Changing Labour Market Revision

Labour Force?

Employed + Unemployed

Unemployment Rate?

Measures the percentage of those who are in the labour force who are unable to find work.

Participation Rate?

Measures the percentage of the total working age population who are members of the labour force.

Underemployment Rate?

The people who work part-time but would like to work more hours (usually full time).

Underutilisation Rate?

The labour that could be used in the production process, but which is effectively being wasted.

Natural Unemployment?

Caused by a mismatch between the skills and qualifications of the workforce and available jobs.

Structural Unemployment?

When people do not have the skills that match the skills required by the business.

Frictional Unemployment?

When a person has left a job and is yet to find a new job.

Seasonal Unemployment?

When workers are only in demand at certain times of the year.

Cyclical Unemployment?

Caused by a lack of aggregate demand due to fluctuations of the business cycle.

• Weak AD (Flow 3)

• Decreased AS (Flow 4)

• Less Demand for Labour (Flow 1)

• Incomes fall (Flow 2)

NAIRU (Non-Accelerating Inflation Rate of Unemployment)?

The rate of unemployment that exists when full employment is achieved. Occurs when the unemployment rate is 4.25.

Exists when unemployment cannot fall further without triggering excessive rates of inflation.

Hard-Core Unemployment?

Caused by individual characteristics that make it difficult to gain employment (e.g. criminal record, mental illness, physical disability, drug addiction, lack of willingness).