The unemployed workforce could be utilized for the production of goods and services. Since they are not doing so, the economy is losing out on its output.
Since income tax is an important part of the revenue for the government. The unemployed are unable to earn, the government loses out on the income tax revenue.
The government has to give unemployment insurance benefits to the claimants. Hence the government will lose from both sides in terms of unemployment benefits and loss of tax revenue.
Cyclical Unemployment: This type of unemployment is consistent with the trade cycle. When the economy is in its boom phase, there is a reduction in the unemployment. Conversely, when it passes through the recessionary phase, unemployment rate rises.
Seasonal unemployment: This type of unemployment is most common in hotel, catering or fruit picking business.
Frictional unemployment: Frictional unemployment occurs when an individual is between two jobs, i.e. he has lost one job and is searching for the other.
Structural Unemployment: Structural employment occurs due to a change in the composition of some industries. Technological progress may make an industry capital intensive from a purely labor intensive one. The release in labor from such an industry gives rise to the problem of unemployment.