Unit 2 AOS 1: Economic Activity

Labour market

A market for labour services, where buyers and sellers of labour come together in exchange and where the rate of exchange is the price of labour

Labour market supply/demand relationship

As price of labour rises, businesses will be incentivised to reduce the demand for labour

Employed

When someone, over the age of 15, is working more than one hour per week in return for some from of measurable remuneration (such as wages)

Unemployed

When someone is over 15, without work or working for less than one hour per week, and actively looking for work.

Strong labour market conditions

Develop when the demand for labour rises relative to the supply

Weaker labour market conditions

Develop when the demand for labour falls relative to the supply

The labour force rate

All those aged 15 and over who are willing and able to work

The rate of employed

Aged over 15 years, working either full or part time (a minimum of one hour per week)

Rate of unemployed

Aged over 15 years, without a job but actively look for work

The participation rate

The percentage of the total ‘working age’ population (over 15) that are members of the labour force

The underemployment rate

Individuals classified as employed, but would prefer to be working more hours

The underutilisation rate

The proportion of the total labour force that is ‘underutilised’ measures spare capacity in the labour market

How a reduction in AD creates cyclical unemployment