Unemployment

What is unemployment?

•  When those who are actively seeking work are unable to find a job

• A waste of resources

  • If people aren’t working, they are not making any contribution to economic output in their country=lower county GDP

• Unemployed people  will have a lower living standard

How is it measured?

• Carry out a survey

  • In the EU, it’s the Labour Force Survey 

  • Done monthly

• Anyone who has at least one hour’s paid work in a week, or temporarily away from a job (vacation) is unemployed

Type of Unemployment

 Cyclical/Demand Deficient Unemployment

• Linked to economic cycle

• When an economy moves from a boom into a downturn/ People lose their jobs because demand for goods and services start to fall

Structural unemployment

• Changes in the structure of the economy

There are three main types…

• Sectoral unemployment

  • When people are laid off because their industry is in decline

• Technological unemployment

  • Jobs previously done by people are now done by machines

• Regional unemployment

  • Unemployment in a country isn’t likely to be the same in all regions

  • For example, South east of England has a lower unemployment rate than the North-east

Seasonal unemployment

• Some workers are only required for certain times of the year

• Little can be done to reduce this unemployment because it is linked to the climate

Voluntary Unemployment

• Most people are unemployed against their wishes

BUT

• There are people who choose not to work=Voluntarily unemployed

• May choose this because they don’t like the wages offered, or they don’t like the idea of work

Frictional Unemployment

• Short-term unemployment

• Occurs when moving from one job to another

• Will always exist in an economy but isn’t a problem

Impact of Unemployment

 Output

• Productive potential of a country is not being fully exploited

  • Levels…