Unemployment Rate in Uk
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Module Code：FC103Class/Group: 5Module Title: MacroeconomicsAssessment Title：ReportAssignment Title: Unemployment Rate Report over the period 1992 Till TodayTutor Name: Bastian StruveStudent ID Number: 2329820Date of Submission: 5 June 2017AbstractUnemployment rate in the UK has changed since 1992 and. The change according to this report is from 8.5 to 3.8 percent. The decrease of unemployment rate reflects the economic development in the UK. It has resulted to increase in the number of companies and job opportunities. However, one cannot ignore opposite changes in the years such as 1993, 2005, 2006, 2008 and 2009. In these years, the unemployment rate seem to increase and the UK’s government should find ways to cope with this negative change.1.0 IntroductionUnemployment rate data has been used all around the world as an economic indicator for the economic strength of a country. In the United Kingdom, many changes have been observed in the last thirty years about the unemployment rate. Since the recession in 2008, the Gross Domestic Product published in 2009 curtailed 1.9 pc further than the previous quarter. (Economic Review, May 2009, 2009) According to recent research, 31.95 million people work in the United Kingdom, which is a great figure in comparison to the previous years. (ONS Digital, 2016, p. 3) This report tries to determine what causes unemployment in UK. It begins by analyzing the three-main period, which are from 1992 to 2005 experienced drastically decreasing and slightly rose between 2006 and 2010, since when had been steadily dropping until now. The last section brings the recommendation to the British government and summarise the total observation. In the UK employment rate since 1992 up to date has changed and in between these years one can analyze and better understand the nature of employment.2.0 AnalysisThe Trends in Unemployment in the United Kingdom (1992 to Date)The unemployment rate of the UK has fluctuated from 3% to 9% during the last 25 years, it shows on the following graph.[pic 1]Source: National Statistics (2016b)Based on the above graph;1990-1993The data above shows that in 1990 the unemployment rate in was 8.6 percent and increase up to 8.8 in the following year (National Statistics, 2016a). In comparison to other years, this is the highest record of the unemployment rate. In 1992 recession hit the United kingdoms economy and played a huge role in the increase in the unemployment rate. The recession came after the high economic growth and inflationary period. It dominating caused by the decreasing of house price and a high rate of interest. Both the recession-hit and the high unemployment rate in the UK was reason enough for the conservative government to lose their fifth election. However, the negative effects of the increased rate of unemployment did not make the government lose their fourth consecutive general election. Tony Blair joined the government promising to increase the number of jobs in the UK after this period (Pircado, 2009, pp. 2–4). The purchasing power of the unemployed workers was lost and led to unemployment of other workers. This is exactly what happened in 1993 where instead of the rate of unemployment decreasing it increased at an average of 0.2 percent (National Statistics, 2016a). It was a cascading negative effect on the UK’s economy.
1994-1996According to the data in 1994 to 1996 the rate of unemployment rate started to decrease. Between this two years and the years ahead, the Real GDP of the UK increased typically which can be associated with the increased level of employment. In comparison to the previous years, the Real GDP in the UK increased, and the UK government experienced a continuous sixteen-year economic growth. The output of UK fell in the year 2008 and 2009, but it increased again in the years after 2010. In 1996 the level of unemployment decreased but remained below 2 million which changed in the next four years. It remained lower than 1.5 in the years between 2000 to 2005.2000-2006 This data explains the decreased rate in the unemployment rate in the UK during those years. According to numerous reports in the years between 1980 to 2014, the UK’s GDP growth increased by an average of 2.2% per year (National Statistics, 2016b). The graph shows that from 1993 to 2005 the rate of unemployment kept on decreasing from 8.8% to 3.5%. However, between 2005 to 2006 the rate of employment suddenly increased from 3.5% to 4.5% (National Statistics, 2016a). The reason behind this increase was a higher rate of immigration. Most of the eastern Europe states had joined the European Union. Many immigrants were competition for the same jobs with local citizens. Some big companies had collapsed, and many workers were left unemployed. For example, there was a decline of jobs in the manufacturing industries. In the West Midlands of England lost the MG Rover company after it collapsed and in the following the Peugeot companies decided to close its Ryton plant. According to reports in 2005, 30,000 jobs were despite MG Rover hiring more than 6000 people. More employees lost their jobs in other sectors related to these two companies such as the supply, and dealerships industries. In the Ryton plant, more than 2000 employees who were previously employed lost their jobs after the plant was closed (Trading Economics, 2017). Other negative effects occurred during this period. First, those workers who lost the jobs moved to other cities and countries to look for work in the manufacturing industry. Due to this migration labor cost decreased the workers who remained in their positions started to receive a lesser salary in comparison to the previous years.2006-2011 In the years between 2006 and 2007 the unemployment rate increased from 4.0% to 4.4% as the economy had started to stabilize, but in the following year, it decreased with an average change of 0.2%. In the years 2008 the official level of unemployment increase up to 2 million and above and was caused by the downturn in the United Kingdom’s economy. In the next year, the unemployment level reached 2.5 million which resulted in an increased rate of 8.0 percent. Between the years 2008 and 2011, the rate of unemployment increased from 4.4% to 6.5% (National Statistics, 2016b). This meant that the UK’s population had increased and the level of unemployment increased as well. Both the level and rate of unemployment had begun to slow decrease, but in the years later from 2008 the level of employment reached 2.6 million. This was a sharp increase, and 8.0 percent was the increase of unemployment rate. The reason behind this great increase was job losses in the public sector caused by the “Conservative-led government’s spending cuts.”