How Unemployment is Calculated

how are unemployment benefits calculated


In the UK, there are two main ways of measuring unemployment.

  • The Labour Force Survey involves asking people whether they are – out of working and actively seeking work.
  • The Claimant Count Method counts the number of people receiving Job Seekers Allowance (JSA).

Not everyone who considers themselves unemployed is eligible for JSA. Hence there is a difference in the numbers. As you can see in the above graph, the difference between the Labour Force Survey and Claimant Count has increased in recent years. This is due to the fact it is more difficult to get JSA and more unemployed are either not getting benefits or are receiving other ‘non-unemployment’ related benefits like disability benefit.

Explaining Difference Between Labour Force Survey and Claimant Count

1. Not Eligible for JSA despite being unemployed

There are two types of JSA

  • Contribution based JSA – if you have paid two years of NI contributions, you can be paid JSA whatever you income and savings. This can be paid for only 6 months
  • Income Based JSA – This is paid to those on low incomes and with low savings. If you have not made sufficient contributions, you will still be eligible for this as long as your

    income is not too high.

Therefore if you have not made contributions and you (or your partner) have high income / savings then you will not be eligible for JSA. One of the groups with the biggest differences between JSA and Labour Force are married women. They may be unemployed, but often ineligible for JSA because of partner’s earnings.

2. 16-17 year olds not eligble for JSA (except in special cases). 16-17 years olds are included in Labour Force Survey if they are looking for work.

3. Other Benefits.

In the LFS of March 2010, 42% of the unemployed said they were claiming benefits other than JSA. This includes disability benefits and child related benefits. The trend to rising number of people on disability benefits is reducing JSA but not the Labour Force Survey.

4. People in Education.

A rise in student numbers in the 18-24 year category means that there are more potentially unemployed (in summer holidays e.t.c) but not eligble for JSA

5. Not Taking JSA

JSA has strict rules about not going on foreign holidays. Some people may not think it is worth claiming given all the hassle of collecting and going for interviews. Yet, they would still say they are looking for work and unemployed.


Category: Credit

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