From CEOpedia | Management online
(Redirected from Underemployment)

Unemployment is the inability to find work by people in productive age who are: capable to work, willing to work, actively seeking employment. Unemployed constitute a part of population in productive age.

The rates of unemployment depend from three factors: economic activity rate, population of people in productive age and the size of employment.

While describing and analysing the situation on the labour market the value of unemployment rate is used. It is the percentage of the total labour force that is unemployed to the resources of labour force. Based on this index number the number of unemployed is determined.

Traditional western handbooks identify the following types of unemployment: technological, cyclical, frictional (passing) and structural. In the recent textbooks there is a division of voluntary and compulsory (forced) unemployment. Unemployment cannot be entirely eliminated. There is so-called the natural rate of unemployment which is always higher than zero.

In order to be classified as unemployed three conditions must be fulfilled:

  • be unemployed,
  • actively seeking employment,
  • be able to work.

Features of unemployed

Generally speaking unemployed is a person who: is capable and willing to work according to the labour law (in full-time employment), is not employed and not attending school with the exception of night-school and external-school (as far as the night/external-school started during the employment period). What is more, the person:

  • is over 18 years old,
  • is below 60 (women) or 65 (men) years old,
  • did not acquire the right to receive pension,
  • is (and neither his/her spouse) not an owner of homestead,
  • does not run non-agricultural homestead or is not subjected to social insurance from any other activity,
  • is handicapped and may be half-time employed if its justified by his health status.

The number of unemployed is dependent from the condition relations which, in a given moment, shape the situation on the labour market. There are three main determinants: demand for work, work supply and real salary.

See also:

Unemploymentrecommended articles
David RicardoCapitalismMarginal productivity theory of distributionLabour lawWorkforceNatural rate of unemploymentEmploymentEngels lawEconomics


Author: Piotr Baran