In this report I will illustrate how unemployment and inflation in the UK has changed since 1980 to the present day. I will also analyse the Governments current strategies for dealing with inflation and unemployment.
Unemployment is when people are joblessness. The measure of unemployment is the number of jobless people who are available for work and are actively seeking jobs.
There is a waste of scare economic goods when there is unemployment and this reduces the long run growth potential of the economy. When there is high unemployment, the economy is producing within its production possibility frontier.
However if there is a reduction in unemployment, the total national output can increase leading to an improvement in economic welfare.
The Office for National Statistics (ONS) publishes two unemployment rate measures. There is the rate based on the claimant count, which includes all those who are unemployed and actually claiming benefit from Jobseekers Allowance; and the Government's preferred International Labour Organisation total, which includes people not eligible for benefit.
The following diagram uses the claimant count to see how many people are unemployed between 1992-1999.
Long-term unemployment occurs when workers fail to find employment after 6 months and the long term claimant count above shows that unemployment was at its highest in the UK at the end of 1994 at around 39%.
Unemployment fluctuated at around 9% in the late 1980s, and then dropped to a low count of 6%. During the recession of the early 90s, the jobless rate shot up again, to 8%, but has been falling ever since
The number of people claiming jobless benefits fell last month, decreasing by 3,300 to 926,900 to reach it lowest since 1980 as the U.K jobs market remained firm. However since June 2003, unemployment has risen by 12,000 to 1.48 million, keeping the jobless rate at 5%, also the manufacturing industries has lost 121,000 jobs since ...