Unemployment - Explanation

Unemployment can be defined as the number of people (of working age) who are willing and available to work at current wage rates, but not currently employed. This is a relatively straightforward definition but working out how many people this is in practice is much more difficult. There are two ways that the total number of unemployed can be worked out, but both can be a little unreliable:

1. A claimant count
2. A Labour Force Survey

The first of these two was the method that was used for the whole of the 1980s and most of the 1990s. It simply involves taking a count of the number of people unemployed and claiming benefit. However, this method has many imperfections and so the incoming Labour government in 1997 changed to the second method of calculating unemployment. The Labour Force Survey is the current method.

Unemployment can be measured either as the number of people in '000s or millions and this is the most quoted figure. However, to give us an idea of how significant this number is, we often calculate how many people this is as a percentage of the labour force.

Over the last two decades, unemployment has fluctuated considerably. We can see this from the graph below.

Unemployment 1979-1998

Why not also have a look at the relevant theories about unemployment, or have a go at worksheets about it?