Revision: Measuring Unemployment

The unemployed are people who are registered as able, available and willing to work at the going wage rate but who 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 unemployment in the UK:

The Claimant Count measure of unemployment includes those unemployed people who are eligible to claim the Job Seeker’s Allowance (JSA). 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 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 one that provides a rich source of data on the employment status of thousands of households across the UK - there will always be a sampling error in the data. The Labour Force Survey uses the internationally agreed definition of unemployment and therefore best allows cross-country comparisons of unemployment levels.

No measure of unemployment is completely accurate since there are some people out of work but looking for a job who are not picked up by the official statistics. An example of this are discouraged workers who may have been out of employment for a lengthy time and who have lost the will and the motivation to keep applying for jobs. All economies suffer from hidden unemployment and also from under-employment, where people are notionally in some form of work, but perhaps a job that has little true worth and which generates virtually nothing in the form of measurable output or social benefit.