For the past three years the world has undergone a number of major crises. There has been the inflation from 2008, termed the American crisis, then debt crisis globally and most recently, the European crisis. All these crises end up with one common factor adding to the economy; unemployment. The first sign of an economy in crisis are the high rates of unemployment that prevail. Hence, looking at the high levels of unemployment in the past three years globally; you can understand the depth of such a crisis. What exactly is the role of employment or unemployment in the economy? How do these two affect each other?
Relationship between the two
Unemployment is a characteristic of a failing economy. This is because when the economy is in decline people begin to lose their confidence to survive in such a market. Employees present a liability to the labour market and, therefore, when the labour market feels this pressure, the initial reaction is to reduce their work force. This leads to an increase in unemployment rates. The economy, on the other hand, also affects the unemployment figures. However, countries that have good economies provide better opportunities for job creation and will, therefore, reduce unemployment in their country.
Using statistics from the past three years, this argument can be further proved. Unemployment rates were highest at the dawn of the American crisis in 2007/2008. As more countries in the world experienced ripples from this event, the unemployment levels began to increase. Through 2011, a global unemployment high level of 6.1 percent was experienced; with over 200 million people worldwide being unemployed, an ever increasing figure.
Building the economy
Therefore, if unemployment rates and the state of the economies are related; countries should use this to solve the economic crises. Most global countries promote investments in their economy and labour market; promote entrepreneurships and the generation of income. These all are efforts to sustain their economies. However, these are only means to get the growth started, so for countries to be able to achieve economic success, they need to invest in employment.
Job creation, improved employment conditions and increased social protection are what the economy uses as sustenance. In order for countries to avert the crisis they are in and build their economies, they need to create jobs and eradicate unemployment. This will ensure they have a work force that can sustain the economy for years to come.