Unemployment rate

Unemployment refers to the share of the labor force that is without work but available for and seeking employment.

Aggregation method:

Weighted average

Statistical concept and methodology:

Methodology: The unemployment rate is calculated by expressing the number of unemployed persons as a percentage of the total number of persons in the labor force. The labor force (formerly known as the economically active population) is the sum of the number of persons employed and the number of persons unemployed.

The series is part of the "ILO modeled estimates database," including nationally reported observations and imputed data for countries with missing data, primarily to capture regional and global trends with consistent country coverage. Country-reported microdata is based mainly on nationally representative labor force surveys, with other sources (e.g., household surveys and population censuses) considering differences in the data source, the scope of coverage, methodology, and other country-specific factors. Country analysis requires caution where limited nationally reported data are available. A series of models are also applied to impute missing observations and make projections. However, imputed observations are not based on national data, are subject to high uncertainty, and should not be used for country comparisons or rankings. For more information: https://ilostat.ilo.org/resources/concepts-and-definitions/ilo-modelled-estimates/

Statistical concept(s): The unemployed comprise all persons of working age who were: a) without work during the reference period, i.e. were not in paid employment or self-employment; b) currently available for work, i.e. were available for paid employment or self-employment during the reference period; and c) seeking work, i.e. had taken specific steps in a specified recent period to seek paid employment or self-employment. Future starters, that is, persons who did not look for work but have a future labor market stake (made arrangements for a future job start) are also counted as unemployed, as are participants in skills training or retraining schemes within employment promotion programs, who on that basis, were “not in employment”, not “currently available” and did not “seek employment” because they had a job offer to start within a short subsequent period generally not greater than three months. The unemployed also include persons “not in employment” who carried out activities to migrate abroad in order to work for pay or profit but who were still waiting for the opportunity to leave.

Employment comprises all persons of working age who during a specified brief period, such as one week or one day, were in the following categories: a) paid employment (whether at work or with a job but not at work); or b) self-employment (whether at work or with an enterprise but not at work).

The working-age population is the population above the legal working age, but for statistical purposes it comprises all persons above a specified minimum age threshold for which an inquiry on economic activity is made. To promote international comparability, the working-age population is often defined as all persons aged 15 and older, but this may vary from country to country based on national laws and practices (some countries also apply an upper age limit).

Development relevance:

The unemployment rate is a useful measure of the underutilization of the labor supply. It reflects the inability of an economy to generate employment for those persons who want to work but are not doing so, even though they are available for employment and actively seeking work. It is thus seen as an indicator of the efficiency and effectiveness of an economy to absorb its labor force and of the performance of the labor market.

Given its usefulness in conveying valuable information on a country’s labor market situation and the fact that it is widely recognized as a headline labor market indicator, it was included as one of the indicators to measure progress towards the achievement of the Sustainable Development Goals (SDG), under Goal 8 (Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all).

Limitations and exceptions:

While the unemployment rate may be considered the most informative labour market indicator, reflecting the general performance of the labour market and the economy as a whole, it should not be interpreted as a measure of economic hardship or of well-being. When based on the internationally-recommended standards, the unemployment rate simply reflects the proportion of the labour force that does not have a job but is available and actively looking for work. It says nothing about the economic resources of unemployed workers or their family members. Its use should, therefore, be limited to serving as a measurement of the utilization of labour and an indication of the failure to find work. Other measures, including income-related indicators, would be needed to evaluate economic hardship. An additional criticism of the aggregate unemployment measure is that it masks information on the composition of the jobless population and therefore misses out on the particularities of the education level, ethnic origin, socio-economic background, work experience, etc. of the unemployed. Moreover, the unemployment rate says nothing about the type of unemployment – whether it is cyclical and short-term or structural and long-term – which is a critical issue for policy makers in the development of their policy responses, especially given that structural unemployment cannot be addressed by boosting market demand only.

Other notes:

National estimates are also available in the WDI database. Caution should be used when comparing ILO estimates with national estimates.