Often on television we hear news of an increase or decrease in the unemployment rate in a particular country or city. But does each of us correctly understand what is meant? After all, the real state of affairs can be understood only by correctly understanding the significance of such an indicator as the unemployment rate. The calculation formula below will contribute to a better understanding of the issue.
Causes of unemployment
Like it or not, but in any state there is a certain percentage of people who do not have a job at the moment. Even the richest countries have unemployment. There are a number of reasons for this.
Any of the most developed countries and economies in the world find a place for unemployment. Perhaps, only with the idea of ​​capitalism did Soviet people believe that in the near future everyone would have work and goods in stores would no longer be sold for money.
Unemployment can be due to a number of reasons. They can be divided into several groups:
- economic;
- political;
- social;
- personal.
The economic group of reasons can be attributed to those related to the specifics of the development of the economy of a region (country). If the state’s production capacities are at zero, the economy crashes, enterprises stop, it is natural that there can be no talk of full employment of the population. In this case, people simply have nowhere to work.
Political reasons are based on any government measures to regulate a particular sector of the economy. Sometimes politicians, solving issues of an international scale, forget that they affect the lives of citizens within the country. Someone thanks to this gets a job, and someone loses.
A group of a social nature includes the causes of unemployment, independent of the economic or political vector of development. They are more influenced by prestige and fashion. For example, there may be 1 thousand vacancies for a cleaning job, but because of their beliefs about the possibility of finding a more prestigious and better job, people remain unemployed at the moment.
The personal group of reasons includes those associated with the individual qualities of people. After all, there are those who do not want to work at all, live on benefits, use alcoholic beverages and narcotic substances, and it is simply impossible for them to get society to do anything in the existing legal field.
To calculate the correct statistics for unemployed people, a special unemployment formula is used. The unemployment rate that can be calculated using it determines the degree of unemployment of the economically active population. We will consider it further.
The following is immediately worth noting. You can calculate the unemployment rate in different ways. The calculation formula in each method will be different. But mainly in statistics they use the unemployment rate of the International Labor Organization.
It is determined by the ratio of the total number of unemployed to the number of economically active population.
Unemployed is a part of the workforce that can be engaged in the production of goods or services, but for some reason is not involved in these processes.
Economically active population - the total number of people who are able-bodied and can be involved in the production of services or goods.
Types of Unemployment
Having calculated the unemployment rate, you need to give a correct assessment of the results. It is worthwhile to understand the categories of the population, as well as the types of unemployment for the possibility of analyzing the results that the unemployment formula will show. The unemployment rate, depending on these parameters, will differ and be of a different nature.
The following types of unemployment can be distinguished:
Structural.
Frictional.
Seasonal
Cyclic.
Next, we will consider each species in more detail and find out the formulas that will help to know the level of each of them.
Structural unemployment
Structural unemployment is one of the most widespread types. Its presence in the economy is associated with a constant change in market demand for any product. If demand falls on a particular product, then the need for specialists who produce it also decreases.
To combat this type of unemployment, quite a lot of time is required for retraining specialists who have lost their jobs under new trends of demand.
To calculate this type, the following unemployment formula is used. The structural unemployment rate is calculated as follows:
Bstr = Kstr / Chrs * 100%, where:
Kstr - the number of structural unemployed;
Chrs - total labor force.
Frictional unemployment
Frictional unemployment characterizes the level of unemployed people with certain qualifications. Usually there is an increase in such unemployment if the economy has the following problem: closure of enterprises and a decline in production capacities occur faster than the organization of new production. That is, people actually lose their jobs and are temporarily unable to find a job due to the lack of jobs corresponding to their qualifications.
That is, we can say that frictional unemployment is a simple movement of labor, which cannot be avoided, but its level can be reduced. The main ways to reduce is the availability of the best information component in the labor market, where the public should be informed in a timely manner of the appearance of certain free vacancies.
The following unemployment formula will help calculate this indicator. The frictional type unemployment rate is calculated as follows:
Bfr = Kfr / HRs * 100%, where:
Kfr - the number of frictional unemployed.
Seasonal unemployment
Mostly related to work that is seasonal in nature. For example, if you went to a resort place, you noticed that only in a certain season there is an increased demand and a corresponding offer for goods or services. Tourists love to come to the mountains in winter, and to the sea in summer. The rest of the time, cafes, shops and other enterprises do not even work. At this time, their employees are either sitting idle or starting to do something else.
Apart from this, there are many factories that specialize in seasonal products. For example, producers of tomato paste or any juice are tied to the ripening period of certain agricultural products. The rest of the time, production capacities remain without work, as well as the workers of these factories.
It is not difficult to calculate this level of unemployment. The formula is as follows:
BS = Ks / HRs * 100%, where:
Ks - the number of seasonal unemployed.
Cyclical unemployment
This type is associated with generally understood economic development cycles. There is an economic rule, which is constantly confirmed in all countries: if there is a period of economic growth, then there will be a period of decline.
That is, from time to time the economy of any state either grows, or goes into decline. In a period of decline in GDP, cyclical unemployment appears, which characterizes the level of unoccupied labor force in connection with a temporary reduction in production capacities and the release from work processes.
For calculations, the following unemployment formula is used. The cyclical unemployment rate is:
Bts = Kts / Chrs * 100%, where:
Kts - the number of cyclical unemployed.
Other unemployment rates
To carry out an in-depth analysis, it is not enough just to know how to calculate the above indicators. Often use the concept of the natural unemployment rate.
The formula for calculating it is as follows:
Be = Bstr + Bfr.
Natural unemployment. What does the indicator say?
What does this indicator mean? It is calculated when they want to know what the general level of unemployment will be if the full employment condition is met.
That is, if everyone who wanted to was able to find a job. Accordingly, one can see that natural unemployment, the formula of which is given above, assumes the presence in the economy of only structural and frictional types of unemployment.
We can say that this indicator shows the situation that has developed on the labor market in ideal conditions, when the entire economically active population is engaged in the production of goods or services.
Actual unemployment
Another major indicator is actual unemployment. It is calculated as the sum of all types of unemployment indicated above, except for natural. That is, the sum of the structural, frictional, seasonal and cyclical - this will be actual unemployment. The formula is as follows:
Bf = Bstr + Bfr + Bs + Bts.
Actual unemployment essentially reflects the real situation on the labor market. It may be greater, equal to or less than the natural unemployment rate. The calculation formula shows that this indicator affects absolutely all types of unemployment, which means:
The actual level will be higher than natural unemployment in the event that a slowdown in development is observed in the economy.
The situation will be inversely proportional to the first if the economy picks up pace and jobs appear faster than the dismissal of people from their old posts.
In fact, with a full understanding of the causes, types and factors, the unemployment calculation formula helps to give a realistic assessment of the population’s employment and the government’s work to ensure decent jobs.
The unemployment rate has always characterized the state of the economy, and thanks to this indicator, we can conclude where to go further and what needs to be fixed in the economic development vector.