Legal Definitions - structural unemployment

Structural unemployment refers to a type of joblessness that occurs when there is a fundamental mismatch between the skills that job seekers possess and the skills that employers require, or when jobs are available in different geographical locations than where job seekers reside. This form of unemployment is often long-term and results from significant, underlying changes in the economy, such as technological advancements, shifts in industry, or globalization.

Here are some examples to illustrate structural unemployment:

• Imagine a town where the primary employer for decades was a large automobile manufacturing plant. Due to advancements in robotics and automation, the plant significantly reduces its human workforce, replacing many assembly line positions with automated systems. The workers who were laid off possess highly specialized skills in manual assembly, but the few new jobs created at the plant require expertise in robotics programming, data analytics, or advanced machinery maintenance. These displaced workers face structural unemployment because their existing skills no longer align with the demands of the evolving manufacturing industry, and retraining for the new roles can be a lengthy and challenging process.

• Consider a region historically dependent on the coal mining industry. As national energy policies shift towards renewable sources like solar and wind power, many coal mines close down permanently. Thousands of experienced coal miners, whose skills are specific to extraction and underground operations, find themselves without work. While there might be a growing demand for technicians in the renewable energy sector, these jobs often require different technical training and may be located in different parts of the country. The miners are experiencing structural unemployment because their specialized skills are no longer in demand due to a fundamental change in the energy sector, creating a significant skills gap and potential geographical mismatch.

• Think about a country where a significant portion of its call center operations were outsourced to another nation with lower labor costs. Many customer service representatives in the original country, who were skilled in phone-based support and data entry, lose their jobs. While the economy might be growing in other sectors, such as software development or healthcare, the skills required for these new jobs are vastly different. These former call center employees face structural unemployment because their specific customer service skills are no longer in high demand within their local job market due to global economic shifts, and transitioning to the growing sectors requires substantial retraining and education.