Unemployment: who counts, and why it happens

In 2013, Spain’s unemployment rate for 15-to-24-year-olds was 55.5 percent. That sounds as if more than half of all young Spaniards were hunting for work and finding none. In fact, young people without a job who were looking for one made up 21 percent of everyone that age. The 55.5 percent is a share of a smaller group: only the young people who were working or looking for work. Many of the rest were students.

Both numbers are true. They divide by different groups.

Key Term

Who counts as unemployed

Labour statisticians from many countries agreed the international definition at the International Labour Organization (ILO), a United Nations agency. Statistics offices survey a sample of households and ask what each person did in one particular week. You are unemployed only if all three are true:

You had no job that week. Even one hour of paid work counts as having a job. So does being off sick or on holiday from a job you still have.
You could start work within about two weeks.
You looked for work in the past four weeks, for example by applying for jobs.

The labour force is the employed plus the unemployed: everyone of working age (usually from age 15 or 16) who is working or trying to. People who are doing neither, such as retired people, full-time carers and students who aren’t looking for work, are outside the labour force. A student with a paid Saturday job counts as employed, and a student who is looking for one and could start counts as unemployed.

The rate is a share of the labour force, not of the whole population.

These tests leave two groups of struggling people out of the unemployment count. A discouraged worker wants a job and could start one, but has stopped looking. They believe there is no work for them, perhaps after months of rejections. They fail test 3, so they are outside the labour force. A part-timer who wants more hours, say 35 a week instead of 10, counts as employed. So the headline rate, the one the news reports, can miss real hardship. Many countries also publish a broader measure that adds both groups back.

Worked Example

A town has 1,000 adults. Of these, 760 have a job, and 40 have no job and are looking for one. The other 200 are retired, studying or caring for family, and aren’t looking for work. (a) What is the unemployment rate? (b) Then 10 of the 40 still want a job but give up looking, because they think there is no work for them. What is the new rate?

Key Term

Four reasons people are unemployed

Frictional: between jobs, or just starting out, while searching. Jobs that suit them exist, but finding the right one takes time, usually not long. Usual fix: better job matching, such as job websites.
Structural: the worker’s skills or location no longer match the jobs on offer, often because an industry shrank or machines took over. Usual fix: retraining, or help to move.
Cyclical: in a recession (a period when the whole economy shrinks), spending falls across the economy, so firms sell less and need fewer workers. Usual fix: more spending, which governments and central banks (the banks that look after a currency) can encourage.
Seasonal: the work comes and goes with the time of year, like fruit picking or ski teaching. Usual fix: the next season, or other work in the off-season.

Interactive — What kind of unemployment is it?

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Six real cases from six countries, each with its answer, an evidence label and a source.

The type decides the fix. In Spain, 2.6 million more people had jobs in 2019 than in 2013, as the economy grew again. But extra spending across the economy couldn’t reopen the coal mines or take jobs back from robots. Those workers needed new skills, or a move to where the jobs were.

Trap · Common Misconception

"Full employment means nobody is unemployed"

Economists say an economy is at full employment when there is no cyclical unemployment: no recession is holding jobs back. Some frictional and structural unemployment always remains, because people keep leaving school, changing jobs and moving between industries. So the rate never reaches zero. Even the European Union country with the lowest rate in 2025, Czechia, had 2.8 percent unemployment.

Practice · 1 / 6

Wrong answers cost no XP

Put the ideas to work:

Four people are out of work and looking for a job. Which one is cyclically unemployed?

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