9 Impact of unemployment on society and individuals

An unemployed person is a person who has no job but is looking for a job.

Unemployment is a problem in every country. Not just for companies and employees The unemployment rate also affects the country’s economy.

The effects of unemployment on society and individuals are 9 as follows.

1. A person loses a source of income.

A person’s income has many sources ranging from salary, wages, profit from sales. to profits from investing in money and capital markets. However, it cannot be denied that salary and wages are one of the main sources of income for a person.

This means that a person will lose his primary source of income if he is laid off from his primary job. In fact, this main income can be used for important purposes such as meeting daily needs and medical care.

2. The purchasing power of the people is declining.

loss of core income (decrease disposable income) Finally, it will lead to a reduction in consumption expenditure due to the reduced ability or purchasing power of the people. For example, A, who initially received a monthly salary of 5,000,000 IDR and could go to beautician every month. Had to stop these expenses because I was fired from the company.

If this happened not only to A but to millions of other people as well. This will result in lower economic growth. If you let this problem protract More and more people will fall into poverty. and the country’s economy will come to a halt.

3. Reduced economic growth

Economic growth, or often calculated by GDP (gross domestic product) is one indicator that the country’s economy is moving. There are several methods used to calculate GDP, one of which is the spending approach.

To calculate GDP by the expenditure method There are several economic factors to consider: government spending (in simple terms, taxes-subsidies), household consumption, investment and net exports.

when the purchasing power of the people decreases Household spending will also automatically decrease, and the tax revenues used by the government will also decrease. Since one type of tax is levied on income (salary) and value added (VAT), so if citizens are not salaried then there is no tax goal. and because the purchasing power of the people decreased VAT income will also be reduced.

from an investment point of view The initial drop in purchasing power slows down. foreign investors Secondly, the drop in purchasing power due to falling income will encourage domestic investors to spend money to meet their daily needs. As a result, the investment sector also decreased.

4. Increased health problems

Unemployment also contributes to health problems. Few people have depression because of being fired. This can happen for a variety of reasons, such as being shocked at your joblessness or feeling worthless because you thought you were fired for not meeting the company’s requirements.

There are ways for people to deal with their fear of being fired. This includes escaping through the consumption of illegal alcohol and drugs. In the end, this would also worsen his health. Another reason unemployment affects health is a decrease in the ability to see a doctor, buy medicine, or consult a psychologist and psychiatrist.

5. An increase in crime

The impact of rising unemployment on the number of crimes has been the object of much research by economists. The assumption of this research is Losing an important job will motivate people to take action. Including committing crimes to survive. This assumption concludes that if the unemployment rate increases The crime rate in the area will also increase.

Several studies have confirmed the existence of this relationship. Several other pieces prove otherwise. That is, crime rates are not correlated with unemployment rates. However, the results of these studies depend on the data and research methods used. as well as the area studied a lot

6. Potential government spending

Unemployment not only reduces tax revenues. But it can also increase government spending. This is because the government needs to provide both monetary and non-cash assistance to the unemployed. In order not to increase unemployment affects the economy.

A simple example is the pre-employment card provided by the Indonesian government during the recent COVID-19 pandemic. Training by attracting many partner companies

The hope is unemployment caused by COVID-19. will not affect systematically And when the epidemic ends or the income from the strike People can survive using newly acquired skills.

7. Increased potential for debt default

To meet a wide range of important and valuable needs. Many individuals use the mechanism of borrowing money from banks. Therefore, when a person experiences dismissal from employment (PHK), there is a possibility that he will not be able to pay his debts. If this happens in large numbers at the same time It is possible that the growth of the banking industry in Indonesia will slow down.

Many banks overcome this with programs such as relief from interest paymentsdebt renewal or even both But to get this facility The person must tell the truth about the termination he received.

8. Decreased work skills

Those who do not work for a long time may lose their skills. This was because he hadn’t practiced or hone his skills for a long time. While these work-world skills are important for the unemployed to retain in order to get a new job, they are not.

This problem can be solved by taking various courses when unemployed and for some occupations can be solved by being a freelancer. Taking courses or freelancing allows individuals to acquire new skills. while retaining the original skill

9. The impact of unemployment on business

For companies, unemployment can have both positive and negative effects. This is beneficial because there is a large number of workers ready to be recruited into the company. Especially for employees with the right skills.

However, unemployment can also have a negative impact on business. Due to lower purchasing power due to the number of unemployed people, the company’s income has decreased.

Given the above effects, it is not surprising that the unemployment rate in a country It must be managed as best as possible.