In a strange twist, there has been a rise in job vacancies not matched by a corresponding fall in unemployment (Federal Reserve of Atlanta). This suggests there could be a growing mismatch of skills / demand for labour leading to cyclical unemployment being replaced by structural unemployment.
- Cyclical unemployment is the unemployment that increases during a recession. Firms produce less so lay off workers. As you might expect unemployment has risen in all the major economies affected by the recession.
- Structural unemployment occurs when there are vacancies but people don't have the right skills / motivation to take the job. (this includes occupational and geographical immobilities)
- Recessions tend to hit certain sectors of the economy more. For example, In this recession, finance has been hard hit requiring a shift in labour to other sectors. This could require a significant geographical and occupational change.
- In Recessions, there is often a fall in the participation rate. e.g. people become demoralised from the labour market and take early retirement or move onto non-unemployment benefits. This is certainly an issue in UK with 5 million people on non-unemployment benefits.
Long Term Trends There are long term trends in a global economy towards a mixture of high skilled professions (e.g. health and legal) and very low skilled service sector jobs (e.g. cleaning). There has been a steady decline in manufacturing jobs with mid-level skills. (See: Mit.edu). These long term trends do put upward pressure on structural unemployment.