3.2 Low unemployment

1. UNEMPLOYMENT

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

2. EMPLOYMENT

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

3. CLAIMANT COUNT MEASURE OF UNEMPLOYMENT

the method of measuring unemployment according to the number of people who are claiming unemployment related benefits

4. LEVEL OF UNEMPLOYMENT

the number of people in the working population who are unemployed

5. RATE OF UNEMPLOYMENT

the percentage of the country’s workforce that is unemployed

6. CALCULATION OF UNEMPLOYMENT RATE

number of unemployed/workforce x 100

7. FRICTIONAL UNEMPLOYMENT

unemployment caused by time lags when workers move between jobs

8. SEASONAL UNEMPLOYMENT

unemployment caused by a fall in demand during a particular season such as ski instructors in the summer

9. HOW TO REDUCE SEASONAL UNEMPLOYMENT

producers diversify into other activities during the low season to maintain employment

10. STRUCTURAL UNEMPLOYMENT

unemployment caused by a permanent decline of an industry or industries such as the UK steel industry

11. HOW TO REDUCE STRUCTURAL UNEMPLOYMENT

government uses protectionism

12. CYCLICAL UNEMPLOYMENT

unemployment caused by a lack of demand in the economy

13. HOW TO REDUCE CYCLICAL UNEMPLOYMENT

government stimulates demand by cutting taxes and increasing government expenditure

14. COSTS OF UNEMPLOYMENT TO INDIVIDUALS

lower living standards, loss of status and self-esteem, long term unemployed may lose skills and become unemployable, taxpayers may have to pay more tax to pay for unemployment benefits

15. COSTS OF UNEMPLOYMENT TO THE GOVERNMENT

a loss of revenue from income tax, more government expenditure on unemployment benefits, higher spending on training the unemployed with new skills

16. COSTS OF UNEMPLOYMENT TO THE REGIONS

some regions are hit hardest than others especially those that suffer from structural unemployment leading to depressed property prices and increased social problems such as crime. A greater income and wealth inequality between the north and the south as the north has suffered more from long term and structural unemployment whereas the south has benefitted more from the growth and prosperity of the financial services sector

17. COSTS OF UNEMPLOYMENT TO THE ECONOMY

causes incomes to fall leading to less demand for goods and services thus causing less derived demand for labour and more unemployment.

18. BENEFITS OF UNEMPLOYMENT

frictional unemployment is necessary for a dynamic economy, unemployment keeps wage rates down benefitting employers and helping to make the UK more competitive more overseas rivals