Identify discuss the reasons for the fall in UK unemployment since the early 1990s and consider
Unemployment can be defined as the number of people (of working age) who are willing and available to work at current wage rates, but not currently employed. ... The first of these two was the method that was used for the whole of the 1980s and most of the 1990s. ... Due to this the Labour government in 1997 changed to the second method of calculating unemployment. ... Over the last two decades, unemployment has fluctuated so much. ... For the next few years unemployment fell rapidly, but rose again in the recession of the early 1990s. Since then unemployment has fallen considerably and is now at the lowest level it has been at for over two decades. There are many different possible causes of unemployment, and unfortunately it is not easy to identify which is the most important and what to do about it. The causes of unemployment can be split into two main types: • Demand-side • Supply-side The first cause of unemployment (demand-side) is simply a lack of aggregate demand. ... When there isnt enough demand employers will not need as many workers, and so demand-deficient unemployment results. ... Unemployment caused by supply-side factors results from imperfections in the labour market. ... However, if the market doesnt clear properly there may be unemployment. This may happen because wages dont fall properly to clear the market. This is shown in the diagram below: Wages are initially too high and so unemployment is a result (supply is greater than demand). To get rid of this unemployment and clear the market wages should fall.