Clustered around the term “frictional unemployment”, which is used to refer to the period between leaving a job and starting a new one,are a number of benefits.
As more companies double down on hiring freelancers and part time employees, frictional unemployment is increasingly a common scenario.
Temporary Nature of Frictional Unemployment
With frictional unemployment taking place as people transition from one job to the next, it is mostly temporary. Even though it is transient people prefer to avoid this often short period of unemployment, so much so they search for a new job while working in their current one, and switch from one to the other seamlessly.
Frictional unemployment is an indelible component of an economy. Additionally movement from one job to another happens more often when the economy is healthy. It also provides several benefits to an economy as companies can find employees that are a better fit for a job,and have the right type of qualifications.
While frictional unemployment is always present, it decreases sharply when the economy is in recession and the amount of jobs available is minimal.Healthy economies that have low unemployment rates result in people spending less amount of time without a job. They can therefore move to better paying jobs or those that are a closer match to their skill set without going through a prolonged frictional unemployment phase.
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Voluntary Component of Frictional Unemployment
Often people after leaving a job opt not to take up the first employment offer they receive as they are not happy with or it does not match their skill set. This voluntary rejection of jobs means that job seekers spend longer durations classified under the frictional unemployment category. People also undergo a period of voluntary frictional unemployment when they move from one part of the country to another. Some of the influencing factors are marriage and the subsequent shift to be near a husband or wife, and the need to care for ailing relatives which results in frictional unemployment for periods up to a year.Additionally people who rejoin the ranks of those searching for jobs, after taking time out to raise a child or dealing with illness are considered to be in this unemployment category.
Fresh graduates from college are also considered to be going through a phase of frictional unemployment as they hunt for jobs. At this stage, graduates often join jobs that do not match their skill set and quickly switch to others when they get a better opening. Others among the pool of fresh graduates opt to remain unemployed, and turn down job offers for a short time until they find employment that suits their skill sets.
How Frictional Unemployment Benefits Employees
Quitting a job and going through a period of frictional unemployment to find a more satisfying or higher paid opening is popular among employees who have significant savings. Employers also benefit in this scenario as they get staff who are highly motivated to excel in their job and bring a positive outlook which they share with co-workers.
Optimal frictional unemployment rates point towards an economy that is healthy. Additionally as people move to better paying jobs or those that suits their skill set the economy benefits in the long term.