Employment & Unemployment 2.1 Flashcards
Labour Force def. (Economically Active)
Number of people of working age who are either employed or unemployed but actively seeking work.
33.6million in 2017
Unemployment def.
Not in employment, but willing to and actively searching for work
Underemployment
Employed, but not working as many hours as one would wish.
Much of this is part-time workers, who account for roughly 25% of the population
Economically Inactive
Number of people who are of working age (between school leaving age and retirement age) who are not looking for work
Claimant Count
Number of people claiming benefits
Not the most accurate measure of unemployment, ILO method is better (International Labour Organisation)
ILO (International Labour Organisation) Measure
Uses the labour force survey to measure unemployment
Considered better than the Claimant Count because:
- Includes those who are ineligible for benefits e.g. mothers returning to work who have an employed partner
- Doesn’t include those who claim benefits but are involved in the ‘Black Economy’
Issues with the ILO and Claimant Count measures
3
Doesn’t include those who are underemployed, this could be viewed as partly unemployed. The number has risen through use of Zero Hour contracts
Doesn’t include discouraged workers
Neither measure capture the difference between Short-term & Long-term unemployment. Short-term is far less harmful to the economy as most of the unemployed find jobs within weeks or months. It is the LTU people that are harmful, this is often in places with structural unemployment
5 Types of Unemployment
Structural
Seasonal
Frictional
Cyclical
Structural Unemployment
Unemployment as traditional industries have gone into decline (coal, steel etc.), often due to technological change
Extremely hard to deal with, some areas in South Wales still haven’t recovered from the closure of steel plants and coal mines in the 80s
Seasonal Unemployment
Some regions & industries (often tourism) need more workers at certain times of the year. Often occurs in coastal towns during the summer. Often highest during winter
Frictional Unemployment
Unemployment inbetween jobs. Often only short-term, and the extent of frictional unemployment can be reduced by making it easier to find jobs at Job Centres, and it is now harder to claim benefits just after unemployment to encourage finding a new job faster
Cyclical Unemployment
Unemployment as a result of a fall in aggregate demand. e.g. during a recession, cyclical unemployment is common as firms have made employees redundant to cut costs.
Can be tackled through interventionist policies to increase AD e.g. during financial crisis 2008, many govs used fiscal policy
Real Wage Unemployment
2
Occurs when the level of wages in an industry exceed the market equilibrium e.g. minimum wages, thus people find it hard to find jobs
Also occurs when people can get more in benefits, or close to the same, than if they were working thus there I little incentive to work
Impact of immigration
4
3mil EU nationals working in the UK.
Majority are young and pay more in taxes than they receive in benefits, increasing GDP. They also help offset the issue of the ageing population
Some sectors, such as hospitality, rely heavily on migrants who are willing to work long hours on low pay.
There are arguments that immigrants suppress the opportunity of jobs to other UK residents, yet in 2019, UK unemployment was historically low at 3.85%
Impacts of unemployment on the Government
Tax revenues decrease, whilst spending on benefits increase, leading to a decrease in GDP. Less money to spend on infrastructure and public services
