Certified Supply Chain Professional (CSCP) Practice Exam

Which type of unemployment occurs when workers' skills are no longer needed?

1. Frictional unemployment

2. Seasonal unemployment

3. Structural unemployment

4. Cyclical unemployment

The correct answer is: Structural unemployment

The type of unemployment that arises when workers' skills are no longer in demand is known as structural unemployment. This situation often occurs due to technological advancements, shifts in the economy, or changes in consumer preferences that render certain skills obsolete. For instance, if a factory automates its production processes, workers who were previously employed to perform manual tasks may find their skills no longer applicable. Structural unemployment reflects a more profound long-term issue within the labor market as it suggests that there is a mismatch between the skills workers possess and the skills required by employers. This difference necessitates retraining or reskilling for affected individuals to find new job opportunities in evolving sectors of the economy. Frictional unemployment refers to the short-term transitional phase when individuals are temporarily unemployed while transitioning between jobs, which does not pertain to skills becoming obsolete. Seasonal unemployment is tied to specific times of the year when demand for labor fluctuates, such as in agriculture or tourism, and cyclical unemployment is associated with economic downturns or cycles affecting overall demand for labor. Therefore, structural unemployment is the most fitting description for a situation where skills are no longer needed in the job market.