Unemployment Rate
The unemployment rate measures the proportion of the labour force that is unemployed. Under standard international definitions, an unemployed person is generally someone who does not currently have a job, is available to work and is actively looking for employment. The unemployment rate is calculated using the number of unemployed people as a proportion of the total labour force, rather than the entire population.
Why can the unemployment rate be misleading on its own?
The unemployment rate does not include everyone who is out of work.
Someone who is not employed and is not actively looking for a job may be classified as economically inactive rather than unemployed. This can include students, retirees, people with caring responsibilities or people who have stopped searching for work.
As a result, unemployment can sometimes fall because people have left the labour force rather than because they have found jobs.
Economists therefore tend to examine unemployment alongside other indicators such as employment growth, vacancies, wage growth and labour force participation.
