Pack 5 Flashcards
Formula for unemployment rate
( Number of people unemployed / number of people in workforce ) x 100
•Remember that unemployed people are also part of the workforce
Explain how unemployment, inactivity and underemployment differ
Unemployment - refers to when people who are willing, able and actively looking for to work are not currently employed.
Inactivity - The number of people of working age who are either unwilling or unable to work.
Underemployment - Occurs when a person does not work full time or takes a job that does not reflect their actual training and financial needs.
2 main ways of measuring unemployment
•The Claimant Count - use the number of claimants of job seekers allowance.
•The labour force survey - Measure those out of work in the last four weeks and ready to start in the last two weeks.
Outline a pro and con of each method of measuring unemployment
Claimant Count:
•Pro - Quick and cheap to measure unemployment as the data already exists.
•Con - Not everyone who is unemployed can claim benefits.
Labour Force Survey:
•Pro - Individuals are included regardless of whether they claim benefits or not.
•Con - The survey may be inaccurate as the data are six weeks out of date by the time they are published.
5 types of unemployment
•Seasonal - people who only have jobs at certain times of the year, demand changes for certain occupations at different times of the year.
•Frictional - people who are constantly between jobs to search to better paying jobs.
•Cyclical - if theres a lack of demand for an economy’s output, firms do not require the same quantity of employees, so this is a result of a recession when AD is low.
•Structural - a measure of workers who lose jobs in a declining industry and do not have the skills to join other industries, result of poor education.
•Real wage - when wages are above the equilibrium level causing excess supply of labour, could be due to national minimum wage or strong trade unions.
Suggest solutions to at least 3 types of unemployment
Frictional unemployment - Improved job placement services, career counselling.
Structural unemployment - Government invests in training programmes, relocate subsidies.
Cyclical unemployment - Government spending increases.
Explain the impact of unemployment on workers - 1 pro and con
•Pro - more leisure time
•Con - chance of redundancy, lower incomes if made unemployed
Explain the impact of unemployment on firms - 1 pro and con
•Pro - greater choice of employees, costs of production decreases due to workers willing to accept lower wages.
•Con - Less spending so AD decreases
Explain the impact of unemployment on the economy - 1 pro and con
•Pro - less inflationary pressure due to reduced AD, less importing due to lower incomes
•Con - Lower economic growth, higher consumer prices and less purchasing power
Impact of unemployment on the government - 1 pro and con
•Pro - less inflationary pressure due to fall in AD, less importing
•Con - less tax revenue due to higher spending on unemployment benefits, Greater income inequality
Explain the state of youth employment in the UK and spain
•Been escalating in UK since 2005
•Cost of £31 billion from 2021-2025
•Current youth unemployment rate is 14.8%
