IBUS 750-Exploring Global Business
May 31, 2014
Economic and Social Challenges in the United Kingdom and Their Impact on Business.
The Great Recession was a crisis that affected economies worldwide. During this time, some countries only experienced small declines in Gross Domestic Product (GDP) and declines in international trade while others experienced more severe repercussions such as increased unemployment rates, economic decline, increased poverty populations, higher crime rates, and other calamities. These challenges have caused the demise of businesses, mass employment layoffs, and a decreased ability to take financial risks across the world. Many ...view middle of the document...
As businesses began reducing their workforces, employers no longer had the ability to work at capacity without overworking their employees. To resolve this issue, many companies used staffing agencies to find temporary employees or used immigrants to fill the positions. This method has been beneficial in some ways to the employer and the United Kingdom’s economy.
Many businesses preferred to hire temporary employees or immigrants because they were not required to pay these individuals benefits. This tactic used by the businesses helped employers cut their wage expenses. The use of temporary employees helped the government by reducing the unemployment rate in the United Kingdom, which resulted in many citizens regaining faith in the country’s economy. It also helped the United Kingdom save money that would have otherwise been spent on more unemployment benefits.
As employers began to hire more immigrants, people began moving to the United Kingdom to pursue employment opportunities. Immigrants not only moved to the United Kingdom to fill open job positions, they also came to open their own businesses. “In late 2007, immigrants and non-UK born citizens represented around 40 per cent of business owners in the United Kingdom.” This likely represents the fact that several immigrants were limited to self-employment due to the restrictions placed on immigrant workers in United Kingdom. Immigrants that entered the United Kingdom during the Great Recession were usually young and at working age. Because these immigrants were working, they were likely to pay taxes and less likely to spend money on education. “Due to the young age of the immigrant workers, their need for pensions, long-term care and health care benefits are not as high as the need for older adults. For immigrants without restricted employment opportunities, the increase in entrepreneurship represented an opportunity to gain an initial foothold in the labor market.”
Once the reductions in workforce took place, the number of unemployed individuals began to rise. In the United Kingdom, individuals are labeled as unemployed if they are not working, actively seeking employment, have the ability to begin working within two weeks and are at least sixteen years old. Citizens that do not meet all of the above requirements are considered to be “economically inactive.” As the availability of job openings decreased due to the presence of economic decline, the number of unemployed citizens increased as well.
Although the unemployment rates in the United Kingdom appear to have rebounded tremendously, the current unemployment rate is not a true representation of the current state of the economy. There are economic classifications that manipulate the unemployment rate. A major contributor to the manipulative unemployment data is the population of those classified as the “Hidden Unemployed” group. The “Hidden Unemployed” individuals are those that are not included...