Week 7 and 8: Employment and unemployment

The Labour Force Survey (LFS)

a study of the employment circumstances of the UK population. It is the largest household study in the UK and provides the official measures of employment and unemployment

International Labour Organisation (ILO)

a United Nations agency whose mandate is to advance social justice and promote decent work by setting international labour standards

Hysteresis (unemployment)

a type of long-term unemployment that results from the persistence of high unemployment rates over an extended period of time.

It occurs when the economy experiences a period of prolonged weakness, such as during a recession, which leads to a high level of structural unemployment.

reverse multiplier effect

occurs when an initial withdrawal of spending from the economy leads to knock-on effects and a bigger final fall in real GDP

crowding out

a decrease in investment that results from government borrowing

natural rate of unemployment

The equilibrium rate of unemployment = frictional + seasonal + structural unemployment.

active population

those in work or actively seeking work; also known as the labour force.

activity rate / participation rate

the number of those in work or unemployed divided by the population of working age expressed as a percentage.

Cyclical or demand-deficient unemployment

when there is insufficient demand in the economy for all workers who wish to work at current wage rates to obtain a job; where national output < potential output leading to a negative output gap.

Employed

the number of people in paid work.

Employees

workers employed by another individual or firm.

Employment

those in paid work.

Employment rate

the number of those in work divided by the population of working age expressed as a percentage.

Frictional unemployment

when workers are unemployed for short lengths of time between jobs.

Full-time workers

workers who work hours and the days which are the norm for a particular job.

Hidden unemployed

partly those in the population who would take a job if offered, but are not in work and are not currently seeking work; and partly those who are underemployed.

Inactive

the number of those not in work and not unemployed.

Inactivity rate

the number of those not in work and not unemployed divided by the population of working age expressed as a percentage.

Labour force

those in work or actively seeking work; also know as the active population.

Long-term unemployed

in the UK, those unemployed for more than one year.

Part-time workers

workers who only work a fraction of the hours and the days which are the norm for a particular job.

Population of working age

the total number of people aged between the statutory school leaving age and the state retirement age.

Real wage or classical unemployment

when workers are unemployed because real wages are too high and inflexible downwards, leading to insufficient demand for workers from employers.

Seasonal unemployment

when workers are unemployed at certain times of the year, such as building workers or agricultural workers in winter.

Self-employed

workers who work on their own account and are not employees.

Short-term unemployed

in the UK, those unemployed for less than a year.

Structural unemployment

when the pattern of demand and production changes leaving workers unemployed in labour markets where demand has shrunk. Examples of structural unemployment are regional unemployment, sectoral unemployment or technological unemployment.

Underemployed

those who would work more hours if available or are in jobs which are below their skill level.

Unemployed

those not in work but seeking work.

Unemployment

occurs when individuals are without a job but are actively seeking work.

Unemployment rate

the number of those not in work, but seeking work, divided by the labour force expressed as a percentage.