Unemployment is one of the most pernicious economic problems faced by people and nations across the world. Unemployment is essentially the situation whereby individuals who are actively seeking to work and engage in meaningful economic activity, cannot do so due to a lack of job opportunities. In times of high unemployment, it can symbolise an economy in distress, and when unemployment is very low in comparison to the rate of growth of the population, it can be a sign of a overheated economy.

Unemployment can be divided up into four main categories: frictional unemployment, cyclical unemployment, structural unemployment and institutional unemployment. Frictional unemployment is essentially the result of the time taken to transition between two different jobs and occurs in times of normal economic activity. Cyclical unemployment occurs at times when there is an overall lack of demand in an economy and businesses cut back on employees. Structural unemployment happens due to obsolescence of certain job sector and can occur due to advancements in technology as well as shifts in the political structure of an economy. Institutional unemployment is when government regulations impede businesses from hiring employees in a particular sector.

To minimize the ill effects of unemployment, governments offer a certain level of income support, through an unemployment insurance policy, which can provide temporary support to those who meet specific criteria. Data on the state of unemployment is collected and published by governments and is used to inform economic decisions and regulations. Governments also try to actively create job opportunities, either directly in the public sector or through incentives in the form taxation breaks and other subsidies to encourage businesses to hire workers.

Unemployment is an issue for every economy, as it can severely constrain economic growth, lead to losses in revenue and in turn negative fiscal implications. When unemployment is too high, it can lead to social unrest as well. It is thus important to take measures to ensure that people have the ability to seek meaningful employment and that the overall economic growth is distributed between the labour force in order to create a balanced and sustainable economic structure.