4.5 Unemployment

Unemployment occurs when a person is:

• willing to work,
• able to work, and
• actively looking for a job —

but cannot find one.

It is important to understand what unemployment does not include. People who are retired, full-time students, or who have chosen not to work are not counted as unemployed, because they are not actively seeking jobs.

The labour force (also called the workforce) is the total number of people who are either working or actively looking for work. It includes:

• People who have a job (the employed), and
• People who do not have a job but want one (the unemployed)

People outside the labour force include full-time students, retirees, and those who are permanently unable to work.

The unemployment rate tells us what percentage of the labour force does not have a job. It is calculated like this:

Example: If there are 2 million unemployed people and the labour force is 20 million, then:

These two terms are different and easy to confuse:

• The level of unemployment = the actual number of people who are unemployed (e.g., 2 million people)
• The rate of unemployment = the percentage of the labour force that is unemployed (e.g., 10%)