Introduction
Unemployment, in the view of a layman, is “joblessness”, but in economics, unemployment is defined as “An economic condition marked by the fact that the individuals actively seeking jobs remain unhired.” (Investorwords). According to International Labour Organization (ILO), the unemployed one is:
- “without a job, want a job, have actively sought work in the last 4 weeks and are available to start work in the next 2 weeks, or
- Out of work, have found a job and are waiting to start in the next 2 weeks” (Office of National Statistics 4).
Unemployment definition
The term unemployment can be used for both i.e. human and non-human factors of production. But particularly this term is used for human factors of production or workers. Unemployment is very costly or we can say that there are many costs of unemployment such as “loss of human suffering”, “loss of dignity”, “loss of output” (i.e. unemployment can result in declining GDP), “loss of savings” etc (Maunder, Myers, Wall, Miller 141). Types of unemployment include; frictional unemployment, cyclical unemployment, seasonal unemployment, and structural unemployment. Frictional unemployment is also called transitional unemployment according to this type when a person switches from one job to another, the period when he leaves one job and has not found the other that is called transitional or frictional unemployment. Cyclical unemployment is caused due to changes in the business cycle i.e. boom and recession. Seasonal unemployment is a result of the rise and fall of a particular job. Structural unemployment takes place when there are structural/technological changes in society. In this kind of unemployment, people are unable to find jobs, this kind of unemployment takes place due to the increase of “labor-saving machines”, which is also called regional unemployment i.e. individual services are not needed in a particular location. (Maunder, Myers, Wall, Miller 144, 145). Either kind of unemployment is the main issue that arises that what number of people are unemployed? Or how can we measure unemployment? In the past unemployment was considered a very serious matter in Europe, govt. undertook many relief and charity programs to get rid of unemployment. The French High Council of Labor asked to undertake a statistical study of the problem of unemployment and to “estimate the cost of operating an official insurance fund against unemployment” as a result there was a detailed statistical examination was done, later in 1985, this organization was named as Organization of International Statistics of Unemployment, this was considered as the first step toward the measurement of unemployment (Hussmann’s, Mehran and Verma 95 ). The statistical surveys were conducted to identify that how many people are getting unemployment benefits, how many people are insured against unemployment etc. as, at that time unemployment was considered as a major social problem, later, unemployment was considered more as an economic problem than a social problem, however nowadays apart from a social and economic issue, unemployment is considered as the main feature of economic development of a nation(Hussamanns, Mehran and Verma 96). Measuring unemployment is not a very simple task. There are many methods of measuring unemployment.
Stated below are the two approaches given in the report of the National Office of Statistics for the measurement of unemployment
- Labor Force Survey (LFS).
- Claimant Count.
Labor Force Survey
This survey is the best approach to measure unemployment as it takes into account the number of unemployed people, changes in population size, and the changes taking place in the number of unemployed people due to change in population. The following diagram will clearly explain the Labor Force Survey of unemployment
The above diagram explains that unemployed are those “who are without a job in the week before the survey but are not unemployed are Economically Inactive”(National Office of Statistics 5)
Claimant Count
The second method of measuring the unemployment rate is that of the Claimant Count. In this method, the number of people who are claiming unemployment benefits/allowances is counted each month on a specific day (Maunder, Myers, Wall, Miller 550)
Issues in measuring unemployment
As stated earlier that measuring unemployment is a very tough job. Many factors are involved in measuring unemployment such as types of unemployment, division of unemployment according to gender, race, age, etc. Each factor gives birth to a new problem in measuring unemployment. In my paper I will discuss only a few of them:
- Expensive Methods of Measurement
Some of the methods used in the measurement of unemployment are quite expensive and cannot be used frequently. An example of such a method is the “Census of Unemployment”(Douglas, Director 6).
- Wrong Statistics
The statistical surveys conducted to find the numbers of unemployed people are often proved wrong because the number of unemployed given by the statistics is often different from those who are unemployed. (Maunder, Myers, Wall, Miller 142).
Different Results Obtained from different Surveys
During the unemployment surveys such as LFS different questions are asked rather than interviewing the people as it is quite difficult to interview every person living in a country. As a result of such survey question “sampling variability” occurs i.e. each sample obtained from a survey gives a different result (Office of National Statistics 7).
Overlap between the Claimant Count and Unemployment
Most of the time the two methods i.e. Claimant count and LFS overlap each other as the latter gives a large number of people unemployed. “In such cases, the definition of unemployment depends entirely upon the provisions of the unemployment insurance act” (Douglas, Director 7).
Number of Claimants and Official Unemployment Figures
According to the Claimant Count method, those who are not unemployed are not eligible for unemployment benefits. Sometimes, govt. changes the “eligibility conditions” as a result the number of claimants also change, which “affect official unemployment figures regardless of the number facing unemployment”( Maunder, Myers, Wall, Miller 142)
Conclusion
Although the above-mentioned problems are the main obstacles in measuring unemployment accurately but such issues can be resolved permanently or temporarily, for example in the case of sampling variability we can “calculate a range of values around the sample estimate that represents the expected variation with a given level of assurance. This is called Confidence Interval” (Office of National Statistics 7).
Works Cited
- Director, Aaron and Douglas, Paul H. Douglas. “The Need for Measuring Unemployment” The problem of unemployment (1976): 3-9
- Hussmanns, Ralph, Farhad Mehran and Vijay Verma. “Measurement of Unemployment” Surveys of economically active population, employment, unemployment and underemployment, and ILO manual on concepts and methods 2 (1990): 95-96.
- “Investorswords.com.” 2009.
- Maunder,Miller, et.al. “Unemployment” Economics Explained 3 (1995):141-146.
- “Office for National Statistics.” 2009: 5-11