Employment means doing paid work
Definition
Employment: when a person of working age does paid work, either for an employer or for themselves.
Unemployment: when a person is out of work, is available to start a job and is actively looking for one.
- The working-age population in the UK is usually taken as those aged 16 to 64, which is the base the official employment figures use.
- Paid work counts however little of it there is, so a few hours in the week is enough, and part-time and self-employed work both count.
- The three parts of the unemployment test have to be met at the same time: no paid work, ready to start soon, and having looked for work recently.
- Someone who fails any one part of that test is not counted as unemployed, however much they would like a job.
Example
- A nurse working 37 hours a week for a hospital is employed, and so is a plumber who runs their own firm.
- A sixth-former with a six-hour Saturday job is employed too, because the figure does not set a minimum number of hours.
- Someone who wants work but stopped applying months ago is not unemployed, because they fail the looking-for-work part of the test.
The labour force excludes the inactive
Definition
Labour force: everyone who is employed plus everyone who is unemployed, also called the economically active population.
Economically inactive: people of working age who are neither employed nor unemployed, usually because they are not looking for work.
- The economically inactive include students, retired people, those caring for family full time and the long-term sick.
- Discouraged workers who have given up looking count as inactive rather than unemployed, even though they would take a job if one appeared.
- That is why the inactivity rate is published next to the unemployment rate, since a fall in unemployment can simply mean people moved into inactivity.
- In April to June 2026 the UK employment rate was 75.1% and the economic inactivity rate 20.9%, both for people aged 16 to 64 (Source: ONS).
Common Mistake
- Do not call someone unemployed just because they have no job, because they must also be available and actively looking.
- Do not read a falling unemployment figure as more people in work, since they may have become economically inactive instead.
Low unemployment is the government objective
- The aim is low unemployment rather than none at all, because some joblessness exists even in a healthy economy while people move between jobs.
- Full employment therefore means nearly everyone who wants a job at going wages can find one, not that literally everyone is working.
- In April to June 2026, 1.772 million people aged 16 and over were unemployed in the UK, out of a labour force of about 36.2 million (Source: ONS).
- Unemployment matters because idle labour is output the economy never produces, and because the cost of it falls hardest on the people out of work.
Who bears that cost, and how heavily, is weighed up in 3.2.6.
Self review
- What three conditions must be met for a person to count as unemployed?
- Who belongs to the labour force, and who is left out of it?
- Why is a discouraged worker not counted as unemployed?
- What does full employment actually mean?
