Economic Indicators #3: Unemployment

Measured in two ways :

Claimant Count (CC) – those claiming unemployment benefit.

Labour Force Survey  (LFS)– those who report that they are unemployed.

Current rates are :

Claimant Count : 1.57 million

LFS : 2.52 million

Which is more accurate and relevant ?

CC tells us about the effect on public finance as they claim Job Seekers Allowance

LFS figure probably more accurately represent unemployment.

There were 29.73 million people in employment aged 16 and over.

International unemployment rates (LFS – 2012)

UK                  7.9%

Greece         14.7%

USA                  8.1%

France         10.2%

Germany          5.5%

Italy                  10.7%


Regional unemployment rates (LFS in 2012)

London                  8.8%

South East                  6.3%

North West                  8.8%

Yorkshire                  9.1%

North East                  10.2%


Youth Unemployment (LFS, 2012, aged 15-24)


Long-term unemployment share – 34.8%



Ideological perspectives :

Neo liberals

Unemployment is a natural part of the economic cycle. Governments should not take direct steps to reduce unemployment for fear of pushing up wages artificially and causing inflation. Only sustainable additional jobs are beneficial in the long run. Unemployment is the price to be paid for rebalancing the economy and creating conditions for future growth.

Neo liberals also see excessive unemployment and other benefits as a disincentive to work. They believe that you can make work pay partly by reducing the benefits of not working.

Liberal and Social Democrat

Unemployment is a social evil. It leads to social problems, crime and community decay. The state is, therefore justified in intervening to reduce unemployment. This applies especially to youth and long term unemployment. The best way to tackle unemployment is to incentivise firms to take on staff and to design the welfare system to encourage work.


  • The minimum wage is essential even though it may promote some unemployment.
  • Work should be made to pay by reducing taxes at low income levels.
  • The benefit system should encourage, rather than discourage people to work.