Unemployment as an economic challenge

Amid the COVID-19 pandemic, the word unemployment became a widespread phenomenon. During 2020, the global unemployment rate increased rapidly, making a boost that has not been seen in the past 10 years.

Such a change caused problems, not only for the unemployed population but also for the economy. There are three main levels that, in summary, create a long-lasting effect on the global economy.

The first level of impact

Unemployed individuals are “perked” to feel the impact of a sudden change first. They are the ones to experience the effect of unemployment to the fullest. Those citizens are left with no means to continue living their normal lives, buying the same goods as before. The inability to pay for goods results in less consumption, which causes the economy to experience the first impact of unemployment. However, it is not the biggest it can get. Because people no longer possess sustainable incomes, they do not spend money on improving their skills and bolstering their knowledge, which leads to the lack of educated staff and individuals who could make a difference.

The second level of impact

Countries are next in the line to experience the effects of unemployment. The first logical thing to assume is that governments no longer receive the same amount of taxes, which causes them to find the financial sources elsewhere (i.e., borrowing, putting more taxation on companies, etc.). As the domino effect continues to spread within the country, companies that receive higher amounts of taxation (and have less demand for their products) are no longer able to afford to maintain the current staff or hire new workers.

The global level of impact

The correlation is more tenuous at the global scale but no less real. It is noticed that unemployment sets severe restrictions on immigration, which have a damaging effect on society and the economy. Apart from that, there is a logical correlation between the increase in crime rates and unemployment, which is expected because people might turn to crime to meet their economic needs. That, in summary, does more harm than good to the global economy.

Unemployment is a global problem, meaning that it occurs in all the countries, no matter how influential their economy is. This makes it a serious issue that can be compared to inflation in its capacity. Unemployment, however, has a unique trait - longevity - that enables it to influence all the levels and aspects of humankind's population for a long time.