2.1.3 Employment and Unemployment

Spec points

Give the 2 measures of unemployment

1. Claimant Count

How is the Claimant Count used to measure unemployment?

• The Claimant Counts is a measure of unemployment based on the number of people who are claiming unemployment-related benefits, such as Job seeker’s Allowance.

• It provides a narrow definition of unemployment, as it only includes those actively seeking and receiving government benefits

How is International Labour Organisation (ILO) and the UK Labour force survey used to measure inflation?

• the ILO define unemployment as individuals of working age who are without work, actively seeking work, and available for work

• the UK Labour 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

What is the difference between unemployment and under-employment?

• 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 utilise their skills and qualifications. This can result in part-time work, low wages, or jobs below their skill level.

What does Employment Rate measure?

Measures the proportion of working-age population in employment. A rising employment rate indicates economic growth.

Define unemployment rate?

Measures the proportion of the labour force actively seeking work.

A rising unemployment rate indicates economic problems

Define Inactivity rate

measure the proportion of the working-age population that is not in the labour force.

It can indicate a lack of job opportunities or demographic factors.

Give 5 causes of unemployment

• Structural unemployment

• Frictional unemployment

• Seasonal unemployment

• Demand deficiency (cyclical) unemployment:

• Real wage inflexibility:

Define Real wage inflexibility

• when wages are too high, leading to job curs or an unwillingness to hire.

Define demand deficiency (cyclical) unemployment

arises from a lack of aggregate demand during economics downturns

Define seasonal unemployment

linked to seasonal variations in demand, e.g tourism or agriculture

Define frictional unemployment

temporary unemployment when individuals are between jobs or entering the workforce.

Define structural unemployment

Occurs when there is a mismatch between skills of the workforce and the requirement of available jobs?

What is the significance of migration for employment and unemployment

Migration can impact employment by changing the supply of labour in specific region. Immigrants may fill labour gap, but this can also lead to wage pressures.

What is the significance of skills for employment and unemployment

Skills are crucial for employment. A highly skilled workforce is more adaptable and less prone to unemployment in a changing economy.

Who does unemployment effect and how?

• Consumers: Reduced income can lead to lower consumer spending, impacting businesses

• Firms: High unemployment can lead to a larger labour pool, potentially reducing wage pressures.

• Workers: Lost income, reducing job prospects, and psychological stress

• Government: Increased spending on unemployment benefits and lost tax revenue, social issues.

• Society: Social unrest, reduced well-being, inequality

Give a real world example of unemployment

During the 2008 financial crisis, structural unemployment increased workers in declining industries (e.g manufacturing) struggling to find jobs in growing sectors (e.g technology). This highlighted the importance of retaining programs and skills development to address unemployment issues.