Download - Employment & Unemployment Syllabus Requirement: Employment/unemployment: Define, Trends in (inc international comp) Explore causes Explore consequences.

Employment & Unemployment

Syllabus Requirement:

Employment/unemployment:

Define, Trends in (inc international comp)Explore causesExplore consequencesUnderstand objectives of government economic policy

Questions for Exploration:

What is unemployment?How can we measure unemployment?Why is unemployment an economic issue?

What causes people to be unemployed?What can be done to reduce unemployment?

What have the trends in unemployment been over the last 20 years?How successful have polices to reduce unemployment been?


http://www.bbc.co.uk/news/business-26255696




http://www.bbc.co.uk/news/10604117



Unemployment in Britain:Use this link to build up a picture of

unemployment in the UK over previous years Make a few key notes on:

What is happening to unemployment overall

Which regions have had high or low unemployment throughout

Which regions have changed most

Try to find out which groups of people are most affected by current unemployment.




http://www.bbc.co.uk/news/uk/

http://www.bbc.co.uk/search/news/?q=Unemployment

http://www.tradingeconomics.com/united-kingdom/unemployment-rate

http://www.ft.com/cms/s/0/b238b43e-6dbd-11e1-b9c7-00144feab49a.html#axzz1p7VbQScO

http://www.statistics.gov.uk/hub/labour-market/index.html

http://www.bbc.co.uk/news/uk/













Reading Refs:

Smith, Pgs 119-120 & 159-162

Grant, Pgs 227-229 & 270-275

Objectives:

Be clear about the extent of your understanding of the basic definitions:

• Labour Market

• Labour Supply

• Working Age Population

• Labour Force

• Unemployed

• Understand the meaning of other key terms in relation to unemployment

• Understand there are different causes of unemployment leading to different types of unemployment


Work in Pairs. Use your knowledge of key terms you know to suggest what the following terms mean:

•Labour Market

•Labour Supply

•Working Age Population

•Labour Force

•Participation Rate

•Unemployment

•Unemployment Rate

•Economically Active

•Economically inactive

•Seasonal adjustment

•Voluntary Unemployment

•Involuntary Unemployment


Work in Pairs. Use your knowledge of key terms you know to suggest what the following terms mean:

•Labour Market: Is made up of firms willing to employ workers and labour seeking employment. The demand for labour by firms is downward sloping with respect to wage (price of labour), while the supply of labour by households is upward sloping with respect to wage.

•Labour Supply:Availability of suitable human resources, both physical and mental, either in total or for in a particular labour market.

The supply of workers with the specific skills or qualifications needed for particular types of work is affected by a country's education and training systems, and any past restrictions on entry to particular occupations


•Population of Working Age:Everyone between 16-60/65 who is eligible and willing to work

•Labour Force:The potential suppliers of labour, who are participating workers or seeking employment

People not counted include students, retired people, stay-at-home parents, people in prisons or similar institutions, as well as people not actively seeking work

•Participation Rate The proportion of the Population of Working Age who form the Labour Force – ie decide to seek work, rather than staying at home or dropping out. This is affected by rates of pay, the availability of jobs, and the rules of the social security system, which determine how much income is available without working


•Unemployment:is measured through the Labour Force Survey (an internationally agreed definition recommended by the International Labour Organisation - ILO) Unemployed people are those:1. without a job, want a job, have actively sought work in the last four weeks and are available to start work in the next two weeks or;2. out of work, have found a job and are waiting to start it in the next two weeks.

•Unemployment Rate:The headline unemployment rate is calculated by dividing the unemployment level for those aged 16 and over by the total number of economically active people aged 16 and over. Economically active is defined as those in employment plus those who are unemployed.

Rate of Unemployment (%) = Number of Unemployed/labour force x 100


Some further definitions:

•Economically Active:People aged 16 and over who are either in employment or unemployed.

•Economically inactive: People who are neither in employment nor unemployed. This includes those who want a job but have not been seeking work in the last four weeks, those who want a job and are seeking work but not available to start work, and those who do not want a job.

•Seasonal adjustment:A process of estimating regularly occurring seasonal effects and removing them from the raw data.


•Voluntary Unemployment

Caused when people choose not to accept a job at the going wage rate (this might be because they are better off on benefits and or working illegally

•Involuntary Unemployment

Caused when unemployed people would accept jobs at the going wage rate but are not able to find jobs


Lesson 2 Objectives:

• Know the different types of unemployment

• Understand there are different causes of unemployment leading to different types of unemployment

• Relate types of unemployment to current economic climate

• Appreciate why unemployment is an issue for the government & economy but some more of a concern than others


• What are the different reasons people might become unemployed?

• These form the different types of Unemployment :

•Voluntary

•Hidden

•Regional

•Seasonal

•Real Wage

•Demand Deficient/ Cyclical

•Structural •Frictional

Types of Types of UnemploymentUnemployment


• Frictional Unemployment:

Occurs when members of the labour force are moving from one job to another or seeking a new job

It reflects a natural part of job turnover in the labour market It takes time to search and find new employment and

workers, even when there are plenty of vacancies and unemployed workers available

• How ‘natural or normal’ is this type of unemployment in an economy?

• How much of a concern is this to the Government/Economy? • What could the Government do to reduce the level of this

unemployment?


• Structural Unemployment:

Occurs as a result of a mismatch between the skills of the unemployed and the requirements of the existing vacancies

People do not always have the qualifications, skills or training to move to a different job

It is linked to occupational immobility of labour Often occurs more heavily in certain regions because of the

long-run decline of traditional industries Simply raising the level of aggregate demand in the

economy will do little to alleviate the problem of structural unemployment


• How much of a concern is this to the Government/Economy?

• What could the Government do to reduce the level of this unemployment?


Demand Deficient Unemployment/Cyclical:

Associated with an economic recession or a sharp economic slowdown.

Caused by lack of Aggregate Demand Also known as cyclical unemployment Occurs due to a fall in the level of national output in the

economy causing firms to lay-off workers to reduce costs and protect profits.

Although usually associated with recession it can also exist in the long run when the economy is constantly run below capacity

Mainly a Keynesian view



unemployment?


Hidden Unemployment:

people who are interested in taking paid work but who are not classified as unemployed

can occur when people have been unemployed long term and become so disillusioned they stop looking for work

the poverty trap and the tax/welfare system can also increase hidden unemployment – people would work but better off on welfare benefits



unemployment?


Real Wage Unemployment:

a form of dis-equilibrium unemployment that occurs when real wages for jobs are forced above the market clearing level

traditionally, trade unions and wages councils are seen as the institutions causing this type of unemployment although evidence of this is limited


• How much of a concern is this to the Government/Economy?

• What could the Government do to reduce the level of this unemployment?


Seasonal Unemployment:

some jobs are only available on a seasonal basis, eg fruit picking

it may however be the case that during the remaining months workers are not looking for alternative work and therefore are not unemployed

those who are looking for work the rest of the year are therefore likely to be classified under another type of unemployment

• How much of a concern is this to the Government/Economy? • How ‘natural or normal’ is this type of unemployment in an

economy? • What could the Government do to reduce the level of this

unemployment?


Regional Unemployment:

Occurs when a significant concentration of unemployed are located in a specific area, leaving the unemployment rate much higher than average in this area

It can be caused by the closure of a significant business or industry in that area

Geographical immobility can intensify regional unemployment Where the younger people leave the area in search of work it

leaves and local ageing population Businesses may not be attracted to these areas where the

unemployed are older or the area is run down



unemployment?


• Long Term Unemployment

occurs when workers fail to find new employment after six months many remain out of work for very long periods economic and social costs are much higher for them most are out of work for structural reasons. it is serious for the economy it damages individuals – loss of self-respect and less interest to

employers they have a much lower chance of employment than those short-term

employers may perceive them to have lower productivity than other workers

vacancies may therefore coexist with high long-term unemployment

• Policies to reduce long term unemployment normally focus on improving the employability of these "outsiders" in the labour market.

• If successful, structural unemployment can be reduced and the natural rate of unemployment can decline.


• Why is unemployment such an issue? What are the Costs?

Unemployment – what are the costs?

Economic Costs

Fiscal Costs

Investment Costs

Social Costs


• Why is unemployment such an issue? What are the Costs?

Unemployment – what are the costs?

Individuals

Economy & Society

Government

Firms


• Consequences of Unemployment

BBC News Refs:

Your Storieshttp://news.bbc.co.uk/1/hi/uk/7883593.stm

How to cope with unemploymenthttp://news.bbc.co.uk/1/hi/business/7842026.stm

http://news.bbc.co.uk/1/hi/uk/7883593.stm

http://news.bbc.co.uk/1/hi/business/7842026.stm


• Consequences of Unemployment

Costs – who does it affect? to the individuals and families directly affected, to local and regional economies the economy as a whole

Economic Costs: Lost Output Of Goods And Services Causes a waste of scarce economic resources Reduces the long run growth potential of the economy Producing within (to the left of) its production possibility frontier

Fiscal Costs To The Government impact on government expenditure, taxation and level of government

borrowing higher benefit payments and lower tax revenues. they spend less so contribute less to the government in indirect taxes may result in a higher government borrowing requirement


• Consequences of Unemployment (contd/)

Deadweight Loss Of Investment In Human Capital Unemployment wastes some of the scarce resources used in training

workers. Workers who are unemployed for long periods become de-skilled as

their skills become increasingly dated in a rapidly changing job market. This reduces their chances of gaining employment in the future.

Social Costs: unemployment is linked to social and economic deprivation, rising

crime and worsening social dislocation (divorce, worsening health and lower life expectancy).

areas of high unemployment will also see a decline in real income and spending together with a rising scale of income inequality.

younger workers are more geographically mobile so some areas left with higher unemployment will have an ageing potential workforce - making them less attractive as locations for new businesses


• Costs of Unemployment (contd/)

Unemployment carries substantial economic and social costs. The duration of unemployment affects the economic and social

costs. These costs are greatest when long-term structural

unemployment is high. Many government focus their labour market policies on

improving the employment prospects of the long-term unemployed.


• Examine the extent to which unemployment reflects Market Failure?

Market Failure – when the market mechanism (D&S) does not result in the efficient allocation of scarce resource

Unemployment – those willing and able to work are unable to find suitable work

Types of Unemployment – structural, demand deficient/cyclical, seasonal,

Is there a ‘natural rate of unemployment?


Lesson 3 Objectives:

•Understand how to measure unemployment

•Consider the current unemployment situation/trends/who is most affected

•Evaluate strategies the Gov may use to seek to reduce unemployment?


Measuring Unemployment

• The Claimant Count – also known as headline unemployment

• measures the number of people who are out of work & eligible to claim benefits.

• is easy & cheap to calculate, it also shows regional variations.

• but it tends to underestimate unemployment as lots of people who want to work are not eligible for benefits. It changes whenever the rules change.

• all but one of the last 40 changes to eligibility have reduced the claimant count!

\\srv003\staffhome$\WALEli\Economics\EconAS\08-9 F582\Unemployment\NSO Measuring Unemployment.mht


• The International Labour Force Survey

• This is the International Labour Office (ILO) measure of the rate of unemployment. The data comes from a quarterly survey of 60,000 households from across the country.

• Unemployed people would include those without a job who:1. Are available for work2. Have looked for work in the past 4 weeks

• It is an internationally standardised measure so is used for international comparisons.

• However it is costly, goes out of data quickly and is subject to sampling errors.

http://www.statistics.gov.uk/hub/labour-market/people-not-in-work/unemployment/index.html




Syllabus Requirement:

Trends in (inc international comp)

http://www.google.com/publicdata?ds=z9a8a3sje0h8ii_&met=unemployment_rate&idim=eu_country:GB&dl=en&hl=en&q=unemployment

BUT – who are the unemployed?

Which groups of people are most likely to be affected?

What are the patterns of unemployment across time, different groups and between regions in the UK?

How does this compare with:

(a) Other EU countries?

(b) Countries outside the EU?




http://www.bbc.co.uk/search/news/?q=unemployment%20UK





YOUTH UNEMPLOYMENT – why is this of great concern to the UK economy?

http://www.bbc.co.uk/news/uk-12765116




http://www.google.co.uk/search?hl=en&q=unemployment+videos&meta=


http://www.ons.gov.uk/ons/taxonomy/index.html?nscl=Labour+Market


http://www.telegraph.co.uk/education/educationnews/8283862/Graduate-

unemployment-hits-15-year-high.html

http://www.bbc.co.uk/news/education-11652845


Who is unemployment hitting most?

Men? Women? Young? Old? Certain Regions? Certain Socio-economic Groups? Certain types of Household? Immigrants? Graduates? Those with no/very few formal qualifications?

Which are the Gov most concerned about and why?

What are they doing to reduce unemployment generally or to target those they are most concerned about?


•How can the Government intervene to tackle unemployment?

Fiscal Policy

Monetary Policy

Supply Side Policy

• It needs to increase the D for labour or improve the quality of supply and information between the buyers (firms) and the sellers (workers) of labour.

•Demand for Labour is DERIVED demand

TASK – 3 groups – each take one Policy and explore the extent to which it can be used to reduce unemployment


• How can the Government tackle unemployment?

Fiscal Policy

Government Income and Taxation

Outline how the Government could use Fiscal Policy to reduce unemployment.

Increase Gov spending either directly through public sector D (eg build more schools) or through loans/grants/subsidies to business to stimulate or encourage them, includes inward investment opportunities to attract foreign firms

Government is one of the biggest employers in the country. If it expands the public sector then it will employ more people (eg nurses, teachers)



Monetary Policy

Varying Interest Rates and the Money Supply.

Lower interest rates – makes it easier for firms to borrow to invest and expand.

Also consumers have more to spend so AD increases

Increase credit availability

Increase money supply – quantitative easing



Supply Side Policy

Education, Training, Apprenticeships, Enterprise Schemes, Promote and facilitate business opportunities, etc

Ensure education is ‘fit for purpose’ – ie young people leave education with the skills, qualifications and personal attributes which makes them very employable in a modern economy. Also support is available for re-training

Reduce barriers to setting up and succeeding in business eg planning laws, simplify tax system, relax business laws


•Policies to Reduce Specific Types of Unemployment:

Governments will use a range of different policies to reduce levels of unemployment in the economy

These policies focus on the underlying causes of unemployment – the different types of unemployment

Consider what the Government could do to reduce the following:


Real Wage Unemployment:•a form of dis-equilibrium unemployment that occurs when real wages for jobs

are forced above the market clearing level•traditionally, trade unions are seen as causing this type of unemployment

although there is no strong evidence (why might this be?)

What Action could the Gov take to reduce this type of unemployment?•Reduce or get rid of the Minimum Wage•Control the power of Trade Unions

Employment Level

Wage RateS of Labour

D for Labour

Eq Wr

Eq El

If wage rates are forced above the market equilibrium (by TUs, or NMW) then unemployment results

Unemployment

Where might the barriers to Gov action be?•Trade union power/political party allegiance•Poverty may result if wages are allowed to fall to market equilibrium


Demand Deficient (cyclical) unemployment•Associated with an economic recession or sharp economic slowdown, caused by lack of

Aggregate Demand•Occurs due to a fall in the level of national output in the economy causing firms to lay-off

workers to reduce costs and protect profits. •Although usually associated with recession it can also exist in the long run when the

economy is constantly run below capacity •Mainly a Keynesian view

What Action could the Gov take to reduce this type of unemployment?Boost Aggregate D through:•Fiscal Policy•Monetary Policy•Supply Side Policies

Real Output Goods/Services

Price Level

Ep

Eq

Agg S

Agg D

Full Emp of Resources

Unemployed Resources

Agg D2

What might the barriers to Gov action be?•Might begin to cause inflation•Government debt increase•Impact of globalisation


•What other types of employment could the Government help to reduce and what might the barriers be?

Voluntary unemploymentPossible Gov Action? •Reduce Unemployment and other welfare Benefits

What might the barriers to Gov action be?•May create absolute poverty & widen the rich/poor divide

Structural unemploymentPossible Gov Action ?•Provide retraining schemes – increase occupational mobility•Help people find jobs by moving areas - improve geographical mobility •Possibly subsidise businesses in declining industries

What might the barriers to Gov action be?•Barriers to mobility – both occupational and geographical


•What other types of employment could the Government help to reduce and what might the barriers be?

Regional unemploymentPossible Gov Action? •Encourage people to move areas to find work

What might the barriers to Gov action be?May create absolute poverty & widen the rich/poor divide


•Why might unemployment be a Regional problem?

Causes:Declining industry and unemployed geographically immobileNot a pleasant or accessible area for business to move to

Consequences:We end with richer and poorer areas of the country – regional disparities

Possible Remedies:Encourage either business to move to those areas or the people to move to where the jobs areImprove the infrastructure in areas of high unemploymentSet up Enterprise Zones to focus on these areasPublic Sector investment in those areas (eg Royal Mint in Wales)

LABOUR MOBILITY

Definition - GEOGRAPHICAL:

Definition - OCCUPATIONAL:

Why is mobility important to the economy?

Ability and willingness for workers to move area/location in search of work or promotion

Ability and willingness for workers to change types of job, often also re-training, to secure work or promotion

Dynamic/Growing Economy needs labour to:

•be flexible by moving from areas and job types where business is decline or there is excess supply to where excess demand for labour exists,

•re-train and move from jobs where demand is falling to newer industries where demand is growing

otherwise economic development and maturity is adversely affected

Family, personal, social ties.

Willingness or confidence to move or re-train.

Differences in availability and price of property, cost/stress of moving

Financial/opportunity costs.

Lack of knowledge of opportunities in other parts of the country or for other jobs.

Retraining courses not available.

Firms may offer financial incentives/other packages to help people move or re-train

Wages may need to increase to attract workers to certain areas/jobs

Better communications technology improves knowledge of opportunities

Gov may offer incentives, ensure moving is easier, ensure schools and local services are good in all areas. Ensure regional disparities are minimised.

Gov may try to change expectations of workers in favour of moving, ie a job is not for life

What Barriers exist to reduce/impede geographical and occupational mobility?

What measures might firms or the Gov take to reduce the barriers?


Is there a perfect level of unemployment? Can it be zero?

• Full Employment?

Most economists agree that unemployment cannot fall to zero since there will always be (and needs to be) some frictional unemployment

Could be defined as occurring when an economy is operating on the production possibility frontier

Full-employment could be defined as a situation where the labour market has reached a state of equilibrium - i.e. when those in the active labour force who are willing and able to work at going wage rates are able to find work. Any remaining unemployment would be frictional.


• The Risk Of Wage Inflation with Full Employment

One possible risk of reaching full-employment is that inflation may increase as total spending in the economy increases, causing businesses to raise prices.

• The Natural rate of Unemployment:

rate where the labour market is in a position of equilibrium labour supply = labour demand at a given real wage rate all those people willing and able to take paid employment at the going

wage rate do so. The natural rate of unemployment is not zero


• Why do Job Vacancies still exist when there are people unemployed?

new jobs created in the economy may not be suitable for those unemployed.

Barriers to geographical mobility – people not prepared to move

Barriers to occupational mobility – people unwilling/unable to retrain

Government measures to encourage, enable or persuade the unemployed to take up jobs may be failing

Wages are not high enough to attract people to those particular jobs

Welfare benefits may mean some unemployed are better off, or feel more secure on benefits than at work (eg the “poverty trap”)


• Trends in Unemployment:

Extract from Labour Market Overviewhttp://www.statistics.gov.uk/pdfdir/lmsuk0309.pdfhttp://www.statistics.gov.uk/downloads/theme_labour/LMS_QandA.pdf

How should the longer-term trends be described ?The trend for the working age employment rate is falling.The trend for the employment level (16+) is falling.The trend for total actual weekly hours is falling.The trends for both the unemployment rate and unemployment level (16+)

are increasing.The trend in the working age economic inactivity rate appears to be falling.

Trends in Unemploymenthttp://www.statistics.gov.uk/hub/labour-market/people-not-in-work/

unemployment/index.html


Tutor2U notes:

\\srv003home\staffhome$\WALEli\Economics\EconAS\10 start\F582 Nat & Intnat Econ\Support Material\Unemployment\T2U Notes Employment and Unemployment.mht

BBC News Refs – Local/Regional Unemployment

• Unemployment in Abingdon

• http://news.bbc.co.uk/1/hi/england/oxfordshire/7944940.stm

• How to cope with unemployment

• http://news.bbc.co.uk/1/hi/business/7842026.stm


• Answers to Grant Activities:

Activity 1:

a. The unemployment is STRUCTURAL

Mismatch between skills of the unemployed and those required by the vacancy which exists.

b. An increase in public sector employment is likely to be caused by an increase in government spending – eg on health, education, administration

Activity 2:

a. 2 disadvantages of losing his job – loss of income, lower standard of living and loss of self-esteem

b. Evidence of search unemployment – has funding for 6 months, before he starts to panic. Suggestion that he was not looking to take just any other job – looking for something suitable



Activity 3:

a. More people entering the labour force, school leavers, immigrants, those not previously part of the labour force (eg previously been carers)

b. 2 benefits of a fall in unemployment – rise in output, increase tax income, less in welfare payments, general feel good factor for those individuals and the economy.

Activity 4:

Multiple choice questions, page 274

1 Answer CThe unemployment arises from the decline in an industry causedby a fall in demand for steel in the country.

2 Answer AFrictional unemployment arises when workers are between jobs.The harder it is for them to obtain information about jobvacancies, the longer they will be unemployed.



Activity 4: Multiple choice questions, page 274

3 Answer AWhen there is unemployment, output is below its potential level. As a result, people

experience lower living standards than possible.

4 Answer AA recession is a decline in real GDP over a period of six months or more – a downturn in the

economic cycle. During a recession demand for some products will decline. The lower aggregate demand causes demand-deficit or cyclical unemployment.

5 Answer AThe longer people are out of work, the more desperate they generally become. This often

makes them more prepared to accept a lower wage.

6 Answer DA fall in unemployment is likely to be accompanied by a rise in employment. More people in

work will lead to an increase in direct and indirect tax revenue. AD will increase and there will be a move towards the production possibility curve. Higher employment may reduce crime levels, but what happens to crime detection rates is determined by how efficiently the police deploy their resources.



Data response questions, page 275a Unemployment was high in 1985 at more than 3 million. It fell in the late 1980s but then rose again in

the early 1990s to nearly 3 million when the country experienced a recession. It then fell to just over 1 million by 2000 as measured by the claimant count.

b The proportion of the labour force who are in work.

c Unemployment can exist when there is full employment as defined by both Keynesians and new classical economists. Keynesians define full employment as existing when there is 3% unemployment. The unemployment will largely frictional, with workers being between jobs. New classical economists also think that some frictional unemployment can occur when the economy is operating at full employment. However, they think that some people will be voluntarily unemployed, being unprepared to work at the going wage rate.

d Because of occupational and geographical immobility. The vacancies in one part of the country may require different skills from those possessed by unemployed people. Even if they have the appropriate skills, they may not be able to fill the vacancies if family ties, differences in housing costs or other factors prevent them moving.

e The passage does not suggest that the costs of unemployment are evenly spread. It mentions that certain areas of the country, for example, Tower Hamlets, experience high rates of unemployment, and that Asian and black people are more likely to be unemployed than white people.



Activity 1:

a. The unemployment is STRUCTURAL

Mismatch between skills of the unemployed and those required by the vacancy which exists.

b. An increase in public sector employment is likely to be caused by an increase in government spending – eg on health, education, administration

Activity 2:

a. 2 disadvantages of losing his job – loss of income, lower standard of living and loss of self-esteem

b. Evidence of search unemployment – has funding for 6 months, before he starts to panic. Suggestion that he was not looking to take just any other job – looking for something suitable



Activity 3:

a. More people entering the labour force, school leavers, immigrants, those not previously part of the labour force (eg previously been carers)

b. 2 benefits of a fall in unemployment – rise in output, increase tax income, less in welfare payments, general feel good factor for those individuals and the economy.

Activity 4:

Multiple choice questions, page 274

1 Answer CThe unemployment arises from the decline in an industry causedby a fall in demand for steel in the country.

2 Answer AFrictional unemployment arises when workers are between jobs.The harder it is for them to obtain information about jobvacancies, the longer they will be unemployed.


BBC News Refs:

• Recession Tracker Articlehttp://news.bbc.co.uk/1/hi/business/7789784.stm

• Unemployment hits 3.2 Billionhttp://news.bbc.co.uk/1/hi/business/7931289.stm

• BBC Radio 4 News Article - Wed 29 April 09 – Graduate Jobshttp://www.bbc.co.uk/iplayer/episode/b00jyylj/Today_29_04_2009/

• BBC News Article - Wed 29 April 09 – Graduate Jobshttp://news.bbc.co.uk/1/hi/education/8022358.stm


Student Activities – work in 2s/3s:

Read the case studies and each case decide which categories it fits into.

Try the definitions matching activity



Activity 11, page 227a Calculate the country’s labour force 2m + 28m = 30mb Calculate the country’s unemployment rate (2m/30m) x 100 = 6.67%

Activity 12, page 227a The rate of unemployment is the percentage of the labour force who are

unemployed.b Because it can be used for international comparisons and it includes both

people who are unemployed and claiming job seeker’s allowance and people who are unemployed but not claiming benefits.



Activity 13, page 228a labour force surveyb labour force surveyc claimant countd claimant count

Activity 14, page 229a In 1999 the unemployment rate was higher in the UK than in Japan. The UK’s

unemployment rate fell from 1999 to 2001 and then rose to 2003. However, the UK’s unemployment rate in 2003 was lower than in 1999 and lower than Japan’s. Japan’s unemployment rate did not change between 1999 and 2000 but then rose in each year from 2000 to 2003.

b It would also be useful to know how the unemployment was measured in the two countries. The comparison is more valid if the same measure is used. In assessing the seriousness of the unemployment experienced, it would also be beneficial to know the average time people are unemployed, as long-term unemployment can be damaging.

Employment & UnemploymentReview Questions for

discussion!

What is unemployment? How can we measure unemployment? Why is unemployment an economic

issue?

What causes people to be unemployed? What can be done to reduce

unemployment?


Past Exam Questions:


Create your own Diamond 9s and pass to another group to discuss and prioritise: