Employment and Unemployment Flashcards
what is unemployment?
the unemployed consist of those of working age who are willing and able to work, actively seeking work but who do not have a job.
what is the claimant count?
measure of unemployment. This counts the number of people claiming unemployment related benefits, such as Job Seeker’s Allowance (JSA). They have to prove they are actively looking for work.
evaluate the claimant count
Not every unemployed person is eligible for, or bothers claiming JSA. Those with partners on high incomes will not be eligible for the benefit, even if they are
unemployed. Although there may be instances of people claiming the benefit whilst they are employed, the method generally underestimated the level of
unemployment.
what is the international labour organisation (ILO) and the UK labour force survey (LFS)
The LFS is taken on by the ILO. It directly asks people if they meet the following
criteria:
- Been out of work for 4 weeks
- Able and willing to start working within 2 weeks
- Workers should be available for 1 hour per week. Part time unemployment is included
Since the part time unemployed are less likely to claim unemployment benefit, this method gives a higher unemployment figure than the Claimant Count.
who are the unemployed?
The unemployed are those able and willing to work, but are not employed. They are actively seeking work and usually looking to start within the next two weeks.
who are the underemployed?
The underemployed are those who are in part time or zero hour contracts when they would prefer to be full time and people who are self-employed but would rather be employees.
It also includes those who are in jobs which do not reflect their skill level , for example a university graduate that can’t find a graduate job so is working as a bartender.
who are the hidden unemployed?
o working part time but would like to work full time
o on government training schemes who would prefer employment
o classed as sick or disabled
o who aren’t actively looking for jobs but would take a job if offered or are in education
because they can’t get a job
what are the effects unemployment have on consumer?
If consumers are unemployed, they have less disposable income and their standard of living may fall as a result. There are also psychological consequences of losing a job, which could affect the mental health of workers.
what are the effects of unemployment on firms?
With a higher rate of unemployment, firms have a larger supply of labour to employ from. This causes wages to fall, which would help firms reduce their costs. However, with higher rates of unemployment, since consumers have less disposable income, consumer spending falls so firms may lose profits. Producers which sell inferior goods might see a rise in sales. It might cost firms to retrain workers, especially if they have been out of work for a long time.
what are the effects of unemployment on workers?
With unemployment, there is a waste of workers’ resources. They could also lose their existing skills if they are not fully utilized. Those in jobs are likely to see a fall in their wages as supply of labour increases.
what are the effects of unemployment on government?
If the unemployment rate increases, the government may have to spend more on JSA, which incurs an opportunity cost because the money could have been invested elsewhere. The government would also receive less revenue from income tax, and from indirect taxes on expenditure, since the unemployed have less disposable income to spend.
what are the effects of unemployment on society?
There is an opportunity cost to society, since workers could have produced goods and services if they were employed. There could be negative externalities in the form of crime and vandalism, if the unemployment rate increases
who are the economically inactive?
those who are not actively looking for jobs. These could include carers for the elderly, disabled or children, or those who have retired. Some workers are discouraged from the labour market, since they have been out of work for so long that they have stopped looking for work. If the number of the economically inactive increases, the size of the labour force may decrease, which means the productive potential of the economy could fall.
what is structural unemployment?
occurs with a long term decline in demand for the goods and services in an industry, which costs jobs. worsened by the geographical and occupational
immobility of labour.
If workers do not have the transferable skills to move to another industry, or if it is not easy to move somewhere jobs are available, then those facing structural unemployment are likely to remain unemployed in the long run.
Globalisation contributes to structural unemployment, since production in the manufacturing sectors, such as in clothing or motor cars, moves abroad to countries
with lower labour costs. Technological change also contributes as workers began to be replaced by machinery.
what is frictional unemployment?
This is the time between leaving a job and looking for another job. It is common for there to always be some frictional unemployment, and it is not particularly damaging since it is only short term. For example, it could be the time between graduating from university and finding a job.
