It was predicted that global unemployment would rise by over two million in 2017. Unemployment rates, however, vary between countries. Some governments use fiscal policy measures and others use supply-side policy measures to reduce unemployment. The unemployment rate can also be influenced by trade protection.

Mark scheme

Marking points from the official mark scheme (May/June 2019). The mark or mark type is shown in brackets.

1. 8 Government spending
2. 8 Taxation
3. Total demand may be lower (1) higher cyclical unemployment / recession (1).
4. Lower labour mobility (1) causing structural unemployment (1).
5. Greater pace of technological advancement (1) replacing labour / causing structural unemployment (1).
6. Greater voluntary unemployment (1) due to higher benefits (1).
7. Labour force growing faster than economy (1) creating shortage of jobs (1).
8. Lower education standards (1) means workers are less employable (1).
9. Labour market restrictions (1) may make employing workers more expensive (1).
10. Supply-side policy measures increase productive capacity within the economy (1).
11. Education and training (1) could raise the skills of workers (1) labour productivity could rise (1) firms may be encouraged to take on more workers (1).
12. A cut in income tax (1) may increase total (aggregate) demand (1) causing firms to produce more (1) and so take on more workers (1) it may also have an incentive effect (1).
13. A cut in unemployment benefit (1) may encourage more of the unemployed to take jobs (1) if wages are now higher than benefits (1).
14. Privatisation (1) could result in an expansion of firms (1) if they are more competitive (1) and so they may take on more workers (1).
15. Subsidies (1) will lower costs of production (1) encouraging firms to expand (1) employ more workers (1).
16. Trade Union reforms (1) may encourage firms to employ more workers (1) e.g. cheaper / more flexible labour force (1).
17. Up to 5 marks for why it should:
18. The industries might be infant industries (1) not able to take full advantage of scale (1) and so not able to compete on price (1).
19. The industries may be declining industries (1) if they go out of business quickly, unemployment may increase (1).
20. The industries may be facing dumping (1) which will make it difficult for firms to compete against foreign producers selling at below cost price (1).
21. The government may want to reduce a current account deficit (1) caused by imports exceeding exports (1) encourage economic growth (1) create more jobs (1).
22. Up to 5 marks for why it should not:
23. It may push up the price of imported products if tariffs are used (1) costs of production may rise (1) causing inflation (1) consumers' purchasing power would fall (1).
24. It may reduce competition for domestic firms (1) this may reduce efficiency (1) raise prices (1) reduce quality (1).
25. Other countries may retaliate (1) reduce exports (1).
26. Opportunity cost (1) e.g. resources could be used to support education / healthcare / infrastructure (1).
27. Free trade may result in lower prices (1) greater variety for consumers (1).