3.2 - Low Unemployment

what is employment

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

what is full employment

when all those able to and willing to work are in paid employment at the current wage rate

what does the government aim to achieve

low unemployment as full employment is unlikely in reality

what is unemployment

when workers who are able and willing to work are unable to find employment

what does the claimant count measure

the number of people claiming unemployment related benefits such as jobseekers allowance which is a way of measuring unemployment

how do you calculate unemployment

number of people unemployed / country’s workforce x100

what are the causes of unemployment

seasonal so out of work due to time of year such as a ski instructor

frictional so moving between jobs

structural so long term changes in the economy means skills are no longer needed such as miners

cyclical unemployment caused by short term movements in the business cycle when the economy has falling demand

how to evaluate unemployment causes

frictional unemployment is seen as good because it is in the workers power and leads to a better allocation of resources which helps solve the basic economic problem

what are the consequences of unemployment to individuals

lower living standards and excluded workers and costs to taxpayers and social problems such and crime health implications and family breakdowns

what are the consequences of unemployment to regions

depressed areas where no one. wants to live so property value falls and crime increases and social problems such as health and crime

what are the consequences of unemployment to the government

wasted resources and budget deficit which is the government spending being greater than tax revenue

benefits of unemployment

puts downward pressure on wages as there is lots of competition for jobs which is good for businesses and the consumer if lower costs lead to lower prices

lower costs leads to the uk being more internationally competitive if businesses choose to lower prices

frictional unemployment is necessary so we allocate resources in the best way possible

what is classical unemployment

when wage is above the equilibrium so there us excess supply and not enough demand

what is classical unemployment caused by

national minimum wage or living wage and trade unions and labour immobility geographical due to not being willing or able to move to where jobs are and occupational due to not having skills to move to different jobs