Written by Candice Wolken
May 3, 2019
Frictional unemployment is defined as when a worker is in the process of moving from one job to another. This type of unemployment is generally considered by economists to be a natural part of the labor market but can come with significant costs to your organization.
There are several frictional unemployment examples that show why an employee may be stuck in limbo within their current role:
Frictional unemployment is generally considered to be short-lived and differs from structural unemployment (i.e., industrial reorganization typically due to technological change) and cyclical unemployment (i.e., the regular ups and downs of growth or production within a business cycle).
Your organization can contribute to frictional unemployment when it delays filling a position due to a perceived lack of quality candidates, even if quality candidates are available. But if your employees leave voluntarily in pursuit of better positions elsewhere, this cause of frictional unemployment can be a major concern.
In this case, employees who become frictionally unemployed may not be as productive due to job seeking or lack of motivation, and may even contribute toward poor morale. Additionally, the turnover cost of recruiting new hires is expensive to the business due to recruiting and training expenditures.
In growing economies, it is generally believed that frictional unemployment will rise as workers are more confident in their ability to secure a better position than they currently have. Voluntary turnover was at 14.2% across all industries as reported in our 2018 Turnover Report.
Mitigating the impacts of voluntary turnover that cause frictional unemployment in your organization may be critical to maintaining a healthy workforce.
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