low unemployment

what is employment?

the use of labour in the economy to produce goods and services

what is unemployment?

occurs when workers able and willing to work at the current wage rate are unable to find employment

why will there never be 100 percent employment?

people will always be moving between jobs

who are not included in unemployment figures?

economically unactive people

what is the claimant count?

a measure of unemployment involved in using the number of people who claim unemployment related benefits

what is the level of unemployment?

the number of people in the workforce who are without a job

what is the equation for unemployment rate?

number of unemployed/ total workforce x 100

when did unemployment figures rise?

they rose in the 1980s and 1990s and from 2007-2011 and these often linked output falling in the economy and hence less workers being needed to produce that less output

when has the unemployment rate fallen?

it has fallen since 2011 as more low skill and low paying jobs have increased and also due to self employment such as uber drivers

what is cyclical unemployment?

unemployment caused by lack of aggregate demand in an economy

what is structural unemployment?

unemployment caused by a permanent decline of an industry or industries e.g: steel production

what is seasonal unemployment?

workers without employment due to a decrease in demand at certain times of the year

what is frictional unemployment?

unemployment caused by time lags when workers move between jobs

what are the benefits of unemployment ?

- easier to recruit workers: if there is high unemployment, it means there is a lot of people searching for employment meaning that firms will have an easier time finding workers if needed to expand output

- less costs for firms: as there are lots of workers looking for employment, there will be higher supply of labour than demand meaning firms will be more incentivised to keep wages down reducing their costs

- increased competitiveness: as firms have lower costs, this makes them more competitive as they can keep prices low

- low inflation: as wages are lower, workers will be able to afford less goods and services, decreasing demand for goods and services meaning firms will have to lower prices to increase demand keeping the price level low

what are the costs of unemployment to individuals?

- lower standard of living : when workers have no job, they lose their mane source of income from wages, meaning they will be able to afford less goods and services that contribute to their wellbeing

-lower income for already employed workers: due to a surplus of workers from increased unemployment, already existing workers will face lower wages so demand for labour will meet supply meaning those who are employed will also face lower standard of living

excluded workers: if workers stay unemployed for too long, they may lose their skills meaning firms will not want to employ them

cost to taxpayers: as government will have to be paying increased benefits to the unemployed, their costs will increase so they will increase taxes to cover their costs meaning workers who pay tax will have to pay more

what are the costs to the government from unemployment?

labour resources are wasted: as the economy will not be working at full capacity, less output will be produced in the economy than what it could be due to less workers meaning labour is being wasted

cycle of unemployment: as unemployment means less incomes for individuals, there will be less consumption which means there will be less demand for goods and services meaning there firms will produce less output so supply matches demand, meaning less workers will be needed, leading to more unemployment

increased budget deficit: government will have to spend money on increased benefits to the unemployed and will also be gaining less income from tax revenue as lower incomes and wages and also from less VAT due to less spending. This will mean the government is gaining less but spending more increasing the budget deficit

what are the costs of unemployment to regions?

spread of unemployment: in regions, certain areas may experience higher rates of unemployment meaning they will become depressed areas leading to less money flowing in these areas causing shops and services to shut down and move away from this area leading to social problems of those who live there and uneven development in the region