- Employment and Unemployment |
We now turn our attention to the labour market and consider why people find themselves out of work and cannot find a paid job. Unemployment imposes heavy economic and social costs; we look at which policies are likely to be most effective in keeping unemployment as low as possible.Defining and measuring unemployment Officially, the unemployed are peoplewho are registered as able, available and willing to work at the going wage rate but who cannot find work despite an active search for work. This last point is important for to be classified as unemployed, one must show evidence of being active in the labour market.
There are two main measures of unemployment in the UK: 1. The Claimant Count measure of unemployment includes those unemployedpeople who are eligible to claim the Job Seeker's Allowance (JSA) or who have enough National Insurance Credits. People who satisfy the criteria receive the JSA for six months before moving onto special employment measures including the New Deal Programme. The Claimant Count is a “head-count” of people claiming unemployment benefit. 2. The Labour Force Survey covers those who are without anykind of job including part time work but who have looked for work in the past month and are able to start work in the next two weeks. The figure also includes those people who have found a job and are waiting to start in the next two weeks. On average, the labour force survey measure has exceeded the claimant count by about 400,000 in recent years. Because it is a survey (albeit a large one and onethat provides a rich source of data on the employment status of thousands of households across the UK), we must remember that there will always be a sampling error in the data. The Labour Force Survey measure is the internationally agreed definition of unemployment and therefore the measure that best allows cross-country comparisons of unemployment levels.Under-counting the true level ofunemploymentBritain may be twice as high as official statistics show. Research on the UK labour market by economists at HSBC bank takes into account anybody who is 'economically inactive', but looking for a job, not just those who are eligible for unemployment benefits. The report estimates that there are 3.4m Britons who are unemployed, as opposed to the International Labour Organisation's estimate of1.4m people. Britain's official unemployment rate is 4.8% - one of the lowest rates of unemployment in the European UnionAdapted from newspaper reports, July 2004 The most recent changes in claimant count and labour force survey measures of unemployment are summarised in the chart above and the table below. | Labour Force Survey Unemployment | Claimant Count |
| | Unemployment
| Level | Annual change | Rate | Level | Annual change | Rate |
| 000s | 000s | % | 000s | 000s | % |
1990 | 2,004 | -102 | 6.9 | 1,648 | -120 | 5.5 |
1993 | 2,953 | 157 | 10.5 | 2,877 | 135 | 9.7 |
1997 | 2,045 | -299 | 7.2 | 1,585 | -503 | 5.3 |
1998 | 1,783 | -262 | 6.3 | 1,348 | -237 | 4.5 |
1999 | 1,759 | -24 | 6.1 | 1,248 | -100 | 4.1 |
2000 | 1,638 | -121 | 5.6| 1,088 | -160 | 3.6 |
2001 | 1,431 | -207 | 4.9 | 970 | -119 | 3.2 |
2002 | 1,533 | 102 | 5.2 | 947 | -23 | 3.1 |
2003 | 1,476 | -57 | 5.0 | 933 | -14 | 3.0 |
2004 | 1,426 | -50 | 4.8 | 854 | -80 | 2.7 |
2005 | 1,425 | -1 | 4.7 | 862 | 8 | 2.7 |
In 2005, the UK had one of the lowest rates of unemployment among the major developed nations. Although the Netherlands and Ireland both haveunemployment rates below that of the UK, we have one of the lowest rates in the European Union. Indeed for the Euro Zone as a whole the rate of unemployment has been persistently high in recent years – never lower than eight per cent and now rising to nearly nine per cent. Unemployment is a major economic, social and political problem in countries such as Poland, Germany, Spain and France –...
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