The unemployment rate is a key economic indicator. It tells us how many people are out of work and how long they have been jobless. It also helps us understand a country’s economy and its job market. There are different ways to measure unemployment, but the most common is a monthly survey that measures civilians in the labor force (workers who are employed or actively looking for work). These statistics are collected by governments around the world to understand how the jobs market is doing.
There are several different types of unemployment, but the most important is cyclical unemployment. This type of unemployment changes with the business cycle and is tied to the strength of an economy. For example, a strong economy may lead to more hiring and higher wages, which in turn leads to less unemployment.
However, there are other influences on the labour market beyond the business cycle. For example, some countries measure a different kind of unemployment, called frictional unemployment. This is caused by individuals being unemployed for a short period of time and having trouble finding new employment because of problems with their current employer, such as firing them or reducing hours.
In addition to measuring cyclical and frictional unemployment, some governments use data to monitor underemployment. This includes those working part time but who want to work more and are available to do so. It can also include those working in a field for which they are not well trained or who lack the qualifications to find a better job.