Cyclical unemployment is a type of job loss that happens when the economy is not doing well, like during a recession.
How It Affects the Economy:
Higher Unemployment Rates: For example, during the financial crisis in 2008, about 10% of people in advanced countries lost their jobs.
Less Money to Spend: When people are unemployed, they usually have less money to buy things. This means that shops and services see less demand. In the UK, a 1% rise in unemployment can lead to a drop in the economy worth about $2.50 billion.
Businesses Spend Less: When companies see fewer customers and make less money, they often hold back on spending on new projects or growth. For example, during the 2008 recession, investment in the UK went down by 15%.
Long-Lasting Effects on the Economy: If cyclical unemployment continues for a long time, it can turn into structural unemployment, which can hurt the economy even more. The OECD (an organization that helps countries work together) estimated that long-term unemployment might lower the economy's potential by up to 1.5%.
Fixing cyclical unemployment is really important for helping the economy recover and grow again.
Cyclical unemployment is a type of job loss that happens when the economy is not doing well, like during a recession.
How It Affects the Economy:
Higher Unemployment Rates: For example, during the financial crisis in 2008, about 10% of people in advanced countries lost their jobs.
Less Money to Spend: When people are unemployed, they usually have less money to buy things. This means that shops and services see less demand. In the UK, a 1% rise in unemployment can lead to a drop in the economy worth about $2.50 billion.
Businesses Spend Less: When companies see fewer customers and make less money, they often hold back on spending on new projects or growth. For example, during the 2008 recession, investment in the UK went down by 15%.
Long-Lasting Effects on the Economy: If cyclical unemployment continues for a long time, it can turn into structural unemployment, which can hurt the economy even more. The OECD (an organization that helps countries work together) estimated that long-term unemployment might lower the economy's potential by up to 1.5%.
Fixing cyclical unemployment is really important for helping the economy recover and grow again.