Evaluate the extent to which fiscal policy is the best method that can be used by a government toreduce structural unemployment
Fiscal policy is the best method that can be used by a government
Fiscal policy can decrease unemployment by helping to increase aggregate demand and the rate of economic growth. The government will need to pursue expansionary fiscal policy; this involves cutting taxes and increasing government spending. Lower taxes increase disposable income (e.g. VAT cut to 15% in 2008) and therefore help to increase consumption, leading to higher aggregate demand (AD). With an increase in AD, there will be an increase in Real GDP (as long as there is spare capacity in the economy). If firms produce more, there will be an increase in demand for workers and therefore lower demand-deficient unemployment. Also, with higher aggregate demand and strong economic growth, fewer firms will go bankrupt meaning fewer job losses.
nvesting in education increases productivity in that the output of the worker increase, this correlates clearly through gross domestic spending on R&D being defined as the expenditure on R&D carried out by companies, research institutes, university and government laboratories in the UK. According to the OECD (2019), in 2015, 1.7% of UK GDP was spent on R&D compared to 3.4% in of Switzerland GDP in 2015, highlighting the disparity of investment, and in the same time periods Switzerland has seen less volatility in the economy then the UK has over time. Training increases the effective output of each worker; this is because there is access to better quality of knowledge, enabling workers to adapt to a changing economy which requires a range of different skills. HP i-Kuppam access to better quality of knowledge increasing the output of workers, HP launched the world’s first i-community or inclusive-community at Kuppam in February 2002 where the community have access to IT based solutions to everyday life situations, which have socio-economic benefits, as well, thereby helping this local market to grow faster. HP had access to infiltrate into a new market with prospective employees to hire, following Bartlett and Ghoshal’s model of responding to local responsiveness in terms of needs in the market, the intent of creating was to create an impact on the community. Even more so, it integrates a systems approach with various other initiatives such as the training centre being linked to satisfy goal enhancing employment opportunities through IT.
Considering the research, productivity has been at a decrease and stagnant due to stringent labour market regulation and the deregulation of these has led to an increase in profitability. That is, removing flexible working arrangements for example. Despite this, it must be considered that with streamlining to make firms efficient comes volatility within the workplace creating a toxic insecure environment which wouldn’t promote productivity and performance. Again, this is to be examined on a case by case basis as different organisational cultures may vary in terms