MAT 1223 (INTRODUCTION TO ECONOMICS)

OCT DEC 2015

INDIVIDUAL ASSIGNMENT
UNEMPLOYMENT ISSUE IN UNITED KINGDOM

PREPARED BY

: MOHD KAMIL BIN KAMAL

GROUP

: DiA 14

PREPARED FOR

: EN ABD HADI BIN MUSTAFFA

1.0 Country Background (United Kingdom)

Destination Great Britain, the United Kingdom of Great Britain and Northern Ireland,
commonly known as the United Kingdom (UK) and Britain, is a country in northern Europe
that consists of England, Wales, Scotland, and the province of Northern Ireland which
occupies the north-eastern part of the island of Ireland. The UK is located on an archipelago
known as the British Isles with the main islands of Great Britain and Ireland, and the
surrounding island groups of the Hebrides, the Shetlands, the Orkneys, the Isle of Man and
the Isle of Wight. The United Kingdom is located off the northern coast of France, and west
of Sweden and Denmark, between the North Sea and the North Atlantic Ocean.
Below here are information related to United Kingdom:
Item
Official Name
Capital City
Government
Geography
Population
Major Industries
Currency

Information
United Kingdom of Great Britain and Northern Ireland
London
Constitutional Monarchy
Area 243,000 km2
Location Western Europe
65 Million (year 2014)
Machine tools, electric power, automation, railroad,
shipbuilding, aircraft, coal, petroleum, clothing and foods
British Pound (GBP)

2.0 Unemployment Statistic for 10 years in UK

Based on the graph above, there are several findings and analysis:
a) Overall for 10 years, the unemployment rate in UK is increase in the range between
4.8% (lowest) and 8.5% (highest).
b) There are a massive increase of unemployment occur in year 2008 to middle of year
2009 from 5.3% to 8%. Which is led to the huge increase of 2.7%.
c) There are improvement in unemployment rate whereby the drop was occur in middle
of year 2013 to year 2015 from 7.6% to 5.5%. Therefore the drop range was 2.1%

3.0 Factors of Unemployment issue in United Kingdom

There are several factors that lead to huge unemployment problems in United Kingdom:
a) Flexible labour market issues
The statistics suggest that UK labour markets are more flexible. Therefore its easier
to cut hours and keep people employed on short term basis only. In other words, its
easy to hire and fire workers based on nature job needed. Example such as working
as voluntary government services.
b) Flexible pay issues
Due to flexible labour market issues, therefore the pay also flexible and sometimes
below the market, lower than inflation. And somehow due to expansive economy, the
inflation rate in UK is higher (2.5% in year 2014). Therefore company find it hard to
cope with salary issues.
c) Falling in productivity
In UK, the recession occur between year 2008 to 2010 which led to massive increase
in unemployment. Where the demand is excessive, but somehow industries cannot
cope with demand due to falling output.
d) Growth in zero-hour contract
The number of zero hour contracts have increased from 50,000 (2005) to 200,000 in
(2013). This means workers have no guarantee of how many hours they will get paid
for. It is a factor in explaining why there is more under-employment

4.0 Conclusion
There are many reasons to be gloomy about the UK economy. The threat of a triple dip
recession, the most protracted drop in GDP on record and a growing trade deficit. But, the
unemployment figures are relatively good. However, it has come at the cost of falling real
wages and stagnant labour productivity. Also, we shouldnt under-estimate the fact an
unemployment rate of 2.5 million is still a very serious economic and social problem. If
recovery had been stronger, the unemployment rate could be much lower, and if we fail to
see strong and sustained economic recovery, unemployment will continue to be a serious
problem. But, it suggests that encouraging labour market flexibility has definite benefits for
unemployment, and it is something the Eurozone may also benefit from.