Structural Unemployment

Posted in Human Resource Terms, Total Reads: 525
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Definition: Structural Unemployment

Structural unemployment is a scenario in a country or a company where increase in technological advancements or other factors have made the skills of the people / employees obsolete and hence the people are not suited for the jobs available. In this case, people are do not have adequate knowledge about the job profile which creates unemployment.


Some of the reasons for structural unemployment:

1. Workers lack the job skills

2. Workers reside far away from regions where jobs are available but have mobility constraints and hence cannot move there

3. Workers are unwilling to work because of low salaries


Consequently, even though jobs are available, there exists unemployment. There is a stark mismatch between the companies’ requirement and what the workers are willing to offer.

Structural unemployment is worsened by extraneous factors.

Examples:

1. Technology

2. Competition

3. Government policy


Worth mentioning is that there are three major types of unemployment. In addition to structural unemployment, we also have cyclical & frictional unemployment.


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