Steve Bain

Seasonal Unemployment Definition, Examples & Problems

Seasonal unemployment is one of the four main classifications of unemployment that economists use to describe certain characteristics in the labor market and, whilst it is not usually thought to be a particularly damaging form of unemployment, it does pose some unique problems that can become serious if handled poorly by inappropriate government policy.

In this article I will describe the key issues for consideration when forming a policy approach towards seasonal unemployment. I will explain when the problems posed are likely to be at their worst, and what experiences and examples from other countries are available to help guide us.

First of all, let's start with a definition of what seasonal unemployment is.

What is Seasonal Unemployment?

As the name suggests, seasonal unemployment refers to certain time-periods in the year when workers experience difficulty finding, or maintaining, employment. The lack of jobs at these times is caused by natural fluctuations in the demand for labor due to associated fluctuations in the demand for the products of certain types of products/services.

Seasonal Unemployment Examples

There are many examples of seasonal unemployment because there are many fluctuations in demand for different types of products at certain times of the year. The more obvious examples relate to seasonal changes in weather, but there are many other causes. The list below includes the usual examples that get cited:

  • Ski resorts - during summer months the opportunities for skiing are clearly reduced, and that causes skiing operators to mothball their services during these low months, thereby making their employees temporarily redundant.
  • Tourism - the opposite of ski resort job losses occurs for many tourism sector businesses that do well for most of the year, but poorly during the coldest/wettest times of the year. Beach resorts are an obvious example, and rather than hitting particular industries an entire local economy can experience seasonal unemployment when the weather is at its worst. 
  • Construction jobs - in many countries the construction industry contracts quite sharply during the winter months causing many employees to be laid off for a few months. The contraction is not just caused by reduced demand from consumers, some work is impossible to do, or too dangerous to do, when weather conditions deteriorate.

Seasonal Employment Examples

Similar to seasonal unemployment, there are many examples where short-season industries experience a temporary boost in demand that creates some additional short-term jobs. This might more accurately be described as seasonal employment rather than unemployment. Examples include:

  • Fruit pickers - during the harvest months there is extra demand for seasonal workers to pick fruits, and therefore a boost in employment occurs as extra jobs become available. This is true of many agriculture related industries.
  • Christmas Jobs - the retail sector experiences significant increases in demand during the months running up to Christmas as consumers scramble to purchase gifts. Naturally, this can create seasonal jobs during these months.
  • Garden Centers - during the planting season there is extra demand for seasonal workers because consumers increase their spending on all sorts of potted plants. Demand for other garden accessories also picks up at this time.

Problems and Solutions

The main problem with seasonal unemployment relates to how it should be treated with regard to access to various welfare support programs.

The pattern of employment throughout a year is important here, because for most people employed as a fruit-picker or other type of short-season job, there tends to be less intention of seeking welfare. Rather these opportunities are more likely to be taken as a means of temporarily supplementing a family income and nothing more.

How long do seasonal jobs last?

As you will note from the examples above, there can be a large variation in the time-period that affects seasonal jobs. There is also no formal definition that sets a dividing line between seasonal unemployment and seasonal employment, so any yardstick that we use here is open to interpretation.

Casually we can simply regard seasonal jobs as lasting anything from a few weeks to a few months, and by their nature they will usually be low-skilled jobs because employers will not be able to justify those jobs if a long and expensive training period is required.

Can seasonal workers claim unemployment benefits?

The critical distinction here relates to whether a person intends to be employed throughout the year or not. Access to welfare payments is denied to anyone who is not actively seeking work, merely being without work is not sufficient. This does, of course, present difficulties in enforcing this distinction since it is quite simple for a person to pretend to be actively seeking work even if none is desired, merely as a way to qualify for welfare support.

To combat fraudulent claims of this nature, many countries restrict access to welfare for anyone who has not worked for some minimum number of weeks in the year prior to becoming unemployed. Additionally, claimants may be asked to regularly provide evidence of job-search activities.

There are also some general arguments against provision of welfare payments to people who become seasonally unemployed. These include:

  1. Many social insurance schemes are set up to provide a degree of security for unforeseen periods of unemployment, but workers in seasonal industries may be able to predict periods of redundancy and therefore can be reasonably expected to save money for such times.
  2. Some argue that seasonal work already compensates workers for those times of the year when work is unavailable by paying higher wages when it is available. However, while there may be some evidence of this in certain industries e.g. construction, it is more often the exception rather than the rule.
  3. Welfare payments to seasonal workers might, in effect, unfairly subsidize seasonal industries by allowing them to pay wages lower than would be accepted if access to welfare is denied. Unfair subsidies do lead to suboptimal outcomes and overall losses for society.

Whilst all these arguments may have merit in specific circumstances, research has generally failed to substantiate them in a convincing fashion. Furthermore, the problems involved in devising effective policies to account for such specific circumstances, as well the practical implementation of those policies, has generally discouraged most countries from attempting to overcome them.

Geographical differences and local unemployment

It is reasonable to assume that the countries most impacted by seasonal influences on their levels of unemployment might also be the ones that are most active in implementing policies aimed at mitigating those influences. The evidence of this, however, is somewhat patchy. Grady and Kapsalis have shown that while Canada and the Nordic countries experience some broadly similar weather patterns, the impact of this on employment levels is different. As a consequence, seasonal unemployment policies are rare in the Nordic countries compared to Canada.

The reader should also be clear that it's not just about economic impact; there may be very different cultural attitudes towards government involvement in economics from one country to another. For example, Eastern Europe still has a large electorate that remembers the hardship of being ruled by Communist USSR, and because of that there is a much more appreciative attitude towards free-market solutions and individual responsibilities for finding work, in contrast to the extra perceived responsibility of the state to provide solutions that your average Canadian voter might have.

There is also the question of how a given country develops policies to tackle local unemployment arising in those areas most susceptible to seasonal shifts in demand for workers. Coastal areas that have significant fishing industries or holiday resorts can be hit hard at particular times of the year, and particular policies to deal with this may be desirable. For the most part, the typical response is simply to provide standard programs to help solve general barriers to work.

Other Main Types of Unemployment

  • Cyclical Unemployment - refers to the changing pattern of employment during the business cycle as boom periods create extra jobs whilst recessions destroy jobs.
  • Structural Unemployment - relates to changes in demand for workers in particular industries when new technology and production methods replace employees, or when an existing product is antiquated by a new product.
  • Frictional Unemployment - occurs for a short time-period when workers voluntarily end their employment at one firm in order to take up new employment somewhere else.

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