Labour Market Phenomenon

Separation- Labour market phenomenon of unemployed workforce

What is Separation?

Well, I am not talking about the English meaning of the term “separation” which means not together or moving away. No, what I am talking about is a very important phenomenon observed in the labour markets frequently.

Separation is a labour market situation wherein people move out of/into the job markets. Before I begin with the process, let me just brush you up with a few terminologies that we need to know to understand the concept of separation.

The total non-institutional civilian population of the country is bifurcated under two heads:

1. Labour workforce
2. Out of labour workforce

Now, labour workforce is that component of the population who are willing to work or are working at the current wage rate. It includes employed labourforce and unemployed labourforce. Employed workforce is those who have jobs and are currently working. Unemployed are those who do not have jobs but they are willing to work that means they are looking for work.

The next component of the population is the out of labour workforce. It refers to that workforce which is not looking for jobs that is they do not want to work at the current wage rate.

Now we formally begin with the entire process. Separation involves quits and lay offs. Under separation, we observe the following pattern:

• There are some people who are not happy with their current job and so they voluntarily quit their jobs and seek employment somewhere else. Or it may also happen that firms are incurring losses and so decides to lay off some employees. Employees may manage to get employment in another firm. In both these cases, there is movement within the employed category of the workforce.
• Now it may also happen that the employed who are fired from their jobs or who voluntarily quit their jobs do not work anywhere. In such a case, there is a shift in the workforce from employed to unemployed. Besides this, some people who were earlier unemployed may find jobs and enter the employed category. Hence, we can have movement to/from the employment segment of the labourforce from/to unemployed category.
• This is regarding a case when people find themselves unemployed for a very long duration of time. They may be frustrated because they are unable to find work. They may end up leaving the labour markets, thus leading to a shift from the unemployed to out of labour force. Similarly, movement to/from unemployed segment from/to the out of labourforce can also be possible.
• And finally, people who are currently not willing to work, may suddenly get an opportunity to work and become a part of the employed category of the labourforce. On the other hand, people who are currently employed may leave the market or may be retired.

I think you may have understood the entire process observed in the economy.

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