Syllabus: The meaning of unemployment
Syllabus: Define the term unemployment.
Remember full employment does not mean 100% employment ie does not mean that everyone is employed (see Page 52).
It means the number of people willing and able to work at a given
wage rate is equal to the number of employees, firms are willingto hire
at that wage rate. If there are still people who want to work at the
existing wage rate, and are willing and available to work, this is
described as unemployment (You can also view this as excess supply of
Unemployment is where individuals are willing and able to work at a given wage rate, but do not have a job.
The employment rate is the percentage of the labour force who have a job. The Labour Force is everyone who wants a job at the going wage rate and is eligible for work (ie not children, very old, infirm, in prison etc see below)
To calculate the employment rate you need Total employed X 100
Total Labour Force
Syllabus: Explain how the unemployment rate is calculated.
Syllabus:Calculate the unemployment rate from a set of data.
The unemployment rate is the percentage of the labour force
who do not have a job. To calculate the unemployment rate you
Total Unemployed X 100
Total Labour Force
Underemployment refers to those people, who can only find part-time employment, although they want full-time employment.
Syllabus: Explain the difficulties in measuring unemployment, including
- the existence of hidden unemployment,
- the existence of underemployment,
and the fact that it is an average and therefore ignores
regional, ethnic, age and gender disparities
The official definition of unemployment may differ from country to country. National definitions vary as regards age limits, reference periods, the criteria for seeking work, treatment of persons temporarily laid off and of persons seeking work for the first time. The International Labour Organisation (ILO) definition is commonly employed.
In addition, countries will often distinguish between those who are classified as unemployed, and those who claim some form of unemployment-related benefits because they have no job; the latter being referred to as the claimant count.
An explanation of this difference with reference to the UK can be found on the UK government website.
Hidden unemployment is the unemployment, or underemployment of workers, that is not reflected in official unemployment statistics, because of the way the statistics are compiled. Only those who have no work, but are actively looking for work, are counted as unemployed. Those who have given up looking, those who are working less than they would like, and those who work at jobs in which their skills are underutilized are not officially counted among the unemployed, though in a sense they are. These groups constitute hidden unemployment.
Getting a full picture of the rate of unemployment is difficult (see page 80 for more on this). In addition to the problems of underemployment and other examples of hidden unemployment, a single national unemployment rate does not take into account any regional, ethnic, age and gender disparities. All of these may be of importance to the government when considering policy measures.