unemployment

• Unemployment


  A situation where people are out of work, but are actively seeking work/willing and able to work
• Measured by unemployment


  The total number of people who are without a job but are actively seeking work as a percentage of the workforce
• If more people are employed (fewer people are claiming benefit), they will have more income and therefore are more likely to have a good standard of living
• UNEMPLOYMENT MEASUREMENTS AND MEASUREMENT PROBLEMS
• OECD


  Organisation for Economic Cooperation and development, an international organisation made up of the world's richest nations with the objective of stimulating economic progress in all countries through promoting market-based policies and channelling aid to LEDCs
• What happened to unemployment in many OECD countries in the 1980s?

  Increased
• What happened to unemployment in many OECD countries in the early part of this century?

  Decreased
• What pattern or trend can you see in the unemployment data over time for most OECD countries?

  Cyclical pattern – repeated rises and falls
• Why does the UK have two measures of unemployment?

  Unemployment can be measured in different ways
• In a BOOM


  Unemployment falls
• In a RECESSION


  Unemployment rises
• As nations are more closely linked through trade


  They tend to experience booms and recessions at the same time
• Unemployment


  A situation where a person does not have a job but is actively seeking work
• Unemployment rate


  Those who are out of work, but are actively seeking work as a percentage of workforce/economically active
• Workforce (working population/labour force/economically active)


  Those who are in work or actively seeking work (employed + unemployed)
• Population of working age

  Men and women aged between 16-64
• Participation rate (activity rate)

  The percentage of the population of working age who are economically active
• Measuring unemployment


  1. Labour Force Survey (LFS)

  2. Claimant Count
• The UK government has two measures of unemployment: LFS/ILO and Claimant Count
• LFS/ILO measure


  • Out of work but actively seeking work (ILO definition of unemployment)
  • Survey – only includes a sample (33,000 is approx. 0.1% of the pop.)
  • Used when quoting the UK's official unemployment rate
  • Data collected by ONS every quarter
• Claimant Count measure


  • Counts as unemployed all those who are registered as claiming unemployment-related benefits
  • Data collected by ONS every month
  • Eligible to claim unemployment related benefits
• The government has frequently been accused of moving the goal posts for political gain, whenever changes are brought in that reduce the claimant count
• According to a study in February 2023, the unemployment figures are hiding a big increase since the pandemic. The number of people who are being classified as unfit for work (long term sick) has increased significantly.
• The Labour Force Survey and the Claimant Count may be overestimated as they will include those claiming benefit or identify as seeking work when they are not actively seeking work, and those who claim not to be working and are claiming benefit fraudulently as they are working illegally in the 'Black Economy'.
• The Claimant Count underestimates unemployment as it excludes people over pension age, people under 18, people not eligible for unemployment benefit, some people who may not claim benefits even when they are eligible to, and disqualified people whose savings or that of their spouse are too high.
• The LFS may be unrepresentative if the sample of 33,000 households interviewed is not representative of the population.
• Costs to the unemployed and their dependents

  Loss of income, depreciation of skills, stigma of being unemployed, mental health problems, long-term unemployment is much more damaging than short-term
• Costs to local communities

  Increase in crime, violence and vandalism, areas become run down, decrease in property values
• Costs to the government

  Increased benefits payments, loss of tax revenue, deterioration of government budget
• Costs to the economy as a whole

  Loss of output that unemployed workers could have produced, reduced spending leading to further unemployment
• Economic cycle = “regular fluctuations in the level of economic activity around the productive potential of the economy. In business cycles, the economy veers from recession where it is operating well below its productive potential, to booms where it is likely to be at or above its productive potential (overtime).”
• A recession is defined as: at least two consecutive quarters of declining GDP.
• Globalisation = “the ever increasing integration of the world’s local, regional and national economies into a single international market”.