4. Unemployment Flashcards
Unemployment Definition
The number of people LOOKING for work, but who cannot find a job at a point in time
Rate of Unemployment Formula
Unemployment/Labour force x100
The 2 Principle Measures of Unemployment
- Claimant Count- Number of people claiming Job Seekers Allowance (JSA)
- Labour Force Survey (International Labour Organisation- A quarterly survey of approx 60,000 households compiled by the ONS studying the employment circumstances of the UK population
Labour Force Survey
Pros and Cons
Pros:
Internationally recognised
Potential for analysis of data
Picks up trends in sector
Better guide for policy makers
Generally accepted to be more accurate
Cons:
Costly to compile
Subject to sampling and extrapolation errors
Underemployment
When workers are unable to find a job that is suitable for their qualifications and experience or who cannot find enough hours to work
Inactivity
Include potential workers that have withdrawn from work to look after relatives, or are sick themselves or quit for another job.
Frictional Unemployment
When workers are between jobs.
Typically in short term and often exists because workers do not have perfect and immediate info about every job opportunity that may be available to them.
It is assured that there is always likely to be some frictional unemployment that persists in economy
Structural Unemployment
Occurs when long term shifts in the structure of the economy impact upon the job market.
E.g. UK, has been ever-increasing shift toward the tertiary sector employment and away from primary and secondary sector employment due to low wage economies in Eastern Europe and the Far East
Large pools of highly skilled workers may find themselves unable to find work as limited demand for labour because production and supply moved to other countries.
Skill Shortages
When employers are unable to fill or have considerable difficulty in filling vacancies for occupations
Seasonal Unemployment
This occurs when workers are unemployed at different times of the year.
Tend to happen in leisure, tourism or farming.
Apply to retail, busy period, hire more. E.g . Christmas.
Cyclical Unemployment
Linked to economic cycle and occurs when there is a negative output gap.
Indicates that demand is low (demand deficient unemployment).
Causes of Unemployment
Real wage inflexibility occurs when real wage rates are above the equilibrium wage rate.
Causes supply of labour to be greater than the demand for labour- workers will supply more of their services at higher wage rates-However, firms will demand less workers as wage rate is too high.
Migration
Net migration into UK seen a significant increase in number of workers in the UK
Increase UK labour supply.
