Government and the Macro‑economy: Employment and Unemployment
Objective
Understand the causes and characteristics of seasonal unemployment and be able to identify it in real‑world contexts.
What is Seasonal Unemployment?
Seasonal unemployment occurs when workers are unemployed at certain times of the year because the demand for their labour fluctuates with the season. It is a normal, predictable form of unemployment in economies that have activities tied to weather, holidays, or annual cycles.
Key Features
Predictable and recurring each year.
Linked to industries such as agriculture, tourism, construction, and retail.
Workers often move to other jobs or regions during off‑peak periods.
Usually short‑term, lasting weeks or months.
Causes of Seasonal Unemployment
Weather‑dependent production – Crops can only be planted, tended, and harvested during specific months.
Holiday demand – Retail and hospitality see higher demand during Christmas, summer vacations, or festivals.
Tourism cycles – Tourist destinations experience peaks in summer or winter (ski resorts).
Construction schedules – Building work slows or stops in extreme weather conditions.
Examples
Farm workers in the UK are employed during the harvest of wheat (July–September) and are idle afterwards.
Hotel staff in coastal towns work intensively during summer holidays and may be laid off in winter.
Retail assistants hired for the Christmas shopping period are often redundant after December 31.
Impact on the Economy
Seasonal unemployment can affect aggregate output and income, but because it is predictable, governments and businesses can plan to mitigate its effects. The main impacts include:
Fluctuations in regional unemployment rates.
Variable tax revenues and welfare payments.
Potential under‑utilisation of labour skills during off‑peak periods.
Government Policies to Reduce Seasonal Unemployment
While seasonal unemployment cannot be eliminated entirely, governments can adopt measures to smooth income and employment levels:
Training programmes – Offer off‑season training to improve skills and employability.
Subsidised part‑time work – Encourage firms to retain workers part‑time throughout the year.
Unemployment benefits – Provide short‑term support during off‑season periods.
Promotion of diversification – Encourage regions to develop non‑seasonal industries.
Comparison with Other Types of Unemployment
Type of Unemployment
Cause
Typical Duration
Policy Focus
Seasonal
Fluctuating demand due to seasons
Weeks–months (predictable)
Training, part‑time schemes, diversification
Frictional
Job search and matching
Days–weeks
Job‑centre services, information systems
Structural
Mismatch of skills/technology
Months–years
Education, re‑skilling, relocation assistance
Demand‑deficient (cyclical)
Insufficient aggregate demand
Months–years (linked to business cycle)
Fiscal/monetary stimulus
Suggested diagram: A line graph showing employment levels in a seasonal industry (e.g., agriculture) over a 12‑month period, highlighting peak and off‑peak months.
Key Points to Remember
Seasonal unemployment is regular and linked to the calendar.
It is most common in agriculture, tourism, retail, and construction.
Government interventions aim to smooth income and retain skills.
Understanding seasonality helps in interpreting regional unemployment statistics.