Employment And Unemployment Flashcards
Unemployment meaning
Someone is considered to be unemployed if they are not working but actively seeking work
They are part of the labour force
Who consists of the labour force and non labour force
A country’s population is divided into the labour force - and non labour force
The labour force consists of all workers actively working and the unemployed (who are seeking work)
Usually between the ages of 16-65
The non labour force includes all those not seeking work e.g. stay at home parents, pensioners, school children
Economically inactive meaning
Economically inactive are those people who are between 16-65 and not working or not seeking work
How is unemployment measured
The International Labour Organisation (ILO) Survey
The Claimant Count
Features of ILO and labour force survey
An extensive survey is sent to a random sample of ≈ 60,000 UK households every quarter
Respondents self-determine if they are unemployed based on the ILO criteria
Ready to work within the next two weeks
Have actively looked for work in the past one month
The same survey is used globally so it’s useful for making international comparisons
Features of claimant count
Counts the number of people claiming job seekers allowance (JSA) in the UK
More stringent requirement to be considered unemployed than with the ILO survey
Requires claimants to meet regularly with a ‘work coach’
Underemployed meaning
Someone is underemployed when:
They want to work more hours than they currently work
They are working in a job that requires lower skills than they have e.g. an architect working as a gym instructor
When does underemployment occur
Underemployment is often a response to cyclical unemployment
Workers who have lost their jobs in a weak economy are willing to take part-time jobs or accept roles outside of their main skill base
Underemployment is also a consequence of structural unemployment
Unless workers retrain and gain new skills, it will be hard for them to gain full employment
How can employment rate be increasing even as unemployment rate increases
May be caused by increased immigration which causes working age population to increase
May be caused by a decrease in the inactivity rate as people move from inactive to employed
What do unemployment rates not consider
Unemployment rates do not capture the hidden unemployment that occurs in the long term
Workers look for a job but may eventually give up and become economically inactive
This actually improves the unemployment rate as fewer people are actively seeking work
Types of unemployment
Structural
Cyclical
Seasonal
Frictional
Real wage
Why does structural unemployment occur
Structural unemployment occurs when there is a mismatch between jobs and skills in the economy
It usually happens as the structure of an economy changes e.g. the secondary sector is declining and the tertiary sector is growing
There is no longer a need for a specific type of worker e.g. ship builders in Glasgow
Many Western industries have relocated production to China causing structural unemployment in their economies
Unless workers receive help to retrain, they are often left unemployed or under-employed
Why does does cyclical unemployment occur
Cyclical or demand deficient unemployment is caused by a fall in AD in an economy
This typically happens during a slow down or recession
The demand for labour is a demand derived from the demand for goods/services
As output falls in the economy, firms lay off workers
Why does seasonal unemployment occur
Seasonal unemployment occurs as certain seasons come to an end and labour is not required until the next season
E.g. fruit pickers; summer seaside resort workers; ski instructors
Why does frictional unemployment occur
Frictional unemployment occurs when workers are between jobs
This is usually short-term unemployment
Workers have voluntarily left their previous job to search for another
