12- Employment and unemployment Flashcards
How can unemployment rate be measured?
(No. of people out of work/ no. of economically active) x100
Economically inactive
Those people who are not available to work, such as students or people caring for other people as unpaid activity and those unable to work.
Economically active
Those people who are at work or who are willing to work. Also called the work force, this term includes unemployed people.
2 ways in which unemployment is measured?
- Labour force survey
- Claimant count
How is claimant count measured?
- It measures unemployment by counting the number of people claiming benefits for being unemployed - it was the measure until 1997- it isn’t internationally recognised.
How is labour force survey or ILO measured?
- It is measured using labour force survey statistics.
- Each year 44,000 households with over 100,000 individuals are surveyed each year.
- The questionnaire used covers economic activity as well as household size and structure, accommodation details, and basic demographic information such as age, sex, martial status and ethnicity.
How to be classified as unemployed?
- They have to be without a paid job, be available to start a job within a fortnight and has either looked for work at some point in the last 4 weeks or have been waiting to start a job already obtained. `
Why LFS survey unemployment is likely to be higher than claimant count figure?
- Many female workers are actively looking for work (therefore count in LFS) but are not entitled for benefits. E.g. they might not have built up enough national insurance to qualify for these benefits. Or they are living with an earning husband so aren’t entitled for unemployment benefits.
- Older, particularly male workers may be collecting a pension from their previous employer or financially supported but could be actively seeking work
- Workers aren’t allowed to register as unemployed for the department of work and pensions until they’ve been out of work for a number of weeks but with the LFS it is anyone who is unemployed.
- Claimant count may include some unemployed who would not be part of the LFS. E.g. hidden economy like self employed could be employed but can’t claim benefits.
Over and underestimations of unemployment
- Doesn’t include the underemployed (part timers seeking full time work)
- Those on gov training and work schemes who would prefer to be in proper employment aren’t included
- Some who are out of work, not seeking a job, or receiving benefits for being unemployed but would take up a job if offered- mainly apply to women bringing up children.
Structural unemployment
Caused by a lack of skills for the jobs available; as a result of deindustrialisation or other structural changes in the economy. Occurs when demand for labour is less than supply in an individual labour market in the economy.
E.g. lack of mobility in certain regions
Types of structural unemployment
- Regional unemployment: lack of mobility of factors of production between regions
- Sectoral unemployment: declining sectors causing skilled, specialised workers to be unemployed and unable to adapt to changing demand
- Technological unemployment: workers may be put out of work by the use of technology
Cyclical/ demand deficient unemployment
Caused by weak AD, reducing demand for labour. Often in a recession where not just workers but capital is underutilised e.g. factories remaining empty
Frictional unemployment
Caused by workers seeking a better job; workers in between jobs. It’s in the short term, it’s not deemed serious. The higher job seekers allowance and benefits the more the unemployed look for work.
More advertising- less time
Seasonal unemployment
Workers without jobs due to the time of the year e.g. fruit pickers, ski instructors.
Usually people are unemployed in winter and in summer unemployment falls.
Little can be done as demand varies throughout the year.
Real wage unemployment (classical)
It exists when real wage rates are stuck at a level above that needed to reduce unemployment. Any further causes when unemployed workers are willing to pay less than the minimum wage. Another cause is when workers are not willing to take low paid jobs as they can receive more in welfare benefits.
