Labour Market - Terminology

The government uses four basic terms that are used to measure ‘employment’, not two. Consequently, looking at figures of those ‘employed’ and those ‘unemployed’ does not provide us with a complete picture. It is often assumed that if, for example, 10% are ‘unemployed’, that 90% are presumed to be in work – this is not the case. Also, when we here of 10% being unemployed, it does not mean 10% of the entire population, but 10% of the potential size of the workforce (of ‘economically active’ people).

The normal working age at the time of the Census 2001 was ages 16-64 for men and ages 16-59, which means that between the ages of 60 and 64, men and women can be classified differently for the same position. Census 2001 allowed the labour market position to be measured with ethnicity and religion across the UK for the first time. Although on the whole it confirmed the findings of earlier studies that members of many ethnic and/or religious groups are in a position of higher disadvantage, the Census provided clearer cross-cutting information.

The four terms used to measure employment and labour market participation are:

  • Economic Activity
    People are defined as economically active if they are aged 16 and over and are either employed or unemployed. Economic activity is therefore a measure of participation in the labour market and gives an indication of the potential size of the workforce. The remainder are those whose classified as being economically inactive.
  • Employment
    Individuals who are in employment include employees, those who are self-employed, participants in government employment and training programmes, and (notably for recent migrant communities) people doing unpaid work for a family business.
  • Unemployment
    The term unemployment refers to being without work but actively seeking it. The unemployment rate is generally calculated as a proportion of economically active people, not of the entire population.
  • Economic Inactivity
    People are economically inactive if they are aged 16 or over and are neither employed nor unemployed. For example, people who are retired or who cannot work because of ill health are considered to be economically inactive.
© Crown Copyright. Source data has been derived from ONS Census 2001, unless otherwise stated.