The rate divides unemployment by the labour force
Definition
Unemployment rate: the number of unemployed people expressed as a percentage of the labour force, not of the whole population.
- The labour force in that calculation is the employed plus the unemployed, so the economically inactive are left out of the top and the bottom.
- Dividing by the labour force rather than the population is what makes the rate meaningful, because children, students and pensioners were never looking for work.
- Keep both figures in the same units, so thousands are divided by thousands and millions by millions.
Working the rate out from real figures
- Build the labour force before anything else, because the rate cannot be worked out until that denominator exists.
Example
- In April to June 2026 the UK had 34,469 thousand people aged 16 and over in work and 1,772 thousand unemployed (Source: ONS).
Step 1: add the employed and the unemployed to find the labour force:
labour force=34,469+1,772=36,241 thousand \text{labour force} = 34{,}469 + 1{,}772 = 36{,}241\text{ thousand} labour force=34,469+1,772=36,241 thousandStep 2: divide the number unemployed by the labour force and multiply by 100:
unemployment rate=1,77236,241×100=4.9% \text{unemployment rate} = \frac{1{,}772}{36{,}241} \times 100 = 4.9\% unemployment rate=36,2411,772×100=4.9%- That is the 4.9% the ONS published for April to June 2026, so the method reproduces the official figure.
The rate and the number can move apart
- The rate can fall while the number unemployed is unchanged, if the labour force grows, because the same total is divided by a bigger figure.
- The rate can also rise while employment rises, if people move out of inactivity and start looking for work, joining the labour force before they find a job.
- Reading the rate and the number together is what stops either of those being mistaken for good or bad news.
- In the year to April to June 2026 the number unemployed rose by 88,000 and the rate rose from 4.7% to 4.9%, so both pointed the same way (Source: ONS).
Common Mistake
- Do not divide the unemployed by the total population, because that always produces a rate far lower than the real one.
- Do not put the economically inactive into the labour force, since they are not looking for work.
Say what the rate actually means
- A rate of 4.9% means about 49 people in every thousand who wanted work could not find it, which is the sentence a calculation should finish on.
- Attach the period as well, because an unemployment rate always belongs to a stated month or a stated three months.
- Compare like with like, so a rate against a rate and a number against a number.
Exam technique
- Check the denominator is the labour force and not the total population, since that single slip skews the answer more than any other error on this topic.
- Name the period the rate covers, because a rate quoted without one cannot be compared with anything.
Self review
- Write out the unemployment rate formula from memory.
- A labour force of 20,000 includes 800 unemployed people. Calculate the unemployment rate.
- Why must you never divide by the total population?
- How can the unemployment rate fall while the number unemployed stays the same?
- What was the UK unemployment rate in April to June 2026?
