A

3c. Unemployment

Unemployment

The definition we use is very specific:

  • Someone who is willing and able to work but unable to find employment

This is different to underemployment:

  • Someone who is willing and able to work full time hours but can only find part time employment

If you fit neither of these definitions you are inactive

The unemployment target is full employment

There are many different interpretations of what this means, such as:

  • Everyone has a job
  • The labour market is in equilibrium (i.e. demand = supply)
  • The number of vacancies matches the number of people without a job

It is unlikely and undesirable to have zero unemployment as we want people moving
between jobs to ones with higher pay or that suit their skills better.

Measuring unemployment

The Claimant Count records those claiming unemployment benefit (Job Seekers Allowance, or JSA) and can prove they are actively looking for work.

The Claimant Count may not reflect the true level of unemployment in the UK economy, given that not all the unemployed will bother to claim, and some are deterred because they cannot prove they are looking for work. While some individuals may fraudulently claim, it is generally recognised that the Claimant Count under-estimates actual unemployment levels.

The labour force survey is undertaken by the International Labour Organisation (ILO) and is a more direct assessment of unemployment, rather than those who claim benefit. It is based on an interview of a sample of 60,000 households (approximately 100,000 people) and tries to measure unemployment as a whole, rather than those simply claiming benefits.

To be considered as being unemployed individuals must:

  • Have been out of work for 4 weeks
  • Be able to start work in the following 2 weeks – they must be readily available for work
  • Be available for work for one hour per week.

Since 2003 Labour Force Survey has become the government’s official measure of unemployment, but it probably over-estimates true

unemployment by including people only looking for a few hours part-time work. As a sample, it can be subject to sampling error, which reduced its accuracy.

Employment and immigration

Problems with high levels of unemployment

Costs of unemployment to economic agents

Types of unemployment