Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What best describes structural unemployment?

1. Unemployment caused by seasonal variations in demand

2. Unemployment resulting from voluntary job changes

3. Unemployment due to changes in an industry's structure

4. Unemployment resulting from economic recession

The correct answer is: Unemployment due to changes in an industry's structure

Structural unemployment refers to a form of unemployment that arises when there is a mismatch between the skills of workers and the needs of employers within an economy, often caused by shifts in the structure of an industry. This can happen due to technological advancements, changes in consumer preferences, or globalization, which may lead to certain industries declining while others emerge. When an industry's structure changes—such as the decline of manufacturing jobs due to automation or the rise of the tech sector—workers may find themselves without the necessary skills or training to compete for new available jobs in different sectors. This form of unemployment is distinct because it is not temporary and does not arise from fluctuations in demand over time, nor is it simply a byproduct of broader economic downturns. Understanding structural unemployment is crucial for policymakers, as it highlights the need for workforce training programs and educational initiatives to help workers transition into new roles that are in demand, thus addressing the underlying causes rather than just the symptoms of unemployment.