1. SKILLS SHORTAGES: arise when employers find it difficult to fill their vacancies with appropriately skilled applicants. There are relatively few skills shortages in the UK but it is important to measure them by sector and occupation to identify those activities in which they do have a significant impact.
  2. SKILLS GAPS: arise where members of the existing workforce are seen to lack the skills necessary to meet business needs. Skills gaps are far greater than skills shortages; it is also important to measure skills gaps by sector and occupation. Defining skills shortages is far from straightforward.
  3. OVERQUALIFICATION & UNDEREMPLOYMENT: people must go through occupational downgrading by accepting jobs which are below their previous level of skill.
  4. NDERQUALIFICATION (INCLUDING SKILLS GAPS reported by employers): The educational level of jobseekers does not correspond to the profiles sought on the labour market. Jobseekers are proportionately not skilled enough to meet employers’ needs. In certain areas of Europe, most jobs call for highly skilled workers.


  1. GEOGRAPHICAL IMMOBILITY: Jobseekers are often unable or unwilling to relocate to another region where jobs are could be available due to some attachment to the area where they reside. This could be due to high differences in house market prices or due to social or family ties to the area of residence.
  2. INDUSTRIAL IMMOBILITY: Workers do not easily move from a declining industry to a booming industry due to lack of transferable skills for instance.
  3. OCCUPATIONAL IMMOBILITY: Workers find it difficult to move from a profession to another. This is usually because their skills are very specific and they will need retraining to be able to switch to a different job. It may therefore be a cause of unemployment.


If there is development in labour saving technologies in some industries, there will be a fall in the demand for labour. Examples: The car industry has lost on average 10.000 workers every year for the last 20 years whereas the productivity has never ceased to increase.
  • Shopping centres, train stations and underground stations have replaced workers at the counter by machines to sell tickets.
  • In warehouses, forklifts are labour saving devices. They save time and reduce the likelihood of injury associated with manual handling activities.
  • Agriculture and the forestry industry including the timber industry have both seen their productivity increasing dramatically for the last 50 years due to systematic mechanisation.


Structural unemployment happens when there is a long-term decline in demand in an industry leading to fewer jobs as demand for labour falls away:
  • Online banking and online retailing are structural changes in the market which affect traditional ways of doing business and impact in general quite negatively on employment.
  • Foreign competition can cause unemployment: the coal industry for instance has been affected by the production of electricity and by the competition of other countries.
  • Globalisation leads to changes in the patterns of trade between countries. Manufacturers (in the motor industry, textile, household goods and audio-visual goods) have moved their production centres to Eastern Europe and South Asia where labour costs are cheaper.


Statistics show that an increase in immigration does not necessarily cause unemployment but it generally causes a loss of earnings due to a decrease in the wages of the unskilled and semi-skilled UK-born workers whilst causing an increase in the wages of the higher paid UK-born workers. But the same study shows that the main impact of increased immigration is on the wages of migrants already in the UK. This is because the skills of new migrants are likely to be closer substitutes for the skills of migrants already employed in the UK than those of UK-born workers.