1.4 UNEMPLOYMENT
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This video is relevant for this section despite it saying that it is for AQA.
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Claimant Count
In the UK, the ONS measures the level of unemployment in the economy by the Claimant Count. The claimant count is the number of individuals seeking unemployment benefits whilst they are seeking work. It is reported each month and comes out as a percentage. The data is seasonally adjusted to take into account predictable seasonal change in the demand for labour.
In the UK, the ONS measures the level of unemployment in the economy by the Claimant Count. The claimant count is the number of individuals seeking unemployment benefits whilst they are seeking work. It is reported each month and comes out as a percentage. The data is seasonally adjusted to take into account predictable seasonal change in the demand for labour.
Labour Force Survey
However, the labour force survey also looks at the level of unemployment and uses the definition of anyone who is available to work straight away and they do not have any type of job. Typically this number is around 500,000 higher than the claimant count as some individuals choose not to claim Job Seekers Allowance (JSA) or have a job that starts in a couple of weeks, so are waiting.
However, the labour force survey also looks at the level of unemployment and uses the definition of anyone who is available to work straight away and they do not have any type of job. Typically this number is around 500,000 higher than the claimant count as some individuals choose not to claim Job Seekers Allowance (JSA) or have a job that starts in a couple of weeks, so are waiting.
Are we Measuring Unemployment Correctly?
However, are we measuring unemployment correctly?
· Both the claimant count and labour force survey take into account people who are looking for work. But there are some individuals who are not actively looking for work for a variety of reasons, for example, they are a carer or have taken early retirement.
· Under employment. How many hours should count as having a job? If it is the case that you are only working 4 hours a week and want to be working more hours, should this individual count as being employed? This has especially been the case since the last recession. The Conservative Government claim to have reduced unemployment by 2 million but at the same time there has been a larger rise in the number of individuals who work part -time but wish to work full-time.
However, are we measuring unemployment correctly?
· Both the claimant count and labour force survey take into account people who are looking for work. But there are some individuals who are not actively looking for work for a variety of reasons, for example, they are a carer or have taken early retirement.
· Under employment. How many hours should count as having a job? If it is the case that you are only working 4 hours a week and want to be working more hours, should this individual count as being employed? This has especially been the case since the last recession. The Conservative Government claim to have reduced unemployment by 2 million but at the same time there has been a larger rise in the number of individuals who work part -time but wish to work full-time.
Types of Unemployment
Within the brand of unemployment there are various sub types of unemployment. The four you need to know for AS are listed below:
Within the brand of unemployment there are various sub types of unemployment. The four you need to know for AS are listed below:
- Seasonal – during different seasons, there is a demand for different types of labour. For example, in the summer season, there is an increased demand for harvesters and tourist related industries. In the winter, there is an increase in Christmas temp jobs.
- Frictional – this is when workers are in-between jobs. When a worker gets made redundant they will have interviews for jobs and go through the application process which all takes time. Also, workers may choose to hold out for the job which is right for them, whether this be the salary that they wish to achieve or the right progress or the job that they want to do.
- Structural – when a whole sector/ industry goes into decline and causes mass unemployment, because there is a mismatch of skills or there are not the available jobs to cover the amount of individuals who have just been unemployed.
- Cyclical – this is unemployment associated with the economic cycle. Employment is pro cyclical meaning that if the economy grows employment also grows. This means that unemployment is countercyclical. As labour is derived from the demand for the final good, a decrease in output will result in an increase in unemployment.
Government Policy
Within the brand of unemployment there are various sub types of unemployment. The four you need to know for AS are listed below:
Within the brand of unemployment there are various sub types of unemployment. The four you need to know for AS are listed below:
- Seasonal – during different seasons, there is a demand for different types of labour. For example, in the summer season, there is an increased demand for harvesters and tourist related industries. In the winter, there is an increase in Christmas temp jobs.
- Frictional – this is when workers are in-between jobs. When a worker gets made redundant they will have interviews for jobs and go through the application process which all takes time. Also, workers may choose to hold out for the job which is right for them, whether this be the salary that they wish to achieve or the right progress or the job that they want to do.
- Structural – when a whole sector/ industry goes into decline and causes mass unemployment, because there is a mismatch of skills or there are not the available jobs to cover the amount of individuals who have just been unemployed.
- Cyclical – this is unemployment associated with the economic cycle. Employment is pro cyclical meaning that if the economy grows employment also grows. This means that unemployment is countercyclical. As labour is derived from the demand for the final good, a decrease in output will result in an increase in unemployment.
The Natural Rate of Unemployment
Unemployment is countercyclical, meaning that during a downturn, the unemployment level will rise and during an upturn/ boom, the unemployment level will fall. In an economy, there will always be a certain level of unemployment and this is known as the natural rate of unemployment. The natural rate of unemployment is the expected rate of unemployment in the economy. The natural rate of unemployment can change over time and here are some factors that influence it:
Unemployment is countercyclical, meaning that during a downturn, the unemployment level will rise and during an upturn/ boom, the unemployment level will fall. In an economy, there will always be a certain level of unemployment and this is known as the natural rate of unemployment. The natural rate of unemployment is the expected rate of unemployment in the economy. The natural rate of unemployment can change over time and here are some factors that influence it:
- Skills and education. The capabilities of the work force influence how employable individuals are. If education levels are high, then it is likely that the natural rate of unemployment will be low.
- Hysteresis effect. This is closely linked to skills and education. The longer the time an individual spends unemployed, then they start to lose touch with the skills required for jobs as technology and the way machines work have changed. This results in the unemployed needing to be retrained in order to obtain a job. This is expensive for potential employers, so these individuals are over looked and they start to become the long term unemployed. The more individuals who have experienced this effect, the higher the natural rate of unemployment will become. During recessions the unemployment rate rises and this can cause the natural rate to rise as well. A recession can scare generations because individuals can be out of work for very long periods.
- Flexibility of labour markets. The more flexible the labour market is (such as lower levels of trade union power) the lower the natural rate will be.
- Degree of labour mobility, which will be discussed later.