Unemployment causes widespread poverty, increased crime rates, political instability, exploitation of labor and reduced economic development in the society. Unemployment may also lead to psychological problems, such as mental illness, anxiety and depression.
Widespread Poverty Unemployed people have no source of income, which makes them unable to access basic amenities like quality healthcare, education and nutrition. Therefore, such individuals are compelled to live in poor conditions.
Moreover, widespread unemployment causes a reduction in spending power of the economy. For less diverse economies, this may have a ripple effect that causes further loss of jobs. In this regard, an economic recession may occur due to unsustainable unemployment rates.
Political Instability Widespread unemployment fuels the growth of anti-government activism and revolutions. In most cases, dissatisfied citizens take to the streets in protest against harsh economic times, often resulting in clashes between law enforcement agencies and protesters. For example, the 2012-2017 economic crisis in Venezuela resulted in widespread protests, urban violence and civil unrest in most of its cities.
Exploitation of Labor Unemployment in a society may lead to a surplus of labor in the economy. In this regard, employees readily accept to work for low wages in harsh environmental conditions. This sense of desperation by employees exposes them to mistreatment and exploitation by their employers. Exploitation of labor is evident is some Third World countries, such as India, where skilled laborers earn less than $2 per day despite their experience and educational qualifications.
Reduced Economic Development To curb the negative effects of unemployment, some governments initiate unemployment benefit programs for its temporarily displaced citizens. Such programs are costly to taxpayers and may lead to government borrowing or reallocation of other developmental funds. This can lead to reduced spending on infrastructural development, education, health and other economic development programs.
Psychological problems Loss of employment may result in mental illness, depression, loss of self-esteem and increased anxiety. This is because most people take pride in their ability to provide for their families. Extreme cases of psychological problems arising from unemployment may lead to suicide, domestic violence or divorce.
Waste of Skills Prolonged unemployment may cause loss of vital skills and productivity. This is because professional skills, such as those found in medical and engineering fields, need constant use and upgrades in order to keep up with the latest technological innovations. Furthermore, individuals who remain unemployed for long periods of time face challenges in finding new jobs, resulting in a waste of skills.
Increased Crime Rates As a result of unemployment, idle youth are forced into criminal activities, such as armed robberies, drug trafficking, gambling and prostitution, in order to make ends meet. Such crimes are common in inner cities and less-developed nations due to inadequate employment opportunities. In addition, due to widespread unemployment, poorly paid employees are more susceptible to corruption, embezzlement of funds and other social ills.
On the other hand, unemployed youth often join illegal gangs and terrorist organizations in a bid to earn some income. For example, the growth of piracy and emergence of armed terrorist groups in Somalia was widely fueled by unemployment due to decades of political instability.