2.1.3 - Employment and unemployment

• Measures of employment:

  • claimant count
  • International Labour Organisation (ILO)
• The Claimant Count is the number of people receiving benefits for being unemployed
• Types of unemployment:

  • frictional unemployment
  • structural unemployment
  • seasonal unemployment
  • cyclical unemployment
• Frictional unemployment is due to people moving between jobs.
• International Labour Organisation (ILO) defines unemployment as individuals of working age who are without work, actively seeking work, and available for work.
• • Unemployment refers to individuals who are not currently employed but are actively seeking and available for work.
• Under-employment occurs when individuals are employed but their job does not fully utilize their skills and qualifications. This can result in part-time work, low wages, or jobs below their skill level.
• Impact of unemployment on workers:

  • Lost income
  • reduced job prospects
  • psychological stress.
• 1. International Labour Organisation (ILO) and the UK Labour Force Survey:

  • The ILO defines unemployment as individuals of working age who are without work, actively seeking work, and available for work.
  • The UK Labor Force Survey is the primary source of unemployment data in the UK and follows the ILO definition.
  • It provides a broader and more comprehensive picture of unemployment, including those not eligible for benefits.
• Inactivity Rate: Measures the proportion of the working-age population that is not in the labor force. It can indicate a lack of job opportunities or demographic factors
• • Structural Unemployment: Occurs when there is a mismatch between the skills of the workforce and the requirements of available jobs.
• • Frictional Unemployment: Temporary unemployment when individuals are between jobs or entering the workforce.
• • Seasonal Unemployment: Linked to seasonal variations in demand, e.g., tourism or agriculture.
• • Demand Deficiency (Cyclical) Unemployment: Arises from a lack of aggregate demand during economic downturns.
• • Real Wage Inflexibility: When wages are too high, leading to job cuts or an unwillingness to hire.
• Migration can impact employment by changing the supply of labour in specific regions. Immigrants may fill labour gaps, but this can also lead to wage pressures.
• Skills are crucial for employment. A highly skilled workforce is more adaptable and less prone to unemployment in a changing economy.
• Effects of Unemployment:

  • Consumers: Reduced income can lead to lower consumer spending, impacting businesses.
  • Firms: High unemployment can lead to a larger labor pool, potentially reducing wage pressures.
  • Workers: Lost income, reduced job prospects, and psychological stress.
  • Government: Increased spending on unemployment benefits and lost tax revenue, social issues.
  • Society: Social unrest, reduced well-being, and inequality.