For several years in a row, some analysts and economic experts predict the onset of an economic downturn in Russia. This state of affairs entails many problems for the average citizen, the main of which is the unemployment rate in the country. An organization like Rostrud, a federal service run by the Ministry of Labor and Social Protection, is studying this issue.
Nevertheless, the unemployment rate cannot be considered an absolute measure of the country's ill-being. It all depends on how the calculations are made. The fact is that not all categories of citizens can be safely classified as unemployed. Why is this so and how to determine the level of unemployment in the country? Let's take a closer look.
Concepts and Definitions
The term "unemployment" itself implies a situation where an economically active part of the population is not able to find a paid job and thus becomes a kind of burden, a burden for the rest of the population of the state. According to the definition adopted by the International Labor Organization, an unemployed person is a person who wants to work and has such a physical ability, but does not find a specific job.
In order to correctly calculate all indicators, first of all, you need to divide the entire population of the country into 2 large groups:
1. Economically inactive (EI) - these are citizens who cannot be considered labor for various reasons. These include:
- full-time students of educational institutions;
- retirees, and the basis for the appointment of pension benefits does not matter;
- Persons engaged in housekeeping, caring for the sick, children and as a result of this are not able to work;
- people who are disappointed in finding a job and stop trying;
- simply not wanting to work or not having such a need.
2. Economically active (EA) - the able-bodied population of the country, already having a job or is actively looking for it. This part is also further divided into two categories:
- employed (3) - citizens (regardless of age), employed and paid for their labor, as well as those who work for the benefit of, for example, a family business, and do not receive payment;
- unemployed (B) - the part of the able-bodied population that has no occupation for which it receives income; in case of a job offer is ready to start it immediately; is in active search (sends resumes, contacts the employment center or friends, attends job fairs, etc.); undergoing training (retraining) in the direction of the employment service.
In general, we can say that the unemployment rate in a country is defined as the ratio of the last category we have examined to the total number of EA (economically active population). But we will talk about this a little lower.
Factors Affecting Unemployment
Before determining the level of unemployment in the country, it is worth talking about what affects this indicator. A huge number of factors affect the unemployment rate in the country, among which several main ones can be distinguished:
- growth or recession rates of the economy;
- demographic indicators;
- labor productivity;
- the desire of the population to change jobs or change jobs;
- socially significant reasons: lack of education, pregnancy, alcohol or drug addiction, etc.;
- level of supply and demand for a particular type of employment.
By analyzing these factors in more detail, several different types of unemployment can be distinguished.
What is it like?
Anyone who wants to know how to determine the unemployment rate in a country must understand that this phenomenon can have different indicators depending on its type. Unemployment may be:
- Voluntary This type is due to the fact that some people do not want to work under certain conditions, for example, in cases where wages are reduced. Also in economic theory there is such a thing as a "trap of unemployment." This phenomenon occurs when, for various reasons, a person’s income level does not practically change, regardless of whether he works or not. For example, when the amount of the benefit paid by the state is almost equal to the proposed wage. In such a situation, a person simply does not have an incentive to work.
- Forced. It is characterized by the fact that a person who has a desire to get a job and agrees with the level of wages, simply can not find a job. This happens when the actual wage exceeds that which contributes to the equilibrium state of supply and demand. This leads to the fact that offers begin to exceed demand.
Forced unemployment can be divided into 3 types:
- technological occurs when the mechanization (automation) of production leads to an excess of employees or their insufficient qualifications;
- seasonal is typical for some industries in which production is periodic;
- cyclical is characterized by repeated decline in production in a single region or in the whole country.
More about species
Among others, several types can be distinguished:
- Institutional arises with the intervention of trade unions or the state in setting salary rates in violation of the laws of a market economy.
- Structural occurs when liquidating obsolete business sectors and the emergence of new professions that require special qualifications.
- Friction is associated with the voluntary change of jobs, the exit (departure) from (m) maternity leave, a change of place of residence, and so on; usually short term.
You can also distinguish 2 more types of unemployment: registered and hidden. The first is expressed by the ratio of the unemployed population officially registered with the employment service to the total number of able-bodied people. The second characterizes the number of people who are not registered or employed only formally, but are actually sent on vacation at their own expense in connection with a decrease in production volumes.
Country unemployment rate: calculation formula
Each of these types has its own calculus, but we will talk about a more general version. The formula for determining the unemployment rate in a country is expressed as the ratio of the total number of unemployed to the number of economically active part of the population. It looks like this:
Ub = (B * 100%) / EA, where EA = З + B (З - employed population; B - unemployed).
This is how a country's unemployment rate is determined. Statistics are compiled on the basis of such calculations.
Economic impact
Anyone who is interested in how to determine the level of unemployment in a country should also know that this phenomenon entails quite serious negative consequences. From an economic point of view, an increase in unemployment leads to an increase in the expenses of the State Employment Fund for the payment of unemployment benefits for registered citizens. An increase in the number of unemployed forms the loss of the wage fund and income tax, which is quite natural: there is no work, there is no salary, and therefore there is no one to pay tax.
Another economic consequence of unemployment can be considered a decrease in the purchasing power of citizens. Due to the loss of permanent work, people are forced to reduce their spending to a minimum.
Social factor
Among social problems, one can name the progressive degradation of society. A person who has lost his job loses not only his earnings. He loses his qualifications, self-confidence, often becomes depressed, which complicates the further search for work. This phenomenon is especially dangerous in the youth environment, where insufficient experience and training significantly reduce the likelihood of employment. Under such conditions, part of the younger generation may prefer the search for a job in the proceeds of unearned crime.
The experience of economically developed countries shows that the market is not able to cope with the problem alone. Here, the intervention of the state, its help and assistance is certainly required.
Statistics
According to economists, the problem of lack of permanent work is more or less local. In large cities, it is practically not felt, while in small and medium-sized settlements, so to speak on the periphery, the issue is quite acute. These indicators negatively affect the unemployment rate in the country.
Statistics show that the lowest unemployment rate falls on 1990 and amounts to 5.2%. Apparently, the influence of the Soviet Union affected, the command economy of which partially solved this problem. But this indicator reached its maximum value in 1998 (13.2%).
In fairness, it is worth noting that the influence of state policy had a beneficial effect on these indicators, and by 2007 the unemployment rate in the country (statistics confirm this) could be reduced to 6.1%. Subsequently, these indicators fluctuated at the level of +/- 1.5–2% and by the end of 2014 amounted to 5.3%.
