In this video we’ll calculate and interpret the unemployment rate and look at current
trends and patterns in unemployment.
The unemployment rate measures the percentage of the labour force that is currently not
in employment, but actively seeking employment and able to work.
Here’s how to calculate the unemployment rate.
The blue box represents the number of unemployed workers and the green box represents the number
of people employed.
We then divide the number of unemployed people by the total of the unemployed and employed.
You next multiply that by 100% to arrive at your unemployment rate.
Let’s look at an example.
Use the following information to calculate the unemployment rate for the country of Dianuj,
whose legal working age is 16 and retirement age for men and women is 60:
Population: 1,500,000 Population of working age (between 16 and
60): 900,000 Individuals currently employed: 600,000
Stay at home parents or carers (between 16 and 60): 100,000
Individuals actively seeking and available for work: 200,000
The unemployment rate for this country = 200,000/(200,000+600,000) x 100% OR (200,000/800,000) x100%= 25%.
In the example I provided some useless information with respect to calculating the unemployment
rate.
Make sure you can identify the relevant information when asked to perform such a calculation.
This is an important aspect of economics, not just with unemployment but with other
data as well.
With that said, 25% sounds pretty high.
But how bad is it?
Well, full employment for most countries is around 3-6% unemployment.
At the height of the Great Depression the United States suffered from 24.9% unemployment.
During the Thatcher years in the UK, some parts of the UK faced over 20% unemployment
rates.
So is 25% unemployment a cause for concern?
In most more economically developed economies it definitely would be.
Now let’s look at some patterns and trends in unemployment.
We’ll first look at employment patterns and trends in the various sectors, primary,
secondary and tertiary.
The early stages of development for most economies will look something like this.
As the economies develop more opportunities will develop in the secondary sector while
less exists in the primary sector.
Further along the path of development, most countries will have a significant proportion
of economic activity generated by the tertiary, or service sector.
The primary sector continues to decline.
As the tertiary sectors grows, the opportunities available increase.
This transition is not without costs.
In the case of the United States, the decline of the secondary sector and primary sector
has led to rising unemployment.
Many manufacturing jobs relocated overseas and workers did not necessarily possess the
skill to take advantage of jobs in the service sector.
Within any healthy economy, certain industries will be growing while others are declining.
The growth industries of today may be the declining industries of tomorrow.
As of 2021, both digital marketing and cloud computing are growth industries.
This means opportunities will arise rapidly and the size of these industries will increase
at significant rates in the coming years.
On the other side are the declining industries.
From these images you can guess that the coal mining industry is in decline as it is replaced
with renewable energy and other less polluting alternatives.
In the US, shopping malls are closing due to the increased competition from online shopping.
The government postal service is also in decline as people use private shipping companies to
send packages and also communicate electronically as opposed to sending letters.
Now that you’ve watched this video you should have a better idea about the points listed
here.
If you have any questions or comments, leave them below and let’s try and answer them
together.
That’s us done for now and I will see you in the next one!