Measuring unemployment

Question 1

There are two ways of defining unemployment

Answer 1

1. the level of unemployment is the number of ppl who are looking for a job but cannot find one
2. the rate of unemployment is the number of ppl out of work as a percentage of the labour force

Rate of unemployment used when making comparisons between countries, different countries have differnet popln sizes.

Question 2

Two ways of measuring unemployment:

1. The Claimant Count

Answer 2

Claimant count = number of people claiming unemployment-related benefits from the government, known as the Jobseeker’s Allowance (JSA).
Ads - 1. data is easy to obtain and there is no cost in collecting the data
2. updated monthly, so its always current

Disads - 1. can be manipulated by the government to make it seem smaller - e.g. a change in the rules (e.g. raising the school leaving age to 19) could reduce the no. of ppl who could claim JSA - make it seem that unemployment was falling.
2. excludes those ppl who are looking for work but are not eligible to claim JSA

Question 3

Two ways of measuring unemployment:

2. The Labour Force Survey

Answer 3

International Labour Organisation uses a sample of the popln. It asks ppl who arent working if they’re actively seeking work. Number of ppl who say ‘yes’ are added up to produce the ILO unemployment count.
Ads - 1. more accurate than claimant count
2. internationally agreed measure for unemployment, so easier to make comparisons with other countries

Disads - 1. less upto date than claimant count because of the way the data is collected

2. Expensive to collect and put together the data
3. Sample may be unrepresentative of the popln as a whole - making data inaccurate

figure from labour force survey tends to be higher than claimant count as certain groups are excluded from the claimant count. e.g. ppl cant claim JSA if they have a high earning husband/wife, or might have too much money in savings

Question 4

Unemployment comes at a cost to the whole economy

Answer 4

Governments want to keep track of unemployment figures for a no. of reasons:

1. High rate of unemployment suggests that an economy is doing badly
2. Unemployment will lead to lower incomes and less spending. This will have an impact on companies too - might sell fewer goods, or need to cut prices and make less profit.
3. Unemployment means there’s unused labour in the economy, so fewer goods and services can be produced
4. It also means the government have extra costs e.g. welfare benefits, less revenue because less tax is paid