THE WOLMER’S TRUST SCHOOL FOR GIRLS

ECONOMICS UNIT II
TOPIC: UNEMPLOYMENT AND INFLATION

WHAT IS EMPLOYMENT?

This is a relationship between two parties, usually based on contract where work is paid for,

where one party, which may be a corporation, for profit, not-for-profit organization, co-operative

or other entity is the employer and the other is the employee. Employees work in return for

payment, which may be in the form of an hourly wage, by piecework or an annual salary,

depending on the type of work an employee does or which sector they are working in.

Employees in some fields or sectors may receive gratuities, bonus payment or stock options. In

some types of employment, employees may receive benefits in addition to payment. Benefits can

include health insurance, housing, disability insurance or use of a gym. Employment is typically

governed by employment laws, organisation or legal contracts.

An employee contributes labor and expertise to an endeavor of an employer or of a person

conducting a business or undertaking (PCB) and is usually hired to perform specific duties which

are packaged into a job. In a corporate context, an employee is a person who is hired to provide

services to a company on a regular basis in exchange for compensation and who does not provide

these services as part of an independent business.

WHAT IS UNEMPLOYMENT?

This is a term referring to individuals who are employable and seeking a job but are unable to

find a job. Furthermore, it is those people in the workforce or pool of people who are available

for work that does not have an appropriate job. Usually measured by the unemployment rate,
which is dividing the number of unemployed people by the total number of people in the

workforce, unemployment serves as one of the indicators of an economy’s status.

EMPLOYED AND THE UNEMPLOYED

What are the basic concepts of employment and unemployment?
The basic concepts involved in identifying the employed and unemployed are quite simple:

● People with jobs are employed.

● People who are jobless, looking for a job, and available for work are unemployed.
● The labor force is made up of the employed and the unemployed.
● People who are neither employed nor unemployed are not in the labor force.

WHAT IS THE LABOUR FORCE?

The workforce or labour force is the labour pool either in employment or unemployed. It is

generally used to describe those working for a single company or industry, but can also apply to

a geographic region like a city, state, or country. Within a company, its value can be labelled as

its "Workforce in Place". The workforce of a country includes both the employed and the

unemployed (labour force).

THE UNEMPLOYMENT RATE

The unemployment rate is the percent of the labor force that is jobless. It is a lagging indicator,

meaning that it generally rises or falls in the wake of changing economic conditions, rather than

anticipating them. When the economy is in poor shape and jobs are scarce, the unemployment

rate can be expected to rise. When the economy is growing at a healthy rate and jobs are

relatively plentiful, it can be expected to fall.

 Calculating the Unemployment Rate

The official unemployment rate is known as U-3. It defines unemployed people as those who are

willing and available to work, and who have actively sought work within the past four weeks.

Those with temporary, part-time, or full-time jobs are considered employed, as are those who

perform at least 15 hours of unpaid family work.

To calculate the unemployment rate, the number of unemployed people is divided by the number

of people in the labor force, which consists of all employed and unemployed people. The ratio is

expressed as a percentage.

U= (NUMBER OF UNEMPLOYED/LABOUR FORCE) X 100