Question

When Jack and his co-workers refused to accept any pay cuts, his boss started to outsource the programming jobs to low-paid workers in another country. This outsourcing is happening throughout the programming industry.

Explain why this statement is Structural Unemployment ?

Answer 1

Structural unemployment occurs due to the shifts in the economy, technology improvement and workers' lack of requisite job skills, thus makes it difficult for workers to search job. This can also be caused due to the outsourcing of jobs or the replacement of human workers to automatons. Outsourcing may create long-term structural unemployment in a company as it involves laying off of few employees that initially ran the specific task. Thus the local workers will be stripped off with the employment opportunity for as majority of functions would eventually be sub-contracted to offshore outsourcing countries, thus potential cause of long-term structural unemployment