2.1.3: Unemployment

• Claimant Count (JSA) : The number of people who receive benefits for being unemployed
• International Labour Organisation (ILO): The Office of National statistics uses this to classify employed and unemployed people
• Employed: Those who do more than 1 hour of paid work a week, are on government training schemes or do 15 hours unpaid work for their family business
• Unemployed: Those aged above 16 who are without work, able to work and have sought work actively in the last 4 weeks and are available to start in the next 2 weeks
• Inactive: Those neither employed nor unemployed, and not looking for a job, e.g students, retired people
• Labour Force Survey (LFS): A sample of people living in households, asking about activity in the labour market to class people as employed, unemployed or inactive by ILO definitions. They are only an estimate as it is measured by sample
• There are usually more people in the Labour Force Survey than Claimant Count, as some people aren't eligible for benefits or work in the hidden economy
• Employment rate: percentage of working age who are employed
• Unemployment rate: Percentage of economically active who are unemployed
• Activity rate: Percentage of working age who are economically active
• Inactivity rate: percentage of working age who are economically inactive
• Underemployment: Those who are working at a level below what they would like e.g Doctor working as a cashier, or those working part time when they want to work full time
• Increase in inactivity decreases labour force size, causing a decrease in productive potential of the country, which in turn reduces GDP
• Frictional Unemployment: People who are unemployed because they have moved to a new job. This is only short term so is not very serious
• Structural Unemployment: Unemployment due to industry closures, where technology has replaced jobs or where a certain sector falls in employment
• Seasonal Unemployment: Unemployment caused by change of seasons e.g ice cream in winter is not popular
• Cyclical Unemployment: Unemployment caused by a general lack of demand in the country, also known as Keynesian Demand Deficient unemployment
• Real wage inflexibility: Unemployment caused by real wages being above market clearing level
• Increase in net immigration leads to increased jobs, as many immigrants take lower skilled jobs, and their spending creates more jobs
• Increase in net immigration also leads to lower wages for lower skilled jobs, and more competition for lower skilled jobs which may leave UK workers without employment
• Impact of unemployment on workers

  Loss of income

  Low job security

  Lose skills if long-term unemployed
• Impact of unemployment on firms

  Decrease in demand for their goods and fall in profit

  Can offer lower wages as people have few options

  Smaller pool of skilled people due to long term unemployment
• Impact of unemployment on consumers:

  Consumers in areas of high unemployment lose out as local shopping centres are run down and have less choice

  Unemployed consumers have less to spend
• Impact of unemployment on governments:

  Fall in tax revenue due to less income

  Increase in budget deficit leads to increased taxation
• Impact of unemployment on society:

  Social deprivation e.g increased crime rates, social dislocation

  Loss of potential national output