Available jobs and unemployed workers may not be a workable match.
Structural unemployment arises when changes in the economy leave workers' skills, experience or location poorly matched to available jobs. Technology, changing consumer preferences and international competition can reduce demand for some occupations while others expand. Job vacancies and unemployment can therefore coexist. A skills gap is one mechanism, not a judgement about a worker's worth. Pay, care responsibilities, housing, transport and the time needed to retrain can restrict adjustment. More aggregate demand alone may not close a specific mismatch, although demand conditions still affect how many suitable jobs are available.
- Cause
- Structural unemployment arises when changes in the economy leave workers poorly matched to available jobs. The needed skills, experience or location may differ from those of the people who have lost work.
- Mismatch
- Skills, experience, location, job conditions and practical constraints can matter.
- Vacancies coexist
- An economy can have both unemployment and unfilled roles when they are not workable matches.
Why vacancies do not guarantee a match
Adjustment time
Training, certification, relocation or accessible transport may take time and resources.
Technology
Technology can displace some tasks while creating others. Its net employment effect is not automatic.
Worked example: New vacancies require different skills
Routine processing jobs decline after firms adopt new software. At the same time, specialist maintenance jobs expand, but the displaced workers do not yet have the relevant certification. Some vacancies are in locations difficult for them to reach.
- The change in technology alters the pattern of labour demand rather than necessarily reducing every type of job.
- The certification gap prevents immediate movement into the growing occupations. Location constraints can reinforce the mismatch.
- Unemployment can coexist with vacancies because the people and jobs are not interchangeable at once.
- To assess persistence, examine training duration, entry requirements, transport and employer hiring practices; merely counting vacancies is insufficient.
Watch out for this
If there is at least one vacancy for every unemployed person, unemployment must disappear immediately.
Occupations, skills, location, conditions and matching time matter as well as the total number of vacancies.
Check your understanding
Which additional evidence is most useful when unemployment coexists with vacancies?
- The colour used in the job advert.
- Only the total population.
- Required skills and location compared with those of job seekers.