Assignment 3 Case Study: Chapters 15–18, 5 Marks

Assignment 3 Case Study Chapters 15 16 17 18 5 Markscaseletonu

Assignment 3-Case Study-Chapters: 15, 16, 17 & 18: - [5 Marks] Caselet On Unemployment Many Theories are given by different expert to explain the reasons behind unemployment. One reason of unemployment may be downswings (periods of recession) in the business cycle. Another reason behind wide-scale unemployment refers to structural unemployment. Structural unemployment arises from longer-term changes in the economy, affecting specific industries, regions and occupations. Structural unemployment often explains regional unemployment. Some industries in India have lost their business and so employment to the cheaper imports coming from abroad. Some experts explain that new technology is a cause of unemployment which is also known as technological unemployment. The argument is that the introduction of new technology is destroying jobs and business while at the same time imports from low-wage developing countries are undercutting goods produced in this country. However, many studies may contradict this also. New technologies generally help in producing new products, or services and therefore new areas of employment. Sometimes lesser workers may be required in some areas of production where specific tasks are taken over by machines, but rising productivity boosts overall income and then the demand for new jobs in the economy as a whole.

Paper For Above instruction

The phenomenon of unemployment has been a persistent challenge across economies worldwide, driven by a multitude of factors that influence labor markets. Among the primary causes are economic downturns or recessions, structural shifts in industries, technological advancements, and global trade dynamics. Understanding these causes is essential for formulating effective policy responses aimed at mitigating unemployment and fostering economic growth.

Main Causes of Unemployment

Economic fluctuations, particularly recessions, are significant drivers of cyclical unemployment. During downturns, reduced consumer demand leads to decreased production needs, prompting employers to lay off workers and thereby increasing unemployment rates. Structural unemployment, on the other hand, results from enduring changes in the economy that alter the demand for specific skills, occupations, or industries. These changes may stem from technological innovations, globalization, or shifts in consumer preferences. For example, the decline of the manufacturing sector in many countries has been attributed to automation and offshoring, leading to regional unemployment in affected areas.

Another critical factor is technological unemployment, which refers to job losses caused by technological advancements such as automation and artificial intelligence. While technological progress can render certain jobs obsolete, it also has the potential to create new employment opportunities in emerging sectors. The debate surrounding technological unemployment often revolves around whether technological change does more harm than good. Some argue that automation reduces the demand for human labor in specific tasks, leading to unemployment in particular industries. Others contend that technological progress enhances productivity, lowers production costs, and stimulates innovation, ultimately leading to economic growth and new job creation.

Does Technological Upgradation Cause Unemployment? An Example

Technological upgradation can indeed cause unemployment in specific industries, especially in the short term. For example, in the textile industry, the introduction of computerized knitting machines has replaced manual labor, leading to job losses among traditional workers. While this innovation improves efficiency and product quality, it displaces workers who lack the skills to operate advanced machinery. However, it is important to recognize that over the long term, technological advancements tend to generate new employment opportunities. In the case of the textile industry, automation has spurred the growth of maintenance, programming, and engineering roles, which require new skill sets.

This example illustrates that technological change can cause dislocation and unemployment initially but often results in economic diversification and job creation in new sectors. Policy interventions, such as skill development programs and vocational training, are vital to help workers transition from declining sectors to emerging industries, minimizing unemployment caused by technological progress.

Impact of the COVID-19 Pandemic on Structural Unemployment Globally and in Saudi Arabia

The COVID-19 pandemic has profoundly impacted global labor markets, accentuating existing structural unemployment issues while also creating new challenges. Many countries experienced surges in unemployment due to lockdown measures that disrupted supply chains and reduced demand, especially in sectors like hospitality, tourism, and retail. During this period, structural unemployment peaked as certain industries faced long-term decline or transformation, requiring workers to acquire new skills for emerging roles.

However, the economic resilience of Saudi Arabia appeared to be relatively robust during the pandemic. The Kingdom’s government played a pivotal role in cushioning the economy and safeguarding employment through various initiatives. The Saudi government implemented stimulus packages, supported small and medium enterprises, and accelerated digital infrastructure development, which mitigated the adverse effects on employment. Additionally, initiatives such as the ‘Saudi Vision 2030’ emphasized economic diversification away from oil dependency, promoting sectors like tourism, entertainment, and renewable energy. These efforts provided alternative employment opportunities, reducing the overall impact of the pandemic on employment levels.

Government Policies in Saudi Arabia to Reduce Pandemic-Related Unemployment

Saudi Arabia adopted a multi-faceted approach to curb the pandemic’s impact on employment. The government launched the 'Citizen's Account Program' and financial support schemes to assist affected workers and businesses. Furthermore, the Saudi Arabian Monetary Authority (SAMA) provided liquidity support to banks, facilitating loan extensions and deferrals for businesses. These measures prevented widespread layoffs and supported business continuity.

The government also prioritized workforce localization policies, such as the 'Saudization' program, which incentivizes companies to employ Saudi nationals, thereby reducing reliance on expatriate labor. During the pandemic, these policies helped maintain employment levels within key sectors. Investment in digital transformation and e-commerce infrastructure created new job opportunities, while vocational training programs equipped workers with relevant skills for sectors experiencing growth, such as technology and renewable energy.

Conclusion

Unemployment remains a multifaceted issue influenced by economic cycles, structural changes, technological progress, and global events like the COVID-19 pandemic. While technological advancements may initially cause industry-specific job losses, they also pave the way for new employment opportunities in emerging sectors. Governments worldwide, including Saudi Arabia, play a crucial role in cushioning the adverse effects of such changes through strategic policies, workforce upskilling, and economic diversification efforts. Ensuring a resilient labor market requires a balanced approach that embraces innovation while supporting workers through transition phases.

References

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