The Rollercoaster of Unemployment: Why Some Joblessness Is Just Inevitable

The Rollercoaster of Unemployment: Why Some Joblessness Is Just Inevitable

Have you ever played musical chairs? You know, that game where there's always one fewer chair than people, so someone's guaranteed to be left standing when the music stops? Well, guess what – the job market works pretty much the same way. Sounds incredible, right?

Why Full Employment Is Like Finding a Unicorn

Imagine this: You're suddenly put in charge of the UK economy (congrats on the promotion, by the way, and good luck you will need it!). Your first announcement? "I promise everyone will have a job by Christmas!"

The first thing you see is the economists spitting out their tea in unison

The awkward truth? Even the most amazing economy in the world can't hit 0% unemployment. It's like promising there'll never be traffic in London or that England will definitely win the football World Cup. Nice thought, but let's be real!

This economic head-scratcher is what we call the Natural Rate of Unemployment, or as I nicknamed it: "The Stubborn Percentage That Won't Budge No Matter How Many Motivational Speeches The Prime Minister Gives."

Natural Rate of Unemployment: The Econ Version of "Some People Just Can't Dance"

So what exactly is this Natural Rate of Unemployment (NRU)? Simply put, it's the level of unemployment that hangs around even when the economy is absolutely crushing it. It's like that one friend who always stays too long after the party ends – you just can't get rid of them!

The NRU is what happens when the job market is technically in "perfect balance" – meaning the number of job openings matches the number of job seekers. And yet... people still don't have jobs! How does that make any sense?

Well, it's like dating apps. There might be exactly the same number of people looking for love as there are singles available, but that doesn't mean everyone's getting matched. Some people are swiping left on perfectly good jobs, and some jobs are ghosting perfectly qualified candidates!

The Two Troublemakers Behind Natural Unemployment

1. Structural Unemployment – When the Economy Gets a Glow-up and Leaves You Behind

Remember Blockbuster? (If you don't, ask your parents – or maybe your grandparents at this point!) They were MASSIVE, with over 80,000 employees worldwide. Then Netflix showed up and said, "Hold my streaming subscription."

Those thousands of Blockbuster employees didn't suddenly become terrible workers overnight. Their skills just didn't match what the new job market wanted. It's like being amazing at MySpace when everyone's moved to Instagram.

Just last year, Wilko (RIP) collapsed and 12,500 people lost their jobs. Many of these folks had spent years mastering retail skills specific to Wilko's way of doing things. Those skills don't exactly scream "hire me!" to a tech startup looking for coders.

Or think about black cab drivers in London spending years mastering "The Knowledge" only for Uber to roll in with GPS. Ouch.

2. Frictional Unemployment – The Job Market's Version of Tinder

Ever spent weeks or months hunting for the perfect job? Congratulations – you've been frictionally unemployed!

This type of unemployment happens when people are between jobs. It's like the awkward period between relationships – technically you're single, but you're actively looking to change that status!

Imagine you've just graduated from school with your shiny IB diploma and economics knowledge. You could immediately take that job at Costa (no shade to baristas, they're literally keeping the economy running on caffeine). But instead, you spend three months sending out CVs for jobs you actually would like to do.

During those three months? You're contributing to the natural rate of unemployment! And that's actually... fine? In fact, it's healthy for the economy. It's much better for everyone if people find jobs they're good at rather than grabbing the first thing available.

The REAL Costs When Unemployment Goes Beyond Natural

While some unemployment is as inevitable as rain at a British summer festival, the effects can be properly serious:

Personal Costs – Real People, Real Problems

Every unemployment statistic represents actual humans dealing with major challenges:

• Mental health spiral: Studies show unemployment can increase depression rates by up to 50%. Nothing destroys your vibe quite like sending out 200 job applications and hearing crickets in response.

• Financial nightmare: The average UK household would be completely broke after just two months if the main earner lost their job. That's terrifying!

I met this guy Andy who lost his banking job during the 2008 crisis. He told me: "The worst part wasn't even the money. It was having to tell people what I did for a living. I went from 'investment analyst' to 'between opportunities' overnight. My dating app matches dropped by like 90%.Social Costs – When Communities Get Hit

Unemployment doesn't just affect individuals – it ripples through entire communities:

• Crime goes up: When that steel factory in Redcar closed in 2015 and 3,000 people lost their jobs, local theft increased by 14%. Desperation makes people do things they'd never normally consider.

• Ghost towns form: When a town's biggest employer shuts down, it's not just those workers who suffer. The local Greggs sells fewer sausage rolls. The pub loses its after-work crowd. The charity shops lose volunteers. Before you know it, the high street looks like a zombie apocalypse film set.

I visited a former mining town in Wales last year (I originally graduated at Cardiff University). The mines closed in the 80s, and four decades later, they still haven't recovered. The town centre has more betting shops than actual shops. It's like the economic equivalent of a long COVID – the original problem is gone, but the symptoms linger for years.

Economic Costs – When the Whole Country Takes a Hit

For the national economy, high unemployment is like trying to run a marathon with one leg:

• Lost output: Every unemployed person is a person not making stuff or providing services. The UK loses roughly £14 billion for each percentage point of unemployment above the natural rate. That's enough to build about 40 massive hospitals!

• Government spending does not add up: In 2022/23, the UK spent around £40 billion on working-age benefits. Meanwhile, each unemployed person means less income tax revenue. It's a double financial whammy for the government.

• Inequality on steroids: Unemployment doesn't hit everyone equally. If you're young, from an ethnic minority, or living in certain parts of the UK (looking at you, post-industrial North), your chances of unemployment are way higher. Young UK workers (16-24) face unemployment rates three times higher than older adults. Not exactly fair, is it?

Why "Jobs for Everyone" Is Like Promising Free Pizza Forever

Given how much unemployment costs us all, why don't governments just create enough jobs so everyone has one?

Well, they can't. Even if the government went on the ultimate hiring spree tomorrow, some unemployment would still exist because:

1. People will always quit rubbish jobs to find better ones (frictional unemployment)

2. Technology keeps making certain jobs obsolete faster than workers can retrain (structural unemployment)

3. Some people have skills that just don't match ANY available jobs

Here's an example: Imagine being the world's best VHS video repair technician in 2025. At one point, that was a decent career! Now? Not so much. While you might eventually retrain as a streaming service content moderator or something, that awkward in-between period counts as structural unemployment.

How to Drop This Knowledge in Your IB Exams

When you're tackling those exam questions about unemployment:

• Remember that Switzerland's "amazing" 2% unemployment rate isn't necessarily better than the UK's 4% – they might just have different natural rates

• Government policies can reduce unemployment, but claiming they'll eliminate it completely is like promising to control the weather - hardly likely!

• Countries with rigid labour markets (like it's super hard to fire people) often have higher natural unemployment rates

For data response questions, look at countries like Spain (with historically high unemployment) versus Japan (consistently low). The differences often reflect varying natural rates rather than just policy effectiveness.

The Takeaway: Some Unemployment Is Just Part of the Economic Game

Understanding the natural rate of unemployment is like knowing there will always be traffic jams on the M25 – it's just how the system works. A healthy, dynamic economy will always have SOME level of unemployment.

So next time you hear a politician promising "jobs for absolutely everyone," you can roll your eyes knowingly. As an IB Economics student, you understand that while we should definitely try to reduce unnecessary unemployment, eliminating it completely is about as likely as finding affordable housing in central London – theoretically possible but don't hold your breath! (It is possible, but it is not probable)

Remember – unlike the natural rate of unemployment, your IB exams are something you CAN control with enough prep!

Stay well