What is cyclical unemployment?

Cyclical unemployment is that unemployment that originates due to fluctuations in economic activity in a given country.

This means that the different economic cycles that an economy goes through (such as crisis, recession, expansion phases, etc.) increases or decreases the unemployment rates.

Causes of cyclical unemployment

Among the most frequent causes of cyclical unemployment (which, as we know, can be higher or lower), we find the following:

  • An increase in unemployment in the event that the country's economic activity falls.
  • If a certain company reduces its sales and investments, its demand for labor will also fall, so that more people will be laid off or some will not find a job.
  • Decrease in unemployment in case the country's economic activity tends to recover.

Measures to avoid cyclical unemployment

In order to avoid or reduce the effect of cyclical unemployment, it is necessary for governments to take measures to mitigate this effect. Among the measures that are taken, we highlight the following:

  • Support the economic activity of the country. The Government encourages citizens and companies to generate economic activity in the country. It can do this in different ways: increasing the credit it gives to companies, through subsidies or aid, reducing bureaucratic barriers, etc.
  • Collect unemployment. Encouraging users who do not have a job helps encourage them to find a new one. It also helps them get some incentive to meet their basic needs, at least.
  • Training. It is also important that the Government is involved in offering training and education to people through financial aid for study, as well as facilities. Scholarships or grants for study are very important. This will help them gain more skills and knowledge for the future in new jobs.

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