this shift required workers
to have the required higher level skills. As a result of the mismatch of skills
required of workers to work in the new high-end production industries,
structural unemployment occurred. Singapore often faces structural
changes due to the dynamic changing needs of her economy, and the extent of
structural unemployment depends on the adaptability of workers to adapt to
these new needs.
The
second form of unemployment that could challenge Singapore ’s sustainable growth would
be cyclical unemployment, also known as demand-deficient unemployment. This unemployment
is linked to the business cycle, where downturns occur now and then, aggregate
demand (AD) falls, causing unemployment, and a fall in actual economic growth. Actual
economic growth can be thought of as an increase in real national income in a
given period of time. In particular, due to the small size and relative openness
of the Singapore economy, dependence
on trade makes Singapore
vulnerable to cyclical unemployment, economic recessions, and falling AD. This
leads to unemployment because there would be a fall in the general price level,
profit expectations would also fall, and producers would cut down on
employment, resulting in more unemployed workers with fewer job vacancies
available.
Falling AD of the Singapore
The
sustainable growth of the Singapore
economy can be defined as a sustained increase in the real national output or
real national income (real Y) over a period of time. Structural and
demand-deficient unemployment affect the sustainable growth of the Singapore economy as they affect the sustained
increase in Singapore ’s
national income. During periods of low economic activity and high unemployment,
there will be a fall in the consumption (C), investment (I), and net exports
(X-M) of an economy, shifting AD to the left. The fall in C is a result of the
fall in the disposable income of the workers as a result of being unemployed.
The fall in C, I and (X –M) would lead to a fall in the AD. Assuming that the
Aggregate Supply (AS) curve is unchanged, the fall in AD would translate into a
fall in real Y over the period. This fall in real Y over a period of time would
challenge Singapore ’s
sustained growth.
Conclusions
In
conclusion, structural and demand-deficient unemployment are the two main forms
of unemployment which potentially challenge the sustainable growth of the Singapore
economy, lowering the national income of the economy. There are also other
forms of unemployment such as frictional unemployment or seasonal unemployment
that would also occur in Singapore .
However, such forms of unemployment would not affect the sustainable growth of
the Singapore
economy; as such both structural and demand-deficient unemployment are by far
the biggest enemies to growth.
JC Economics Essays: Tutor's Comments - Special thanks to TJL for his kind contribution. TJL is a friend (fellow teacher) of mine I knew from National Institute of Education (NIE) days, and who later went on to become an excellent, outstanding Economics tutor at IJ after completing his PGDE. This Economics essay was written under examination conditions. In the earlier, past few posts, here on JC Economics Essays, I have given detailed comments about what was right, good, and great about the essays and gave my view, comments, and ideas. It's time for me to revert back to the older Socratic questioning style of earlier posts here on my site! TEACHER'S QUESTION: putting yourself into the shoes of an Economics tutor, and ignoring the provenance of this sample/ model /version of the answer given by a tutor - what grade would you give this Economics paper, and why? what are the good things that you can learn from this Economics paper, and what are bad things that you should not learn from this paper? also, how would you improve on this Economics paper? how else could you approach it? Do remember to ask questions, and read with a critical, yet open, constructive mind. Thanks for reading and cheers!
