tom david Economics How has the level of employment / unemployment and national minimum wage legislation impacted on the economy as a whole and how will this effect the economy in the years to come? What is the current state of our economy? Well many economists think that this year the economy will slowdown. In the last ten years or so our eco mony has been driven by factors such as high consumer spending and the soaring property market, our economy has have already witnessed the housing market slowing down this in turn will have an effect on household spending.
As for our manufacturing industry this has reported its worst fall in output in more than 10 years, increasing fears over the health of the UK economy. Also Factory production it is reported fell by 4% in the year 2002, This is the largest annual slump since 1991, this is according to figures from the Office for National Statistics. Britain's manufacturing industry is going through its worst recession since the early 1990's, however high consumer spending has so far protected the wider economy. 2004 has seen a rise in economic growth both in the UK and worldwide. Britain has had what economists call full employment for quite some time the problem for the future is that this could soon change and we could end up like germany with 10.5% of the population out of work.
The reason that this could happen is that many jobs that exist today were created by the boom in the housing market in the 90's however in the last four years or so house prices have doubled which has resulted in lower consumer spending growth this in turn has an knock on effect on the on the level of employment required in the retail industry and this is a problem. How can employment be classified? There are four types of job. These are primary, secondary, tertiary and quaternary jobs. Primary jobs involve getting raw materials from the natural environment e.g. Mining, farming and fishing. Secondary jobs involve making things (manufacturing) e.g. making cars and steel.
Tertiary jobs involve providing a service e.g. teaching and nursing. Quaternary jobs involve research and development e.g. IT. Employment Structures Employment structure means how the workforce is divided up between the three main employment sectors - primary, secondary and tertiary. Employment structures change over time. Developing Countries usually have a high percentage of the population in primary employment.
This is because most people are engaged in agricultural activities. As a country begins to develop an industrial base there is an increase in the secondary sector. An increase in machinery on farms means fewer people are needed. This is when People tend to migrate to urban areas to increase there chances of employment.
When a country becomes more economically developed like such countries as the UK Japan and the USA there is a increase in demand for services such as education, health care and tourism. Therefore the tertiary sector undergoes growth. By this time computers, machinery and robots replace people in the secondary sector hence the decrease in secondary jobs. The UK has a low proportion of people working in primary industry. This is partly because of mechanisation. Machinery has taken over jobs in the primary sector.
Also, as primary resources have become exhausted (e.g. coal) The UK imports a considerable amount of its non-renewable resources. The number of people employed in the secondary sector is falling. This is because fewer people are needed to work in factories as over the last decade there have been rapid advances in technology. The tertiary sector is the main growth area for the UK. Most people work in hospitals, schools, offices and financial services. Also, as people have more free time and become wealthier there is a greater demand for leisure services.
Therefore more jobs have become available in the tertiary sector. Economies tend to follow a developmental progression that takes them from a heavy reliance on agriculture, toward the development of industry (e.g. automobiles, textiles, shipbuilding, steel, mining) and finally toward a more service based structure. Whereas the first economy to follow this path in the modern world was the United Kingdom, the speed at which other economies have later made the transition to service-based, sometimes called post-industrial, has accelerated over time. Manufacturing tends to be more open to international trade and competition than services.
As a result, there has been a tendency for the first economies to industrialize to come under competitive attack by those seeking to industrialize later, e.g. because production, especially labour, costs are lower in those industrializing later. The resultant shrinkage of manufacturing in the leading economies might explain their growing reliance on the service sector. The UK, a leading trading power and financial center, is one of the quartet of trillion dollar economies of Western Europe. Over the past two decades the government has greatly reduced public ownership and contained the growth of social welfare programs. Agriculture is intensive, highly mechanized, and efficient by European standards, producing about 60% of food needs with only 1% of the labor force. The UK has large coal, natural gas, and oil reserves; primary energy production accounts for 10% of GDP, one of the highest shares of any industrial nation.
Services, particularly banking, insurance, and business services, account by far for the largest proportion of GDP while industry continues to decline in importance. GDP growth slipped in 2001-03 as the global downturn, the high value of the pound, and the bursting of the 'new economy' bubble hurt manufacturing and exports. Still, the economy is one of the strongest in Europe; inflation, interest rates, and unemployment remain low. The relatively good economic performance has complicated the BLAIR government's efforts to make a case for Britain to join the European Economic and Monetary Union (EMU).
Critics point out, however, that the economy is doing well outside of EMU, and they point to public opinion polls that continue to show a majority of Britons opposed to the single currency. Meantime, the government has been speeding up the improvement of education, transport, and health services, at a cost in higher taxes. The war in March-April 2003 between a US-led coalition and Iraq, together with the subsequent problems of restoring the economy and the polity, involve a heavy commitment of British military forces. Unemployment levels top 10 countries below make pie chart from this data United States 32.4% China 18.6% Japan 11.3% India 8.3% Germany 6.7% France 4.8% United Kingdom 4.7% Italy 4.5% Russia 4.4% Brazil 4.3%There are three main policies which the government can use to tackle the problem of unemployment.
These are the fiscal, Monetary and the supply side policy, the fiscal policy is about managing demand in order to reduce unemployment the way in which this is done is by adjusting tax rates in order to increase spending this is know as the multiplier effect as demand is creating demand which leads to the development of new jobs. The Monetary approach focuses on manipulating the cost of money to reduce unemployment, this is done by increasing or decreasing interest rates to create or reduce demand for example if interest rates are high people are more likely to invest and save there money and the opposite applies if interest rates are low. The supply side policy does not focus on increasing or decreasing demand, but looks to eliminate barriers such as reducing trade union power or to reduce the amount of minimum wage legislation or other factors that prevent the labour market reaching full employment. This policy tends to concentrate on increasing the long term economic growth this is done by investing in schools and often lowering income tax to help increase the production capabilities. The employment rate for people of working age was 75.0 per cent for the three months ending in February 2005, an increase from 74.8 per cent the previous quarter. The last time the rate was higher was for the three months ending in November 1975.
The number of people in employment increased by 148,000 over the quarter and by 231,000 over the year, to reach 28.64 million. This is the highest level since comparable records began in 1971. The unemployment rate was 4.8 per cent, up from 4.7 per cent the previous quarter. The number of unemployed people increased by 29,000, to reach 1.43 million.
Women accounted for almost all of the increase in unemployment. Conclusion The fact that unemployment has now risen for four consecutive months shows that Mr Blair's so-called strong, stable economy has started to head for the rocks. We need a Conservative government before we hit those rocks and higher interest rates and taxes don't start to drown us all. The government nowadays seems to have little power in the future of our own economy, The independent Bank sets interest rates and companies make products and profits. The EU sets some of our laws how long will it be before they have complete control. The only thing that the government does is tax and spend and in that respect to win votes they can only promise more and not less.
Some economists suggest that the loss of manufacturing jobs is not a problem as long as we focus more on skilled trades training which would add value to the economy however this is a neo classical approach which is ok but with power being taken from national government and been given to the European union how are the government able to eliminate barriers which will prevent the country from reaching full employment..