Annex E: Concepts and Definitions
Economic activity rate: The number of people who are in employment or unemployed expressed as a percentage of the relevant population.
Economic inactivity rate: The number of economically inactive people expressed as a percentage of the relevant population.
Economically active: The economically active population are those who are either in employment or unemployed.
Economically inactive: Economically inactive people are not in employment, but do not satisfy all the criteria for unemployment. This group is comprised of those who want a job but who have not been seeking work in the last 4 weeks, those who want a job and are seeking work but not available to start and those who do not want a job. For example, students not working or seeking work and those in retirement are classed as economically inactive. It can be useful for some purposes to consider only those who are both economically inactive and not of state pension age.
Employees: The division between employees and self-employed is based on survey respondents' own assessment of their employment status.
Employment: There are two main ways of looking at employment: the number of people with jobs or the number of jobs. These two concepts represent different things as one person can have more than one job. People aged 16 or over are classed as in employment (as an employee or self-employed) by the LFS, if they have done at least one hour of paid work in the week prior to their LFS interview or if they have a job that they are temporarily away from. People who do unpaid work in a family business and people on Government-supported training and employment programmes are also included according to the International Labour Organisation (ILO) convention.
Employment rate: The number of people in employment expressed as a percentage of the relevant population.
Model Based Unemployment: In 2003, ONS developed a statistical model to improve small area estimates of unemployment by using supplementary information from the claimant count - a count of the number of people claiming Jobseeker's Allowance. As it is an administrative measure, accurate information is known for all areas. It is also highly correlated with unemployment. The model is said to borrow strength from the claimant count. The model also includes a socio-economic indicator and a random area effect.
More information about the modelling methodology can be found here:
Rates: Rates represent the proportion of the population or subgroup of the population with a certain characteristic. They allow changes in the labour market to be interpreted in a wider context, allowing for changes in the overall population or the number of people who are economically active. Rates can be calculated for different age groups. For employment, economic activity and economic inactivity, the most widely quoted rates are those for the working age population. For unemployment, headline rates are expressed as a percentage of the economically active population aged 16 and over. Those over retirement age who continue to be economically active will therefore be included in the base while those who are economically inactive will not.
Self-employment: The division between employees and self-employed is based on survey respondents' own assessment of their employment status.
Unemployment: The ILO definition of unemployment covers people who are: not in employment, want a job, have actively sought work in the previous 4 weeks and are available to start work within the next fortnight, or, out of work and have accepted a job which they are waiting to start in the next fortnight.
Unemployment rate: The number of unemployed people expressed as a percentage of the relevant economically active population.
Note that due to changes in the state pension age, (specifically the current female state pension age which is changing dynamically to match the male state pension age) ONS no longer publish rates using a Working age definition in its statistical bulletins, but instead report rates for all people aged 16 to 64.
16 to 19 year olds Not in Employment, Education or Training: The proportion of 16-19 year olds who are not classed as a student, not in employment nor participating in a government training programme.
Further information on Classifications and Standards is also available from the ONS website at http://www.ons.gov.uk/ons/guide-method/classifications/index.html
Email: Alan Winetrobe