Estimates given shows that unemployment levels mostly stayed below the 5 percent level with coming down to nearly 1 percent during 1950. However, the level of unemployment started to rise gradually during the period of 1970 reaching to 8.5 percent during 1991. This reflects a meteoric rise in the nature of unemployment in Britain in regards to other economies of Europe. Estimates reveal that unemployment in Britain rose by 31 percent unlike a rise of only 4 percent in France during the early period of 1990. (McLaughlin, 1992, pp. 1-2) As a solution measure, the right approach to labor policy needs to be determined.
It is observed that the nature of unemployment varies along different countries around the world depending on various factors. Factors, which are mainly observed to contribute to the unemployment growth after the 1970 period, can be listed as the different set of ideologies regarding management of wage structure, the pattern of labor elasticity and labor potential of different countries. Differences in the degree of labor potential in the different countries owe its occurrence due to the promotion of open-market economy. Promotion of the open-market economy led to the use of use of exchange rates to different regions of the market. This is taken to be a potential reason for the differences in labor potential in different market economies around the world. The above fact can also be demonstrated in respect of the traded goods area of the German Republic. It is found that the growth in production in the traded goods section of the German economy surpasses the productivity growth in like sector in Britain. The above fact owes its effects from two reasons. The first reason that can be attributed to the above cause is the rise in wages in the traded sector in Germany in comparison with no such wage rise in Britain’s traded goods sector. ...
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