Unemployment

Unemployment is the condition of people able and willing to work being without a job. A person counted as unemployed is one without work during the measurement period, but actively seeking work over a short span and ready to begin employment. People not working and not seeking work—such as students, pensioners, and some people engaged in domestic labour—are generally placed in the category "outside the labour force."

The unemployment rate is the proportion of unemployed people within the labour force (workers and unemployed combined), not within the total population. Figures from different countries can only be compared when definitions and data collection methods are the same; international bodies such as the International Labour Organization (ILO) have established standard definitions that many countries follow.

Types of unemployment

Economists distinguish several types. Frictional unemployment arises from the time it takes for a person and an available job to match. Structural unemployment stems from a mismatch between workers' skills or location and what the market needs, often due to new technology or industrial change. Cyclical unemployment rises during periods of economic contraction when overall demand falls. There is also seasonal unemployment, such as in agriculture and tourism.

Other measures

The unemployment rate alone does not show the condition of the labour market. Other measures are used: the labour force participation rate, the employment rate, and underemployment, which includes people working fewer hours than they wish. There are also those who have "given up" looking for work, who exit the count; this can make the unemployment rate appear lower than it is.

Effects and policy

Persistent unemployment reduces household income, erodes worker skills, and increases the burden on public services. Governments respond with various policies: unemployment benefits and cash support, training and retraining programmes, job-matching services linking workers and employers, and fiscal or monetary policies to boost aggregate demand. The choice of policy often depends on the type of unemployment present.