Unemployment

Labour Force

the amount of people who are of working age 15 or over who are either working or seeking work

Full employment

refers to the situation where all individuals who are willing and able to work can find employment at current wage rates, without the presence of unemployment due to contractions in the business cycle.

What does full employment not imply

does not imply zero unemployment, as there will always still be some level of frictional, structural and seasonal unemployment

Full employment will also be referred to

natural rate of unemployment

Full employment occurs when ….

the unemployment rate equals the natural rate of unemployment

Full employed or the natural rate of unemployment occurs when the unemployment rate is

about 4%

NAIRU

specific level of unemployment that is evident in an economy that does not cause inflation to increase

If unemployment is at the NAIRU level

inflation is constant

NAIRU is the lowest level of unemployment that can occur in the economy

before inflation starts to increase

Full Employment & NAIRU

There is no fixed rate for full employment or the natural rate of unemployment. Full employment is commonly linked to the Non-Accelerating Inflation Rate of Unemployment (NAIRU)—the level of unemployment at which inflation remains stable

unemployment is at NAIRU level is at 4%-4.5%

inflation remains steady

unemployment rises to 5%

inflation rate decreases

unemployment from 4% to 3.5

inflation rate increases

unemployment rate defintion

the unemployment rate is the percentage of the labour force that is unemployed and actively seeking work

unemployment rate calculation

dividing the number of unemployed individuals by the total labour force and multiplying by 100

participation rate definition

percentage rate is the percentage of the working age population those aged 15 and over that is either employed or actively seeking employment

Participation rate calculation

labour force / working age population x 100

Underutilisation rate

The underutilisation rate is the percentage of the labour force that is underutilised, including both the unemployed and underemployed (those who are employed but want more hours).

underutilisation rate calculation

underemployment rate % + underemployment rate %

Underemployment ratio

number of underemployed people / labour force x 100