Question

Why the Unemployment Rate is No Longer a Reliable Gauge of Labour Market Performance.

i want to write a summary on this article and do not know how to do?

Answer 1

The Unemployment Rate was traditionally used by media policymakers, politicians and all others who wanted to measure the rate of Labour Market Participation. But now, unemployment rate is not considered while measuring labour market performance as it doesn't always give a reliable result. Like the unemployment rate can decrease for two reasons that give two different performance.

• Potential employees /workers who dropped from work for nay reason and are not searching for job anymore, is usually negative
• And when people are finding work, it is positive

Before 2008, the use of unemployment rate by media and others didn't matter much as its results showed those of other measures. But in 2008, the labour force participation rate had reduced from 67.6% to 65.7% and is expected to further reduce to 61%, this deduction was mostly due to aging population. Now, the decline in these labour market participation rates shows us that unemployment and employment rates tell us two different stories and so, unemployment rate can no longer be used for this context.

In 2008, the employment rate declined from 63.4% to 61.1% in 2016. And at this same time, due to falling labour market participation, unemployment rate also reduced from 8.3% to 7% in 2016. So it can be said that employment rate is rather a better barometer for labour market participation than unemployment rate.