Q&A - Explain what unemployment is and how it is measured

Unemployment arises when the supply of those making themselves available for work is greater than the demand for workers. Unemployment is, therefore, the excess supply of labour in the labour market.

You will read much about unemployment when looking at business news stories currently. But who are the “unemployed” and how is the total number of unemployed people calculated?

The unemployed are registered as able, available and willing to work at the going wage rate but cannot find a job 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 the unemployment total in the UK:

- The Claimant Count measure of unemployment includes people who are eligible to claim the Job Seeker’s Allowance. The Claimant Count is a “head-count” of people claiming unemployment benefit.
- The Labour Force Survey covers those who are without any kind 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.

Measuring the number of people unemployed at any one time is quite tricky! That is because there is a constant flow of people entering and leaving the labour market, moving between jobs, or changing the nature of their employment. You can see this illustrated below: