Unemployment rate, its meaning, risks and business opportunities

Unemployment: Its Measurement and Types

The unemployment rate is the most used indicator for understanding conditions in the labour market.

Unemployment occurs when someone is willing and able to work but does not have a paid job. The unemployment rate is the percentage of people in the labour force who are unemployed. Consequently, measuring the unemployment rate requires identifying who is in the labour force. The labour force includes people who are either employed or unemployed. Figuring out who is employed or unemployed involves making practical judgements, such as how much paid work someone needs to undertake for them to be considered as having a job, as well as actually counting how many people have jobs or not.

Current global unemployment rate (Image courtesy of Bloomberg)

Unemployment: Risks

When workers are unemployed, their families lose wages, and the nation loses their contribution to the economy in terms of the goods or services that could have been produced. Unemployed workers also lose their purchasing power, which can lead to unemployment for other workers, creating a cascading effect that ripples through the economy. In this way, unemployment even impacts those who are still employed.

Unemployment: Business Opportunities

Using ICT offers several advantages when implementing jobs and skills initiatives. It can enhance impact, especially when on- and off-line elements are combined, and can increase scale by reaching a much larger and more diversified group of beneficiaries. For example, while networking events connecting aspiring start-ups with established entrepreneurs can have a positive impact on those able to connect physically, an online platform for knowledge-sharing and networking would have a wider reach. ICT can also significantly lower the costs of execution and delivery, allow for faster adaptation to geographic and socio-economic contexts, and help engage younger generations.

Reference

§  Bloomberg.com. 2020. Global Risk Briefing. [ONLINE] Available at: https://www.bloomberg.com/graphics/global-risk-briefing/. [Accessed 14 November 2020].

§  Reserve Bank of Australia. 2020. Unemployment: Its Measurement and Types | Explainer | Education | RBA. [ONLINE] Available at: https://www.rba.gov.au/education/resources/explainers/unemployment-its-measurement-and-types.html. [Accessed 14 November 2020].

§  Investopedia. 2020. How the Unemployment Rate Affects Everybody. [ONLINE] Available at: https://www.investopedia.com/articles/economics/10/unemployment-rate-get-real.asp. [Accessed 14 November 2020].

§  World Economic Forum. 2020. 8 ways business can help tackle unemployment | World Economic Forum. [ONLINE] Available at: https://www.weforum.org/agenda/2015/04/8-ways-business-can-help-tackle-unemployment/. [Accessed 14 November 2020].