Association of Chartered Certified Accountants (ACCA) Certification Practice Test

Which of the following best describes structural unemployment?

1. Temporary job loss due to seasonal demand

2. Job loss caused by automation and technological advancements

3. Unemployment occurring due to long-term industry changes

4. Unemployment that fluctuates with economic cycles

The correct answer is: Unemployment occurring due to long-term industry changes

Structural unemployment occurs when there is a mismatch between the skills of the workforce and the demands of the job market, often due to long-term changes in the economy or specific industries. This type of unemployment can arise from several factors, including technological advancements that change the nature of jobs available, shifts in consumer demand, globalization, and changes in the structure of industries. When industries evolve, certain skills may become obsolete, leading to job loss for workers who lack the necessary qualifications for the new roles that emerge. For instance, if a country shifts from manufacturing-based jobs to technology-driven sectors, workers who are unable to adapt or retrain may find themselves in a state of structural unemployment. This concept differs from other types of unemployment, such as cyclical unemployment, which is influenced by economic downturns, or frictional unemployment, which represents the time it takes for individuals to transition between jobs. Similarly, seasonal unemployment relates specifically to fluctuations in demand throughout the year, while the effects of automation can lead to a more immediate type of job displacement but not necessarily capture the broader, long-term changes in industry structure that define structural unemployment.