Frictional unemployment is an important part of a healthy and thriving economy. It is seen as voluntary or ‘natural’ unemployment resulting from individuals and households,workers and employers, making decisions which sometimes lead to a disconnect between the needs of the labour market and worker decisions.

Frictional unemployment occurs when there is a gap between those looking for work and available jobs. When individuals or households are looking for work but haven't yet found the right fit, and when employers are looking for qualified workers but haven't yet identified or located them, there will naturally be some unemployed workers and unfilled jobs. This is an important and natural part of a healthy economy and can be regarded as a sign of vibrancy in the labour market.

Frictional unemployment is caused by factors such as workers moving from job to job, trying to move up the career ladder and search for better pay, new workers entering the labour market, and those who take extended periods of time away from their employment. For example, when school leavers enter the labour market, they may stay out of work until they have the right skills and experience. Those who leave their job to look after a family member or decide to return to school similarly contribute to frictional unemployment.

Frictional unemployment is seen as positive and is necessary for the long-term health of an economy. It allows workers to search for employment opportunities that best match their skills, interests, and needs and can ultimately lead to job satisfaction and a more productive workforce. Employers similarly benefit from frictional unemployment by being able to access a larger pool of talent and choosing the best-suited candidate for the job.

Frictional unemployment differs from other forms of unemployment, such as cyclical unemployment which is caused by changes in the economy, and structural unemployment which is caused by technological change or changes in production methods. It is important to note that there can be too much frictional unemployment, resulting from a weak labour market, meaning that too few jobs are available, or if the skills mismatch created by frictional unemployment is large. Both of these conditions can have negative economic consequences. To prevent an economy from suffering as a result of frictional unemployment, policy makers can introduce various measures, such as employment incentives and job search assistance, to facilitate workers’ transitions.

Frictional unemployment is an important part of a healthy and thriving economy. It is a natural and necessary process, allowing people to search for the most suitable job and allowing employers to select the best-suited candidate for the job. It is important to note, however, that too much frictional unemployment can lead to a weakened labour market and result in negative economic consequences. Policymakers must remain mindful of this issue and introduce measures to ensure that frictional unemployment does not lead to large-scale unemployment and job insecurity.