People are understandably skeptical about the reported unemployment rate. The rate is produced by the Household Labour Survey which interviews 15,000 households. Each quarter, an eighth of the total sample is replaced by new households. A couple of years ago our household was required to be part of the survey, so I have experienced the questioning firsthand.
The following is the official definition of an employed person;
Employed: All persons in the working-age population who during the reference week worked for one hour or more for pay or profit in the context of an employee/employer relationship or self-employment; or worked without pay for one hour or more in work which contributed directly to the operation of a farm, business or professional practice owned or operated by a relative; or had a job but were not at work due to: own illness or injury, personal or family responsibilities, bad weather or mechanical breakdown, direct involvement in an industrial dispute, or leave or holiday.
An unemployed person;
Unemployed: All persons in the working-age population who during the reference week were without a paid job, available for work and had either actively sought work in the past four weeks ending with the reference week, or had a new job to start within the next four weeks.
These two groups combined make up the Labour Force. The unemployment rate is the number of unemployed persons expressed as a percentage of the labour force.
Note then, people not actively seeking work are not counted as unemployed; people with family responsibilities doing unpaid housework and childcare, people attending educational institutions, retired, permanently unable to work due to physical or mental disabilities are not counted as unemployed.
So, we have this seeming conundrum between twelve percent of the working-age population being on a benefit when the unemployment rate is only 3.7 percent.
But it can be seen from the above that in countries with less generous benefit systems there will be fewer people in the group that is not counted eg without the DPB there would be fewer people not counted because they have family responsibilities.
So, although the HLFS is used in other countries we compare ourselves to, because social security systems vary so much, we are still comparing apples with oranges. Claiming to have the lowest unemployment rate in the OECD begs qualification.
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