What is Seasonal Unemployment?

Definition: Seasonal unemployment is a situation that occurs when a temporary, regularly expected, phenomenon affects the number of available employment opportunities. To sum up, it refers to a particular moment of the year when the unemployment rate increases.

What Does Seasonal Unemployment Mean?

Seasonal unemployment is a normal phenomenon that many industries experience due to a wide range of conditions. The term seasonal refers to a temporary situation, normally an expected and recurrent one, such as a particular weather station or a moment of the year where demand decreases. From the government perspective these seasonal changes in the employment figures must be addressed to keep the unemployment rate low.

In this case, there are some counter measures that can be taken to balance things out. Some of these strategies involve the creation of some government sector’s jobs that alleviate this effect; another one would be to impose some rules that regulate the easiness of these seasonal lay-outs, among some other strategies that governments employ to deal with this scenarios. For companies, this is part of their regular practices to remain profitable, by reducing labor costs when the conditions are not particularly favorable for them.

Here’s an example of this concept.

Example

Winter Cream Co. is an ice cream store located in one of the most concurred shopping malls in Chicago. The store gets a lot of customers daily and it currently has 8 employees working on full time. But winter is coming and there will be a reduction in the demand for ice creams. This is an expected situation that the owners experience every year. According to our concept of seasonal unemployment, what would be the effect of this weather condition for the business structure?

As we previously discussed, seasonal unemployment refers to a temporary window of time where the number of available employment opportunities decreases. Because of the lower demand the store will experience, owners might be forced to lay off some of their current employees or cut their shifts to fewer hours depending on how big this reduction is. This temporary need to reduce the staff will disappear after the weather conditions change. Therefore, it should be considered as a seasonal unemployment situation.