IGCSEEconomicsCIERevision Notes4. Government & the Macroeconomy4.7 Employment & Unemployment4.7.2 Measurement of Unemployment

Measurement of Unemployment (CIE IGCSE Economics)

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Steve Vorster

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Economics & Business Subject Lead

The Claimant Count & Labour Force Survey

  • Unemployment is often measured using two different approaches
    • The International Labour Organisation (ILO) Survey
    • The Claimant Count

The Differences Between the ILO Labour Force Survey & The Claimant Count


The ILO Labour Force Survey
The Claimant Count

  • An extensive survey is sent to a random sample of ≈ 60,000 households every quarter
  • Respondents self-determine if they are unemployed based on the ILO criteria
    • Ready to work within the next two weeks
    • Have actively looked for work in the past one month
  • The same survey is used globally so it's useful for making international comparisons
  • Counts the number of people claiming unemployment benefits
  • More stringent requirement to be considered unemployed than with the ILO survey
  • Requires claimants to meet certain criteria & excludes many e.g.
    • Those with savings
    • People who claim pensions
    • Married women who are looking for a job

Calculating the Unemployment Rate

Three Metrics Are Commonly Used When Analysing the Labour Market in an Economy


Unemployment rate
Employment rate
Labor force participation rate

equals fraction numerator no. space actively space seeking over denominator total space labour space force end fraction space straight x space 100
equals fraction numerator no. space in space employment over denominator population space of space working space age end fraction space straight x space 100
equals fraction numerator labour space force over denominator total space population end fraction space straight x space 100

  

  • The employment rate could be increasing even as the unemployment rate is increasing:
    • May be caused by increased immigration which causes working age population to increase
    • May be caused as people move from being economically inactive to employed

  • Unemployment rates do not capture the hidden unemployment that occurs in the long term
    • Workers look for a job but may eventually give up and become economically inactive
    • This actually improves the unemployment rate as fewer people are actively seeking work

Worked example

The table provides information about a country's labour market

Population size 4000000
Labour force size 2400000
Number employed 1800000
Number of full-time students 200000

What is the unemployment rate of this country?

a) 15%

b) 25%

c) 50%

d) 75%

Step 1: Decide which information in the table is useful

    • The number of full time students would not be included in the labour force size, so it is not useful (it is a distraction)
    • The key infromation is the labour force size & the number employed
       

Step 2: Calculate the number of unemployed in the labour force

    • Labour force - employed = unemployed
    • 2,400,000 - 1,800,000 = 600,000 unemployed
       

Step 3: Calculate the unemployment rate

   Error converting from MathML to accessible text.

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    Steve Vorster

    Author: Steve Vorster

    Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.