World Unemployment Rates

By: EconomyWatch   Date: 13 October 2010

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The problem of unemployment is crucial as far as the world economic growth is concerned. There are different types of unemployment like structural, cyclical, natural and frictional. This categorization of unemployment is based on the various factors that result in unemployment. However, the issue of unemployment has always been a matter of great debate among the traditional as well as contemporary economists. As per the Keynesian economists, unemployment results from lack of effective demand. The viewpoints of the neoclassical or classical economists differ from their Keynesian counterparts. According to them, the rigidities in the labor market like taxes and minimum wage laws are the main reasons behind unemployment. Unemployment rates vary across the countries. The rate of unemployment is relatively low in the developed countries compared to the less developed economies of the world.

How to Measure Unemployment Rate

Unemployment rate is the best way to measure the extent of unemployment in any country. Economists allover the world, give huge importance to the measures of unemployment rate for designing the policies of economic development. The most widely used measure of unemployment rate is mentioned below:

Unemployment Rate = {(Total number of unemployed workers)/Total Labor force} ×100

As per the International Labor Organization (ILO), the unemployment rate can be calculated by using 4 separate measures. According to ILO, the following estimates prove to be useful to have an idea about the extent of unemployment in any economy.

Social Insurance Statistics are one of those estimates. The amount distributed in the form of unemployment benefits is crucial in this context. It gives an idea about the number of unemployed people receiving the unemployment benefits. However, these estimates do not take into account the fact that unemployment benefits may expire before someone is re-employed.

The method of Labor Force Sample Surveys is probably the most preferred one used for calculating the rate of unemployment. The extensive method used in sample surveys helps to calculate the unemployment rate in an efficient way. Labor Force Sample Surveys also facilitate international comparison of unemployment rates.

Official Estimates is another method for determination of unemployment rate in an economy. It uses information collected through other methods for the purpose of determining the unemployment rate. This method, however, has lost its importance over the passage of time.

Employment Office Statistics is probably the least used method in this context. It considers only the monthly tally of workers who are out of work and visit the employment offices for registering themselves. Employment Office Statistics also involve some workers who are not considered to be unemployed according to the definition of the International Labor Organization.

Trend of Unemployment Rates among Countries

Some of the countries with high rates of unemployment are as follows:

The Republic of Liberia shows an unemployment rate of 85%. The Republic of Kiribati and Zimbabwe come next with 70% unemployment rate. The unemployment rate is 50% for both East Timor and Zambia. The unemployment rates for Senegal, Nepal and Lesotho are 48%, 47% and 45% respectively. Bangladesh, Kenya and Botswana show 40% rate of unemployment each. Among the other economies that feature substantially high unemployment rates, Namibia, Swaziland, South Africa, Yemen, Serbia and Montenegro, Tajikistan and Marshall Islands are worth mentioning.

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