Employment and Unemployment

Question 1

Claimant count

Answer 1

The number of people claiming unemployment-related benefits.

Question 2

Cyclical unemployment

Answer 2

Unemployment caused by a persistent lack of aggregate demand for goods and services, where national output < potential output leading to a negative output gap.

Question 3

Demand deficient unemployment

Answer 3

Also known as cyclical unemployment, occurs when planned demand is insufficient to generate a full-employment level of real national output, this is most likely to happen in a slowdown or recession.

Question 4

Discouraged workers

Answer 4

People often out of work for a long time who give up on job search and who become economically inactive in the labour market. A cause of hidden unemployment.

Question 5

Disguised unemployment

Answer 5

Also known as hidden unemployment, where part of the labour force is either left without work or is working in a redundant manner where worker productivity is essentially zero.

Question 6

Economically active

Answer 6

Those who are unemployed and actively seeking employment.

Question 7

Economically inactive

Answer 7

Those who are of working age but are neither in work nor actively seeking work.

Question 8

Frictional unemployment

Answer 8

Those moving between jobs. Typically lasts for up to six months.

Question 9

Full employment

Answer 9

When there enough job vacancies for all the unemployed to take work.

Question 10

Human capital

Answer 10

Human capital is a measure of individuals’ skills, knowledge, abilities, social attributes, personalities and health attributes. These factors enable individuals to work, and therefore produce something of economic value.

Question 11

Inactivity

Answer 11

The state of not producing an economic output.

Question 12

International labour organisation (ILO)

Answer 12

The ILO is a United Nations agency whose mandate is to advance social justice and promote decent work by setting international labour standards.

Question 13

Job search

Answer 13

Process by which workers find appropriate jobs given their tastes and skills.

Question 14

Labour force survey

Answer 14

The Labour Force Survey (LFS) is a study of the employment circumstances of the UK population. It is the largest household study in the UK and provides the official measures of employment and unemployment.

Question 15

Labour shortages

Answer 15

When businesses find it difficult to recruit the skilled workers they need.

Question 16

Labour supply

Answer 16

The number of people able, available and willing to work at prevailing wage rates.

Question 17

Migration

Answer 17

The movement of people from one geographical location to another with the intention of settling in the new region.

Question 18

Natural rate of unemployment

Answer 18

The equilibrium rate of unemployment = frictional + structural unemployment.

Question 19

NEETs

Answer 19

‘NEET’ stands for young people aged 16-24 Not in Education, Employment or Training (NEET). 788,000 people aged 16-24 in the UK were NEETs in 2019, representing 11.3% of the age group.

Question 20

Net inward migration

Answer 20

When the number of migrants coming into a country is higher than those leaving in a given time period – usually a year.

Question 21

Real wage

Answer 21

Nominal wage adjusted for the effects of inflation.

Question 22

Redundancy

Answer 22

Making someone redundant is to end their paid employment.

Question 23

Seasonal unemployment

Answer 23

This occurs when people are unemployed at particular times of the year when demand for labour is lower than usual.

Question 24

Structural unemployment

Answer 24

Unemployment that results from the decline in an industry which leaves people unemployed because they do not have the skills needed by industries that are growing.

Question 25

Tight labour market

Answer 25

When demand for labour is high and there are shortages of labour. Businesses may have to offer higher wages to attract and keep the workers they need.

Question 26

Under-employment

Answer 26

Workers are underemployed when they are willing to supply more hours of work than their employers are prepared to offer.

Question 27

Unemployment rate

Answer 27

The unemployment rate is the proportion of the economically active population who are unemployed.

Question 28

Unemployment trap

Answer 28

When the prospect of the loss of unemployment benefits dissuades those without work from taking a new job – creates a disincentives problem.

Question 29

Unit wage costs

Answer 29

Labour costs per unit of output.

Question 30

Zero hour contracts

Answer 30

An employment contract under which the employee is not guaranteed work and is paid only for work carried out.