Employment And Unemployment Flashcards
What are the 2 different methods to measure unemployment in the UK ?
The claimant count
The international labour organisation (ILO) and the UK work force survey (LFS)
What is the claimant count ?
The number of people claiming unemployment benefits, such as job seamers allowance
However:
- Not every person claims the claimant count as either they don’t bother or they have partners on a high income and therefore aren’t eligible
- Generally underestimates the number of people unemployed
What is the international labour organisation (ILO) and the UK labour force survey (LFS)
The LFS is taken on by the IVO. It directly asks People if they meet the following criteria:
- Been out of work for 4 weeks
- Able and willing to start work in 2 weeks
- Workers should be available for 1hr per week. Part time unemployment is included
Since part time unemployed are less likely to claim unemployment benefits, this gives a higher unemployment count than the claimant count
What is the significance of changes in the rates of employment and unemployment on consumers ?
Less disposable income therefore standard of living will fall
Phycological consequences to losing a job which could effect unemployment
What is the significance of changes in the rates of employment and unemployment on firms ?
With high unemployment, firms have a larger supply of labour to choose from which causes wages to fall and reduce firms costs
What is the significance of changes in the rates of employment and unemployment on workers ?
With high unemployment there is a waste of workers resources. They could lose their existing skills if not fully utilised
What is the significance of changes in the rates of employment and unemployment on the government ?
Government receives less revenue on income and from indirect taxes since people have less disposable income
What is the significance of changes in the rates of employment and unemployment on society ?
Negative externalities from crime and vandalism if people are unemployed
What is structural unemployment?
Structural unemployment is characterised by the immobility of labour. There are 2 types of immobility of labour: occupational immobility and geographical immobility. Occupational immobility is where workers don’t have the transferable skills to do a particular job and geographical labour is where the workers don’t live or can’t move to the correct area to do a job
What is frictional unemployment
The time between leaving a job and looking for another job. Usually around summer and winter, during the summer, more people will be employed in the tourist industry
What is cyclical unemployment ?
Caused by a lack of demand for a good or service. Usually occurs during a period of economic recession or decline. Linked to negative output gap. Firms are forced to fire workers due to decreased consumer spending and they need to reduce costs. This causes output to fall
- can also be caused by an increase in productivity as each worker produces a higher output therefore less workers are needed
How do changes in the rest of the world effect UK employment
Globalisation contributes to structural unemployment as MNCs move manufacturing overseas to areas with cheaper labour which make domestic markets redundant as the industry has declined or moved to a different country
Net inward migration increases the size of the labour force, migration tends to bring high quality skills to the labour force thus increasing productivity and increasing cyclical unemployment
