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
Lay-offs 
(b) People 
out
of the labour force 
joining
the unemployed 

School leavers without a job 

Others (for example, carers) rejoining the workforce but having no job yet 
Flows out of unemployment
are: 

Unemployed people finding jobs 

Laid-off workers being re-employed 

Unemployed people stopping the search for work 
In the UK, the monthly unemployment statistics published by the Office for National Statistics (ONS) 
count only the jobless who receive benefits.
The ONS also produce figures based on a quarterly survey of the labour force known as the International 
Labour organisation measure (ILO measure) that provides seasonally adjusted monthly data. This figure 
is considered to be more useful because it is also an internationally comparable measure. 
6.2 Consequences of unemployment 
Unemployment results in the following problems. 
(a) 
Loss of output
. If labour is unemployed, the economy is not producing as much output as it 
could. Thus, total national income is less than it could be. 
(b) 
Loss of human capital
.
If there is unemployment, the unemployed labour will gradually lose its 
skills, because skills can only be maintained by working. 
(c)
Increasing inequalities in the distribution of income
. Unemployed people earn less than 
employed people, and so when unemployment is increasing, the poor get poorer. 
(d)
Social costs
.
Unemployment brings social problems of personal suffering and distress, and 
possibly also increases in crime, such as theft and vandalism. 
(e) 
Increased burden of welfare payments
. This can have a major impact on government fiscal 
policy. 
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