Measuring Unemployment

The unemployed are those individuals of working age who are capable of work, and are actively looking for work, but who are not employed. If labour is employed, but not effectively used, the situation is called underemployment.

The two main methods of measuring unemployment in the UK are currently the International Labour Organisation (ILO) method, and the claimant count measure.

The Claimant Count

The Claimant Count measure of unemployment counts only those people who are eligible to claim the Job Seeker’s Allowance. The JSA was introduced in October 1996 replacing unemployment benefit. Claimants who satisfy the criteria receive the JSA for six months before moving onto special employment measures. One problem with the claimant count is that it misses out many people who are interested in finding work and who might have searched for work in the recent period – but they don’t meet all of the criteria for claiming and therefore are not included in the monthly unemployment count. It excludes housewives and those on training schemes.

How useful is the Claimant Count?

The Claimant Count may not reflect the true level of unemployment in the UK economy, given that not all the unemployed will bother to claim, and some are deterred because they cannot prove they are looking for work. This is especially true of part-time employees who are much less likely to register as unemployed compared with full-time workers. While some individuals may fraudulently claim, it is generally recognised that the Claimant Count under-estimates actual unemployment levels.

The ILO(International Labour Organization) Count

The Labour Force Survey covers those who have looked for work in the past month and are able to start work in the next two weeks. The claimant count only includes those who are unemployed and claiming benefit. As such it excludes a number of people who are classed as unemployed under the ILO definition – for example women seeking work whose partners are on means tested benefit. On average, the labour force survey measure has exceeded the claimant count total by about 400,000 in recent years.

The labour force survey is undertaken by the International Labour Organisation (ILO) and is a more direct assessment of unemployment, rather than those who claim benefit. It is based on an interview of a sample of 60,000 households (approximately 120,000 people) and tries to measure ‘unemployment’ as a whole, rather than those simply claiming benefits. To be considered as being unemployed individuals must:
1. Have been out of work for 4 weeks.
2. Be able to start work in the next 2 weeks, so they must be readily available for work.
3. Workers only need to be available for work for one hour per week, so part-time unemployment is included in the measurement, though these workers are unlikely to claim unemployment benefit. This tends to make ILO unemployment much higher than the Claimant Count.

It may be that the claimant count, which measures those actually claiming Job Seeker’s Allowance, is in a way a better measure of hardship. There are again problems in this measurement, but these are of a different nature, so it is worthwhile to have sets of data to gain an overall picture of unemployment.

In times of economic prosperity the measures tend to move apart, with the ILO measure higher than the claimant count, and the trend moves in the opposite direction in an economic slowdown. The study of the reasons for these changes give a deeper understanding of how the measures are made, and much of the information is available.

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Also read the tutorial about the types of unemployment.

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