Author: Tina Aridas, Valentina Pasquali
Project Coordinator: Alessandro Magno, Denise Bedell

The official unemployment rate is defined as the number of unemployed persons divided by the total labor force (which is the sum of unemployed persons and employed persons). Unemployment is an economic condition in which individuals actively seeking jobs remain un-hired.


Total Unemployment Around the World, 2012 (% of Labor Force)
Data is from IMF, World Economic Outlook, October 2012.

Dark red - highest rates
Light red - lowest rates

Total Unemployment During the Great Recession: Europe & United States (%)
Data is from Eurostat, Feb. 2013.
 


There are several complications in measuring unemployment within a country and in comparing unemployment rates between countries.

Definitions of "employed person" and "unemployed person" can make this concept complicated. For example, a person who loses well-paid full-time work, cannot find similar work, and settles for a job at one-tenth of the pay doing part-time work, is classified as "employed." Many economists assert that, if such "hidden unemployed" or the "underemployed" are taken into account, the actual unemployment rate may be much higher than official statistics suggest. Additionally, economic reports from individual countries or compiled by different organizations may involve different measures of unemployment. Finally, the "normal" or "acceptable" rate of unemployment within one country can be different from that in another country, or between countries at different points in an economic cycle.

This is why, to get a truer picture, most economists prefer to look at a variety of statistics, including, for example, labor market participation rate or the total number of full-time jobs in an economy.

Nevertheless, unemployment rates remain a useful measure of the health of a particular economy over time, as it has both social and economic implications. Rising unemployment results in loss of income for individuals, reduced collection of taxes for governments, and increased pressure on government spending on social benefits. Long-term unemployment also negatively affects social cohesion and hinders economic growth. The effects of high unemployment in one country can have a major impact on the economies of its trading partners as well, it leads to a decrease in demand for imports.

Uncertainty Holds Back Job Creation

Ekkehard Ernst, Chief of the ILO Employment Trends Unit, talks about the world unemployment outlook for 2013.

The global economic crisis that began in 2007-2008 has had a huge effect on the number of unemployed people around the world, which, according to International Labour Organization (ILO) estimates, increased from 178 million in 2007 to 197 million in 2012, with a peak of 212 million reached in 2009. Unfortunately, prospects for 2013 remain bleak, with the world's unemployment rate again on the rise. "An uncertain economic outlook, and the inadequacy of policy to counter this, has weakened aggregate demand, holding back investment and hiring," said Director-General Guy Ryder presenting the ILO Global Employment Trends 2013 report. "This has prolonged the labor market slump in many countries, lowering job creation and increasing unemployment duration."

In the United States, the unemployment rate hit a record high in 2010 (9.6%,) but then started slowly but steadily decreasing. In February 2013 it fell to 7.7%.

The Euro area has been particularly hard hit. Unemployment was at 9.6% in 2009 and has continued to grow since, to 10.1% in 2010, 10.7% in 2011 and a record high 11.7% in 2012. Unsurprisingly, Greece and Ireland have been faced with some of the fastest growing rates. In Greece, unemployment was only 7.7% in 2008. It then went up to 9.4% in 2009, 12.5% in 2010, 17.3% in 2011 and a staggering estimated 23.8% in 2012. Ireland has suffered a similar fate, seeing its unemployment rate jump from 6.3% in 2008 to 14.8% in 2012. Spain's unemployment has also followed a dramatic path, going from 8.3% in 2007 to an estimated 24.9% in 2012.

Things have been difficult in the United Kingdom as well, with the unemployment rate growing steadily from 5.4% in 2007 to 7.9% in 2010 to 8.1% in 2012.

Data is from Eurostat, Feb. 2013.

Youth Unemployment 2009-2012: Europe & Other Relevant Economies (%)

Overall, young people (most often defined as 15-to-24 year olds) have suffered the worst of the crisis. In fact, while youth unemployment is traditionally around double that for adults, on the tail of the recent recession this ratio has tripled, even quadrupled in some countries. According to the latest ILO estimates, in 2013 74.2 million youth will be unemployed across the world, a 3.8 million increase since 2007. In Spain, youth unemployment hit 53.2% in 2012. In Portugal, this was 37.7% and in Slovakia 34.5%.


Total Unemployment Around the World, 2003-2012
Data is from IMF, World Economic Outlook, October 2012.
Click on the column heading to sort the table.

Notes:

1. Data is from Eurostat and the International Monetary Fund, World Economic Outlook Database, October 2012. This also draws on information from the International Labour Organization; the World Bank; and the US Bureau of Labor Statistics (BLS).
2. The criteria are not necessarily the same for every country. For example, the lower limit in the age bracket under consideration range from 10 years old in Brazil to 16 years old in many other countries; the upper limit ranges from 61 upward.
3. Rates are normally not seasonally adjusted, with the exception of Israel’s.

Total Unemployment During the Great Recession: Europe & United States (%)
Data is from Eurostat, Feb. 2013.
Click on the column heading to sort the table.

 

Notes:
* November 2011
** October 2011
*** Q3 2011

Youth Unemployment 2003-2012: Europe & Other Relevant Economies (%)
Data is from Eurostat, Feb. 2013.
Click on the column heading to sort the table.

 

Notes:
1. Youth = Under 25 years of age.