Unemployment rate

What is the unemployment rate?

The unemployment rate, also known as the unemployment rate, is a economic indicator which determines which is the level of lack of jobs in a society, in relation to the population that is economically active.

In this way, the unemployment rate it calculates how many people, who are able to have a job and are looking for it, are still unemployed.

How to calculate the unemployment rate?

To calculate the unemployment rate, the following formula is used:

Formula to calculate the unemployment rate.

This formula is based on divide the number of unemployed people in the region by the economically active population, that is, by those people who have a job or are actively looking for it.

Later, this result is multiplied by 100 to get the percentage rate.

For example, from a certain population we could obtain the following data:

• Unemployed population: 5,000,000
• Employed population: 20,000,000
• Economically active population: 25,000,000

Therefore, to calculate the unemployment rate of this population we must do the following calculation: (5,000,000 / 25,000,000) * 100 = 20%.

Types of unemployment

The types of unemployment usually measured by the unemployment rate are as follows:

• Structural unemployment: when the inhabitants of a certain population do not meet the employee standards that organizations seek.
• Frictional unemployment: type of unemployment caused by the will of people who, for a certain reason, choose not to work when they could.
• Seasonal unemployment: unemployment caused by the fact that certain jobs are only required at certain times of the year. For example, unemployment in coastal areas out of season.
• Short-term unemployment: directly related to the level of economy of the country in question. If there is an economic recession, there is usually more unemployment.

Examples of unemployment rates

To better understand this concept, we will analyze 3 countries together with their unemployment rates.

Argentina

In 2018, Argentina recorded the highest unemployment rate in a long time, presenting a 9.6%. This occurred because a large number of people were unemployed during this period.

Colombia

In 2018, the unemployment rate in Colombia had an increase of 9.1%, since they registered 142 thousand unemployed people, which greatly affected the country's economy.

Mexico

On Mexico, the unemployment rate registered during 2018 was 3.4%, one of the lowest in Latin America.