Personal Development
Frictional Unemployment: Examples, Causes, and ...

Frictional Unemployment: Examples, Causes, and ...

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What is Frictional Unemployment?

Frictional unemployment is a type of short-term unemployment which occurs when people are voluntarily searching for a new job or career. While this is sometimes portrayed in a negative light, it can actually be a sign of a healthy economy since it indicates there is an optimism about the future and a belief that one can find adequate job prospects. Types of frictional unemployment can include leaving a job to pursue a new one, or taking a break to find the 'right place.'

What Causes Frictional Unemployment?

Frictional unemployment rises when the economy is robust and job opportunities are plentiful. Common causes of this type of unemployment include dissatisfaction with a current role or company, the need for a higher salary, the pandemic prompting people to rethink their futures, or the desire to find a job which aligns with one's values and purpose. There is evidence to suggest this theory is true: according to a survey conducted by Ernst & Young, over half of employees declared they would quit their jobs if their company did not offer flexibility after the pandemic.

My friend Dave offers a great example of this phenomenon. He is completely transitioning industries and fields, indicating a willingness to take risks. Moreover, a friend of mine recently had her second baby and decided it was more important to stay home than to continue working. Consequently, she put her career on hold in order to prioritize motherhood. The good news is this type of decision is becoming increasingly socially acceptable, particularly with companies such as LinkedIn making strides towards becoming more inclusive.

At the heart of all causes of frictional unemployment is the same theme - the search for meaning and purpose. We thrive when we can relate to our work and goals by understanding the purpose behind them. Without this, it can be easy to become lost and have a lack of direction.

Impact of Frictional Unemployment

Frictional unemployment can be detrimental to businesses, as it can be difficult to retain talent, a concept known as the Great Resignation. Because of this, it is imperative for employers to invest in the employee experience in order to create a strong and lasting connection with people. On the other hand, the talent market can become incredibly competitive, with candidates having a plethora of options and being able to field multiple offers. For this reason, it is important to stand out and make positive impressions.

Understanding Frictional Unemployment in a Tight Labor Market

When there is an oversaturated labor market, it can be challenging to win over top talent. It is, however, important to remember the impact that frictional unemployment can have. Here is what you should know.

The Benefits of a Healthy Economy

When frictional unemployment is high, it is a sign that the economy is sound. This is a great thing for both businesses and individuals, as it means more people have the opportunity to find a job which brings them fulfillment, passion, and clarity. At Shiken, we help people worldwide to achieve this goal - to live with greater purpose and understanding.

The Different Types of Unemployment

When people hear the word 'unemployment', it is often seen in a negative light. Frictional unemployment, however, is remarkably different from other types of unemployment. There are three main types: cyclical, structural, and frictional.

  • Cyclical unemployment is related to the slowdown of an economy, with businesses reducing hiring and laying off employees. This can lead to a rise in unemployed people.
  • Structural unemployment occurs when there are seismic shifts in the economic structure. For instance, the development of clean and renewable energy sources has caused some fossil fuel companies to scale back, leading to layoffs.
  • Frictional unemployment is when people voluntarily look for new job opportunities, seeking jobs which offer a better salary and better benefits. This type of unemployment is considered a sign of a healthy and robust economy.

Retaining Talent and Overcoming Frictional Unemployment

With the current economy, organizations may have to consider how to best retain talent amid frictional unemployment. Here are a few strategies that can help:

  • Promote Internal Career Mobility
  • Invest in an internal talent marketplace tool and actively encourage employees to pursue new opportunities. This not only helps the organization find qualified candidates but also gives employees a sense of growth and progress.
  • Offer Learning and Professional Development Opportunities
  • By providing employees with learning pathways and training, organizations can help to develop a knowledgeable and skilled workforce. Professional development can also be a powerful tool for boosting job satisfaction.
  • Invest in Coaching
  • In addition to job training, virtual coaching is an important tool for building mental strength and resilience. Coaching can lead to improved productivity, job satisfaction, and a reduced turnover rate.
  • Review the Talent Acquisition Process
  • The recruitment process can be a great opportunity to diversify the talent pool. Innovative strategies should be used to ensure that the acquisition process is meeting the needs of job seekers. Partnering with organizations that specialize in workforce development can be a great way to attract and develop top candidates.

When considering job satisfaction, it's important to remember that everyone has different needs. Look closely at the hiring practices of your company to make sure they are meeting the needs of the job seekers.

Impacts of High Unemployment on Women

High unemployment rates can be seen as a setback to the economic progress made by women in recent decades. Employers can help by creating initiatives that are focused on hiring and retaining women. Consider offering support for childcare, flexible work schedules, and job sharing options. Collaboration with workforce development organizations that emphasize diversity in the job market can also help to find meaningful employment for job seekers.

Navigating the Digital Interview Process

With today's digital age, job interviews have shifted from the traditional in-person meetings to those that take place online. If you're unfamiliar with the process, utilize the tips provided by Shiken to help applicants stand out from the competition with their virtual meeting.

Developing a Contingency Plan

Having a contingency plan in place can be invaluable to any organization in the event of an unexpected crisis. Shiken provides a guide to help organizations create a successful strategy for managing these types of events.

Creating a Successful Job Requisition Process

The job requisition is the first step for a successful recruitment process. For those who are new to the hiring process, Shiken has put together a guide to help ensure a smooth onboarding experience for recruiters and new hires.

Diversity Recruitment Strategy

Organizations that are looking for more diversity in their talent pool should also look into creating and implementing a diversity recruitment strategy. With this guide from Shiken, businesses can identify the most effective ways to ensure a successful strategy.

Adopting a Full-Cycle Recruiting Model

The process of onboarding new team members can sometimes prove to be a difficult task in terms of getting to know and understand the new hire's specific conditions. It is for this reason that Shiken highly recommends implementing a full-cycle recruiting model.

Such a model is invaluable for cultivating a culture of respect and understanding in the workplace. Not only will this be beneficial for the organization, but it also equips individuals with the necessary resources to face the complexities of today's ever-changing workforce.

What it Entails

  • Identifying the specific recruiting goals for the organization
  • Clarifying the job description and its expectations
  • Establishing a timeline for the recruitment process
  • Having meaningful conversations between the hiring organization and the candidate
  • Reviewing and analyzing the skills and experiences of the new hire
  • Creating an effective onboarding plan for the new team member

A full-cycle recruiting model is a great way to ensure a successful start for new team members. With the help of Shiken, organizations and individuals have the means to stay ahead of the modern workforce.

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