On the Measurement of Employment and Unemployment

In May 1984 unemployment was, officially, 3.1 million. Critics of the count put the true figure at between 1.7 million and 4.4 million, depending on their point of view. In Section 1 I examine what the statistics do and do not measure and highlight recent changes in coverage and counting. Estimates of the long-run rate of unemployment are given in Section 2. These estimates imply that injudicious macroeconomic policy accounts for a large fraction of current unemployment. In Section 3 Britain's unemployment is put into an OECD context. It is shown that our comparatively high level of unemployment is not due to problems with the labour supply or lack of adaptability on the part of the workforce. Finally, Section 4 addresses the question ‘where are the new jobs coming from?’ There is general agreement that manufacturing will not be a source of net new jobs, but private services are unlikely to generate jobs on the scale required to make a dent in unemployment.