Unemployment has always been a problem in our society. The current unemployment rate in Ontario is approximately six percent. This percentage does not usually fluctuate very much, unless there is some dramatic incident that affects the whole economy, like inflation for example. There are numerous causes of unemployment that economists around the world have came up with. However, I will describe the most important ones that are relevant to Canada. The biggest reason for unemployment, not just Canada, but also worldwide, is frictional unemployment.
Many people are always to be found in the process of moving from one job to another in order to improve their salary. And frictional unemployment is the delay in movement between jobs. It also applies to young people trying to find their first time job, language disabilities and lack of skills, including literacy. Frictional employment of this kind increases every year. The effects of this kind of unemployment is that there are more and more young job seekers out there, while the average level of formal education and job expectations of these new entrants to the labour force is very high.
But the most important effect of all is the reduction in the rate of growth of new job opportunities. Frictional unemployment can only be reduced by better career counseling, guiding school leavers into areas which have great number of jobs, by offering subsidies to employers, and by breaking down artificial barriers to certain trades and professions. The second cause of why there is unemployment is due to variations in climate. This type of unemployment is called season unemployment. Industries like farming, lumbering, fishing construction, and port operations are examples of the victims.
Seasonal unemployment is popular in Canada because we encounter snow in most part of the country, therefore it has a great effect on the well-being of the economy. To reduce this, many municipalities undertake winter-works projects and industries that provide winter employment have sometimes been given government financial assistance. Another cause of employment is that consumer demands different or better things as time goes by. Therefore, some industries grow while other decline or even disappear. There are many negative effects upon this kind of structural unemployment.
It means that new jobs are being created in some industries, while others are falling. And most workers cannot easily move from one industry to another. Even though job retraining programs offered by the government are trying to help over come this, there is a natural reluctance in a person to uproot themselves and family to seek job elsewhere. Sometimes this type of structural unemployment affects industries that are vital to the economic well being of a whole region. The last, but not least, cause of unemployment is our advanced technology taking over labour work.
Using machines instead of people is more profitable for a firm because if there is an invention of some new machinery, employing it will have a more capital-intensive method of production. One example of this introduction is of microcomputer in small business, or the use of robots for automobile production. This will likely reduce the rate of hiring. The obvious effect of this, like any other unemployment type, is aggravating local unemployment. These are some particular cause and effect situations that happen in a cyclical manner. The degree of which it affects the society plays a large part in whether or not our economy is stable.