Understanding Unemployment Rate

Unemployment rate refers to the percentage of people within the available labour force who do not have jobs and are actively looking for one (Boyes & Melvin, 2005). Unemployment rates cannot be reduced to zero, which means every economy has some level of unemployment. However, these unemployment rates are of different natures and each has different causes. Various measures have been suggested as remedies for reducing unemployment. Unemployment could also be defined as explained in the dictionary of economics as ‘the state of an individual looking for a paying job but not having one’.

Unemployment occurs when people face crisis in job opportunities due to the unpredictable nature of the economy.

However, without determining the type of unemployment and its causes it is difficult to determine suitable solutions that will reduce the situation. The types of unemployment and their causes are explained below (Hughes & Perlman, 1984). Unemployment is one of the major economic problems. People who are considered unemployed are those who are seeking work or lay off for more than a week.

There are many different reasons why a person could be unemployed. The government tries to find solutions in order to reduce unemployment by making up policies.

The unemployment problem began in the 1990s. First, it resulted from the restructuring of economy. In the period of planned economy, the large-scale corporation is the most common production organization. But to the market economy, the most common one is the individual or small-scale corporation. The workers from the large-scale firms cannot adapt themselves to the production form of the individual or small-scale ones.

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Therefore, in terms of a certain way, the large quantity of unemployment is the cost of the increase of the efficiencies of Chinese economy, or we can regard this as the cost of the change from planned economy to the market one.

For the goal of the restructuring, the society should decrease the quantity of the employment to increase the efficiency. Second, to construct the modern corporation system, the forms of the employing should meet the need of market economics competition, changing from plan-decided to market-decided. In industrialized countries in which most people can earn a living only by working for others, being unable to find a job is a serious problem. Because of its human costs in deprivation and a feeling of rejection and personal failure, the extent of unemployment is widely used as a measure of workers’ welfare. The proportion of workers unemployed also shows how well a nation’s human resources are used and serves as an index of economic activity. Economists have described the types of unemployment as frictional, structural, seasonal and cyclical.