As a result of the financial and
banking crises of 2007-08, a large numbers of workers have been laid off. Those
lucky enough to hold their jobs have had to compromise by having their salaries
reduced; a reduction in working hours; and other benefits, as organization seek
to reduce labour cost in order to survive. For healthy social and economic
dimensions unemployment rate is a very important indicator. From an economic
prospective, unemployment shows there is unused labour available. Increasing
the rate of unemployment may result in individual income loss and increased
pressure on the government’s social fund, for example social security or job
seekers allowance.
In the USA the financial crisis
began in December 2007, at which point job losses start. Unemployment increased
dramatically following the bankruptcy of the Lehman Brothers. The USA’s
unemployment rate suddenly rose by 8.7% and within six months unemployment peaked
at 10.0% and then began to drop. This 10.0% drop represented 3.1 million young
persons, who became unemployed as a result of this crisis. The unemployment
rate in the world increased during the crisis as can be seen in the diagram
below and by clicking here.
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Shows world unemployment rates in
eight bands arranged in an iron-grey palette
|
There was a large fall in the UK’s
retail industry; especially in sectors such as DIY and furnishing. Business
sales and profitability were falling and banks were not in the position to
support them for continued trading. Several well-established market brands
either went out the business or had to shut down a large numbers of their stores
like; MFI, Woolworths and Blacks etc. These closures/reductions were the main
reason for the rise unemployment particularly in the 18 to 24 age range. With the
reduction in retail sales and an increase in unemployment government tax
revenue also fell. In Q4 of 2008 UK’s gross domestic products (GDP) fell by
1.5% and as a result the country officially entered a recession period.
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