Introduction
The concept unemployment means a situation of joblessness or absence of employment. That is anybody who is capable and convenient to work but fails to secure one can said to be unemployed for the concerned period (Philip et al., 2013). It is a basic determination of economic health. It is leading factor in defining how healthy an economy is; if the economy maximized efficiency, everybody would be employed at the same wage. An unemployed is both ineffective and a drain on countries resources. Hence, while unemployment implies a key statistic (the number without jobs divided by those with jobs). Unemployment is a strong statistic that models government policy and personal resolution. The government follows the unemployment rate. Not only does the unemployment shows the economy isn´t running at climax productivity. But leaders in many countries have observed that high unemployment contributes to losing elections. The Federal Reserve accepts that unemployment below a certain threshold will result to natural rate of unemployment which is followed by inflation. Based on the perception by the economist A.W. Philips he deduced by drawing unemployment to inflation during the 1960s (Griffiths, 2007).
Unemployment occurs when populace have no jobs and are eager and searching for work. A few persons give attention to the number of unemployed persons, but Economists spotlight on rate of unemployment which can be measure as dividing unemployment workers by all individuals in the labour force (Farooq, 2011). “The international Labour Organization (ILO) outlined four various forms for calculating unemployment rate. They include labour force sample surveys, official estimates, social insurance statistics and lastly employment office statistics” (Farooq, 2011).
Unemployment is among the clear signal of economic activity. The amount of unemployment commonly hike greatly during recessions then decline as the economic gets back. Public generally see the ordinary unemployed worker as being in serious hardship, so it is always in the news that high unemployment is a big social problem (Parker, 2010). The influence of a labour union that helps in concerted negotiations on behalf of workers can change the nature of the labour market in many ways. There are a lots of theories of unemployment that merge the behaviour of unions (Parker, 2010).
The Bureau of labour statistics is the US agency that oversees and addresses an unemployment and other labour statistics. In 2006, the average unemployment rate was 4.6 per cent. The number only comprises a subdivision of total US population (the presently unemployed individuals who are eager and capable to work). This subdivision of the society excludes children and infants, people in detention, and other people who decide for one reason or the other not to work. Deciding to determine unemployment in this manner presumes that a classical free market prospective works. Thus, individuals making free choices will surely result to the finest result; everybody who desires a job will secure a job. On that note, it is absurd to dissect people who are incapable and reluctant to work. This context predicts unemployment directly as the time spent between jobs; assuming people keep searching for a job, they will find one (Griffiths, 2007). John Maynard Keynes castigate this aspect as ambiguous. He said that the people who pilot demand for goods and services are the same people engaging in the labour market. Unemployment can be defined as less income, which in turn refers to less demand; less demand makes the demand curve in the labour market to alter, constituting a feedback cycle (Griffiths, 2007).
A union is a legal institution of workers who have unite together to accomplish familiar objectives like depending the integrity of its trade, enacting high pay, rising the number of employees an employer bring in, and improved working environment. Unions perform by bargaining with employers to devise a concerted compromise that applies to all union comrades and naturally lasts for a lengthy time. For example, in a unionized firm, rather than each employee bargaining it’s leaving time with the employer, a union will discuss with the company in line to form a contract guiding leaving time that covers all union members. This provides workers in general an active negotiating environment when bargaining working terms and pay (Boundless, 2016).
Types of Unemployment
• Structural Unemployment: is long-lasting and is not conscious to changes in accumulated demand. It indicates to the long-term incapability or intransigence of the economy to provide employment due to structural inequality in the economy (Mwinga, 2012). As a result of structural changes in the economy, structural unemployment is generated by a deterioration in demand for production in a particular industry, and ensuing disinvestment and reduction in its manpower requirements (Chand, 2016). This type of unemployment has earned a decent extent of attention during the recovery being that it is the most difficult to handle and is considering it can easy economic recovery out of recessions, thereby proceeding in a mismatch of workers technical know-how and accessible job openings (Wagner, 2014).
However, it is commonly considered to be caused by structural factors which includes; “the nature of the educational system and its interface with the needs of the labour market (i.e. the skills mismatch problem) technical change and the use of capital-intensive techniques of production, permanent shifts in the demand of goods and services especially in the export markets, the skill mix of the labour force and available for job oppurtunities” (Mwinga, 2012). The unemployment that occurs in Namibia is broadly structural in description. Hence at the same time of lofty economic growth, employment oppurtunities do escalate faster, in other words the employment depth in Namibia is very low (Mwinga, 2012).
• Frictional Unemployment: This emanates from continuous movement of people in ad out of job. Examples are unemployment of university graduates in the time they are seeking for their first jobs, of workers which vacate the jobs before having found new ones (Levine, 2013). This unemployment can be viewed as a subdivision of structural unemployment primarily following temporary unemployment streaks as a result of job search and matching challenges in relation with quits, new entries to the labour market (Mwinga, 2012). “According to economists like Keynes and Lerner frictional unemployment is a kind of unemployment which is quite consistent with the condition of full employment in an economy. Frictional unemployment is due to difficulties in getting workers and vacancies together (Chand, 2016). It is a depressed stage of unemployment because of common frictions in the labour market. Hence workers are continuously searching for new jobs, and businesses are invariably seeking for finest workers (Wagner, 2014).
Furthermore it can said to be the time fray amidst jobs when a worker is seeking for or moving from one job to the other. Frictional unemployment is ever seen to some extent in an economy. It arises when there is mismatch among the workers and jobs. The mismatch can be linked to skills, payment, work time, location, seasonal industries, attitude, taste and other factors. It is controlled by spontaneous agreement to work according to each individual´s variation of their own work and how that measures to current wage rates. Likewise the time and effort required to find a job (Boundless, 2016).
• Cyclical Unemployment: This type arises in the time of economic gloom and dissipate at the times of troughs and booms. It is related with cycles and is identified with cyclical factors like the variation in cumulative domestic and foreign demand for goods and services (Mwinga, 2012). The quick fix of cyclical unemployment depends on the techniques by which total expenditure in the economy can be increased. By that pushing up the level of effective demand. This unemployment is more witnessed in capitalist-partisan developed nations are likely to trade cycles (Chand, 2016). Cyclical unemployment is as a result of business cycle like recession. Economics normally and constantly pass through times of economic booms followed by decline (Wagner, 2014).
• Seasonal Unemployment: This occurs as a result of seasonal deviations, for example changes in climatic conditions. For instance, farmers may be totally employed during planting, cultivation and harvesting seasons, but unemployed at other seasons. It is very common in Namibia as a result of climatic conditions on agriculture (Mwinga, 2012). It exists in any nation, be it develop or underdeveloped. It involves not only an underutilisation of manpower, but also of capital stocks used in companies of a seasonal nature. This poses a severe problem of wastage of productive resources for an underdeveloped country which is already lacking in capital resources (Chand, 2016).
(Boundless, 2016)
Union Density
The term union density evaluates the proportion of the workforce that is no ionized, exempting people who cannot for authorized or other reasons, be members of a union. For example, members of the armed forces. For instance in UK in 2011, union density used to be 23.8 per cent, and had been constantly coming down since 1995 when it was at around 32.4 per cent and even higher marked decline from the start of the 1980s, when it was above 50 per cent. In other European countries there is such run of declining union density. In Germany, density has declined from 23.3 per cent in 1999 to 18.5 per cent in 2010, in the Netherlands the decline has been from 24.6 per cent to 18.2 per cent in 2011. Though, there are exclusion with nations such as Finland, Sweden, Denmark and Iceland having densities around 68 per cent and 79 per cent respectively both in 2011 (Mankiw and Taylor 2014).
Trade union participation that is overall number of workers that belong to a trade union, can be referred to as indicator of trade union power. But, it is also necessary to have a description on how important the level of trade union participation is analogous to all those who could join a trade union. What fraction of all people receiving a wage is a member of the trade union? How do we determine the amount of unionization in highly disjointed labour markets where a high number of workers are seen as own-account workers or work in the informal economy? (Hayter and Stoevska 2011).
Trade union density shows membership as a fraction of the qualified workforce and may be used as a proof of the rate to which workers are coordinated. Again union density only determines the level of unionization and informs us the actual thing concerning the control or negotiating strength of unions. Trade union density rates are consistently explained within a specific political and social background and according to the lawful and governmental structure. Trade union does not echo the negotiating abilities of unions. In some nations, like France, a trade union density scales can be expressed approximately low, hence collective bargaining contributes immensely in coordinating and controlling terms and conditions of employment and coverage of workers by concerted understanding is high. Similarly, in nations like those of the former Soviet Union and in administration where a single union system succeed trade union density rates may be approximately high, but this is not all an observation of the power of the union or a determination of right of observation (Hayter and Stoevska 2011).
Impacts of Union to Unemployment
The review about union’s debate that unions are purely a kind of cartel. When unions enhances wages over the level that would obtain in competitive markets, they lower the quantity of labour demanded, making some workers to be employed and decrease the wages in the other of the economy. Supporters of unions dispute that unions are an inevitable remedy to the market power of the companies that employ workers. In some areas where one specific company is the common employer, if workers do not accept the wages and working requisite that the company propose, they may have slim option but to continue or stop working. In the destitution of a union, then the company could use its market power to pay lower wages and present bad working conditions than could obtain if it had to contend with other companies for the same workers. By so doing a union may equate the company´s market power and defend the workers from being at the pity of the firm authorities. Also supporters of unions maintain that unions are essential for assisting companies answer effectively to workers interest. Furthermore, there are no agreement between economists if unions are good or bad for the economy. Like various establishments, their control is possibly useful in some conditions and unfavourable in others (Mankiw and Taylor 2013).
Unions are capable to move for increment of wages being, that if they are forceful, they can turn the labour market into a monopoly market. Better than a competitive market with copious buyers and sellers that is employers and employees respectively. There are bountiful buyers but only one seller (the union). Comparable to any monopoly market, the result will be an equilibrium with greater prices and lower supply than in the competitive equilibrium. In the side of the labour market, the wages will be bigger, and also unemployment. This is explained in the graphic below, to which a union strongly hikes the wage rate over the equilibrium wage. The space between the point where the new wage rate joins the demand curve and where it converge the supply curve shows the resulting unemployment (Boundless, 2016).
(Boundless, 2016).
If a union is capable to increase the minimum wage for their colleagues over the equilibrium wage, then wages will be employed. But various economists condemn unionization disputing that it intermittently yields higher wages at the expense of fewer jobs. Actually unionization favours the then employed at the risk of the unemployed. Also, by placing higher prices than the equilibrium wage rate, unions encourage load of loss. Pundits also disagree that if some companies are unionized and others are not, wages will fall in non- unionized and companies. The above debate presume that without unions, the labour market would have plenty buyers and sellers of labour. In this competitive equilibrium, the wage would equal the marginal revenue product of labour and the result will be productive. In real sense this is usually not the case. More or less companies are monopolized by a few firms, making the labour market an oligopsony (i.e. a market with many sellers of labour but only a few buyers). In an oligospony companies have the control over workers, and wages may be lower than they would be at competitive equilibrium (Boundless, 2016).
Conclusion
The study has presented a framework for understanding the impacts of unions to unemployment and reasons why countries experience unemployment. The economy will always have some unemployment. Unions affect unemployment by bargaining for increased wages. They are able of increasing production by reducing turnover, improving relationship between workers and management, and by increasing workers incentives. The control of unions is possibly useful in some conditions and unfavourable in others. Apart from union, other factors such as minimum wage laws, job search and efficiency wages can result to some workers having no jobs.
Therefore some policies can lower the rate or amount of unemployment the economy naturally faces. The government should change the process of job search, increases minimum wage, bringing down taxes on businesses, reducing regulations, giving insurance entitlements to unemployed youths. The union should be stronger to protect the interest of its colleagues. By doing so, the incidence of unemployment can be reduced.