Should Uk Policy Be Concerned About Unemployment

The unemployment rate is a good indicator of the overall economic health of a country. When unemployment is high this generally indicates a weakened economy with many people out of work. Unemployment is also related to the inflation rate. When inflation is high then unemployment is typically lower because more people have to work since the money they have is worth less. When inflation is lower then people have less of an incentive to trade their labor if they already have some wealth accumulated. However, there are also exceptions to this trend. Currently in the UK the inflation rate is slightly over seven percent (7.2%) which is relatively high (Office for National Statistics, 2012).

Unemployment refers to the numbers of people not working and can be measured by the claimant count and labour force survey. There are different types of unemployment and each of them requires different policies to overcome them.

It also states how the government made an attempt to lessen the effects of inflation and mass unemployment by limiting wages and increasing interest rates. Subsequently, this led to unrest in the form of strikes. There is a general consensus on the effects of recessions, both past recessions and the one endured in 2010; this includes the vast increase in employment. The problems regarding the economy did not end there as stated by a website article, The Thatcher Years in Statistics (2013), following the rise of inflation to 20% by 1973 issues such as rising unemployment rates which was only reduced by an economic boom later in the 1980s. This allows the assumption to be made, which is also consistent with the current economic climate of today, that the issue of unemployment can only be fully remedied during a time of economic prosperity. Thus, allowing more job opportunities to arise without lots of public finance being spent to purposefully bring about the presence of the jobs. However, there is a key difference between the recession that occurred in the 1970s as indicated by, The Economy of the 1970s (2010), and that is that before the economic downturn of a recession there were years of economic prosperity leading up to it known as the “Barber Boom 1970-73”. Although this caused “tax cuts”, which would have provided a direct and short term benefit for the consumer; it also paved the way for inflation, this hit over 20% by 1973. This was a theme absent from the lead up to the 2010 recession. The evidence of the implications of the recession that occurred in the 1970s is strengthened significantly by, UK recession: Life in Britain in 1980 (2009), this states that even in the 1980s Britain was still feeling the harsh effects of the recession, for example unemployment had reached “5.8 per cent or 1.56 million”. At the time, Britain’s prime minister

The high and persistent levels of unemployment in the United States have become one of the most debated topics among economists, policy makers and the unemployed for more than a decade; especially its impact and best approach to resolving the increasing unemployment rates. It is important to note that as much of a global phenomenon unemployment it is, unemployment occurs in numerous forms, economists have broken down unemployment into three main types: Frictional, structural and cyclical. The in-cooperation of these forms is significant to this paper for better understanding of current trends and identifying characteristics of structural unemployment.

Businesses need to forecast and predict variations in the business cycle, such as recession and inflation. To do this, economists employ economic indicators. These indicators are trends, which are based upon statistics collected regularly on different aspects of the economy, for example, employment, income, and prices. In this report, I will aim to critically evaluate the recent performance of the UK economy, post-recession, and how this has affected employment and productivity. I will be paying close attention to the main economic indicators and analysing these in terms of their strengths and weaknesses and how they contribute to business decisions.

The UK’s unemployment rate reached its highest peak in 2011 at just under 2.7 million during the recent recession which economists are calling the Great Recession (BBC News, 2014). Since, however the fall in the rate of unemployment has not been as sharp as many predicted, concerns have been raised over whether unemployment levels in this single period may have a long lasting effect. The issue of hysteresis within the UK and the persistence of unemployment is what this paper will focus on, as well as the reasons why the youth unemployment rate is much higher.

While estimating structural unemployment is difficult, most figures place somewhere around 8 %. In an absolute value, this has no particular mean, but if we are to look at this comparatively, structural unemployment had generally remained at values around 2 % through the past decades (Salmon, 2011). We can thus point towards an accelerated growth of structural unemployment in the last years, as a consequence not only of the economic crisis (more directly linked with cyclical evolutions of unemployment), but

A political issue that the United Kingdom is currently facing is the increase of unemployment which is positively helping the economy, as a result. The number of citizens not working in the UK decreased by 63,000 to 2.33 million in only three months to January 2014, according to official figures. (BBC) This is clearly a significant current event in UK at the moment because 7.2% of their population is without a job. The unemployment rate in Scotland fell to 6.9%, in Wales it was 6.7% while in Northern Ireland it was 7.5%. (BBC) Interestingly, I found that the Prime Minister David Cameron tweeted: "Another significant fall in unemployment is a sign our long-term economic plan is working, providing security and chances for hard-working people."(BBC) In other words, the rising rate of unemployment is not necessarily a clear indicator of a shattered economy. A large portion of the “unemployed” are self-employed businessmen or entrepreneurs working on their own ventures and have found new ways of producing a steady income within the British economy. Ultimately, the economic history and politics of this nation have been originated by Parliament and are the primary cause for the rapid growth in the business market right now.

It is known that the UK central bank has given more attention toward inflation rate than unemployment rate. Due to the recession in year 2008, the quantitative easing has been implemented and both inflation and unemployment rates target have been achieved. Recently, the Monetary Policy Committee (MPC) has voted to maintain the interest rate at 0.5% to attain price stability and to focus on maintaining inflation rather than unemployment. Contradictory, this has subsequently led to a downward trend of the unemployment rate. The unemployment rate is not too high compared to other countries but they are still an issue that needs to be acknowledge. The government may tackle the issue by adjusting the target for inflation and unemployment that will bring UK economy to its full potential.

In general, unemployment fell from 2012 to 2013. However, unemployment rates were only statistically significant in South East and East of England, whereas improvement of employment rates statistically significant in both South East and Scotland. Comparatively, the degree of ‘Jobseekers Allowance claimants’ declined by 1% across UK with a corresponding 1.7% decrease in North East region (largest

Furthermore, one reason that defining unemployment is difficult is because, there a number of different concepts involved that make defining it challenging. One of which, includes; how are unemployed and employed people identified. An unemployed person could either be someone who wants to work but is not, or someone who cannot find work.The reason why defining unemployment can be tricky, is because there are many levels to it. For instance, the U3, the officially unemployment rate, are the people, who are jobless, and have been currently searching for a job, over a short amount of time. On the other hand, the U6 method comprises of people who have part-time jobs, and are not currently looking for a full-time. This group of people have simply given up on looking for work. Moreover, by looking at unemployment as a consequence, it affects somewhat of the poverty rate, which is also a complicated concept to define.

The recent trends in unemployment for adults has seen a notable increase in male employment, with differences yearly differences from July 2011 to July 2014 increasing by intervals of 0.2, 0.6, and 0.7. Recent trends in unemployment for adults has also seen female unemployment remain stagnant in the years of July 2011 and July 2012, with subsequent increase in unemployment in the years of July 2013 and July 2014. Recent trends for young labour market participants has seen a significant increase for males from 16.7 to 22.9 and a notable increase in female unemployment from 15.2 to 17.9.

To better comprehend the way of unemployment, policymakers require data on numerous parts of it, including the quantity of unemployed individuals, the timeframe for which they have been unemployed, their aptitude levels, the pattern in unemployment, local variations in unemployment et cetera. Once these insights have been gotten and translated, policymakers can utilize them to settle on better-educated choices about controlling the economy and countering unemployment.

The world’s leading economies are ostensibly heading towards a recession with plummeting stock markets and soaring crude oil prices as consumers are beginning to feel the pinch of the credit crunch. According to analysts, the financial slumps of the past nine months seem to be unmatched since the Great Depression (Elliot, 2008). Unstable and unpredictable market turmoil from various sectors of industries with particular reference to the UK has seen major companies battling the slowdown in consumer spending due to the ongoing effects of the credit crunch which threatens job security (Harding & Elliot 2008).

* Unemployment has remained constant at an average of 3.6% in July 2008 to 3.1% in Oct. 2008. However, the global credit crisis has raised fears that “the unemployment rate could double to 6 per cent by 2010 if global demand remains weak”>