What is the unemployment rate?

The unemployment rate is an indicator that shows us the number of people in a specific territory who are in a situation of arrest. This data is expressed as a percentage and is essential to assess the economic situation of a country, since it offers us an overview of the number of people who do not have a job to do.

It is clear that high unemployment rates are a sign that a country's economy is not at its best, while low unemployment rates tend to be the effect of good economic times. However, we must bear in mind that it is possible to have a low unemployment rate but that employment is precarious, since it would not describe the real situation of the people who live in that country. Even so, consequences of having high unemployment they tend to be more damaging economically.

How is the unemployment rate calculated?

The unemployment rate or unemployment rate is very simple to calculate since to measure it it is enough to observe the relationship between the unemployment of a country and its active population. In other words, we must divide the number of unemployed in a country among all the people who have the possibility of working.

In this way, the formula to calculate the unemployment rate would be this:

Unemployment rate = (No. of unemployed / Active population) x 100

Let's take an example. If a country has 2 million unemployed and has an active population of 50 million, what would its unemployment rate be? Very easy.

Unemployment rate = (2.000.000 / 50.000.000) x 100 = 4%.

In this case, we would find a very low unemployment rate that, a priori, would be a consequence of the good health of the economy in question. When these very low unemployment rates occur, the country is considered to be in a situation of full employment. However, this does not mean that everyone in the country has a job.

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