Glossary – Unemployment Rate

Reviewed by Raphael Zeder | Updated Oct 8, 2017


The percentage of a country’s workforce (i.e. people who are willing and able to work) that is unemployed and actively looking for a job. The unemployment rate is calculated as the number of unemployed workers divided by the number of people in the workforce.


Assume a country’s workforce consists of 10’000 people. Now, let’s say 1’000 of those are currently without a job but actively seeking employment. This means the countries unemployment rate can be computed as 1% (1’000 / 100’000).
Note that it is important to distinguish between unemployed people and people who are simply not working. While the former belong to the workforce, people who are not working because they are not eligible (e.g. too young) or not willing to, do not belong to the workforce and are thus not part of the unemployment rate.


The unemployment rate is an important indicator for the current state of the economy. If the economy is doing well, unemployment is usually low, whereas during a recession, unemployment increases.
Furthermore it is essential for every country to keep the unemployment rate under control, since employment is the primary source of income for most people. A high unemployment rate often indicates a low standard of living.

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