When a person does not have a secure constant income they have to know how to spend their money the best way, they are forceto decide between buying a $50 pesos cornflakes or $50 pesos of gas. So obviously people start spending less on products, they will give up anything other thanthose items absolutely necessary to sustain life. That affects the companies in a direct way. Unemployment has a direct impact on all businesses. People buyproducts and services and if they do not have a job there will be less demand of products and services. That is why increasing unemployment often results in manybusinesses reducing inventories because they expect to sell less. IF the demand goes down, companies will start to drop the prices for people to buy more, but thegaining of companies will go down, so they invest less. People start to win less money and even an economic crisis can be caused.
The companies will start to firepeople in order to try not to spend much money and once they have stability again they will hire people again.
Social Impact of Unemployment.
Unemploymentalways hits individuals the hardest. The jobless lose their self respect, purpose, sense of achievement and, of course, income. It is not just the individualsthemselves that are hit, their families also suffer because they are not allowed to have many luxuries. They spend less on entertainment and extra stuff.
Some of thelikely costs of unemployment for society include increased poverty, crime, political instability, mental health problems, and diminished health standards.