How is unemployment calculated in Europe vs America

I have heard Americans talk about our 6% unemployment rate and comparing it to Europes 10%ish rate as proof that our economy is doing better. However I have also heard that in the US we do not calculate unemployment nearly as well as Europe and we leave more people out, giving us lower numbers. For example it is my understanding that if you sign up at a temp agency you are not considered unemployed in the US. Do they use that standard in Europe? Also I have heard that the reason our rates are lower is because we don’t keep track of people who drop out of the workforce as well.

So what are the true unemployment rates when you consider these things. What about underemployment rates (those forced to work part time and those forced to work jobs they are grossly overqualified for) for Europe vs. the US.

I know you can’t consider all the nations of Europe as a single nation with a single unemployment rate, but at the same time you can’t label all 50 states with a single brush either but we do that too.

http://zmagsite.zmag.org/Feb2004/duboff0204.html

Zmag (the left’s answer to newsmax) says the under/unemployment rate is closer to 9.5% when you factor in those who quit trying and involuntary part timers. However that doesn’t include people doing jobs they are overqualified for, ie people with masters degrees in biology working at KFC because they can’t find a job.

The ILO (International Labor Organization) has international statistics that presumably conform to the same definitions. Or, perhaps, not - there were press reports in Germany early this year that the relevant department would institute unemployment reporting on ILO criteria in parallel to the existing statistics, to institute statistics that are comparable internationally. One main difference that was reported was that on ILO criteria someone who worked just one hour per week OR did not actively look for wok was not considered unemployed, while on the German definition you would need to work at least half of the average full-time weekly hours (i.e. at least about 18 hr/week) OR be unable to work in order not to be counted as unemployed. So the official German statistics at least seem not to be comparable internationally (I haven’t read of ILO-definition numbers being published yet).

BTW one quirk in German labour statistics has proved to be a monumental example of political ineptitude: at the beginning of this year the administration of unemployment benefits was reformed with a goal of getting more people into work by carrot and stick. In the course of this those recipients of welfare (administered by the municipialities) who were able to work were shunted over to become clients of the unemployment administration (who was not responsible for them before because they were not entitled, by prior unemployment insurance contributions, to unemployment benefits). The municipialities took advantage of this by declaring almost every welfare recipient able to work (even clear invalids) in order to foist them off to the unemployment administration. Result: the official unemployment figures suddently jumped up by hundreds of thousands when the reform took effect. These newly high unemployment figures put the nail in the (now-outgoing) government’s coffin.

Here is a document by Eurostat, the European statistical office, that lists standardized unemployment rates for the EU, all 25 member countries, the Euro-zone, the US and Japan. There is no further explanation of the US and Japanese numbers but they appear to use the same definition.

http://epp.eurostat.cec.eu.int/pls/portal/docs/PAGE/PGP_PRD_CAT_PREREL/PGE_CAT_PREREL_YEAR_2005/PGE_CAT_PREREL_YEAR_2005_MONTH_10/3-04102005-EN-BP.PDF [PDF]

make that work :smack:

Hold on. Don’t think “better” or “worse”.

  1. Unemployment is calculated with a survey, generally a monthly one. Obviously these surveys are conducted in different languages; the wording may vary as well.

  2. Even the US Bureau of Labor Statistics doesn’t claim that its “Headline Unemployment” figure is a terrific measure of welfare. That’s why they release a monthly report.

http://www.bls.gov/cps/cps_htgm.htm
"Is there only one official definition of unemployment?

Yes, there is only one official definition of unemployment and that was discussed above. However, a number of analysts believe this measure to be too restricted, that it does not adequately capture the breadth of labor market problems. For this reason, economists at BLS developed a set of alternative measures of labor underutilisation. These measures are published every month in the Employment Situation news release. They range from a very limited measure that includes only those who have been unemployed (as officially defined) for 15 weeks or more to a very broad one that includes total unemployed (as officially defined), all marginally attached workers, and all persons employed part time for economic reasons."

All 50 states share the same unemployment rate methodology in the US. Methodologies (I think) vary across Europe.

Yes, the ILO tries to resolve some of these issues. I would assume that the OECD does as well.

Ah, I see the US has an international comparison program as well:
http://www.bls.gov/fls/home.htm
ftp://ftp.bls.gov/pub/special.requests/ForeignLabor/flsjec.txt

There’s more than you probably wanted to read here regarding methodologies used in the UK.

I noted something while reading this document. Very roughly the unemployment figure is 50% higher for males and twice as high for females. I was a first surprised by such a notable difference, but then I vaguely remembered that there are significantly more females working in the EU than in te USA (as for Japan, the breakdown isn’t given , but I even more vaguely remember that Japanese unemployment statistics have some quirk resulting in excluding many females from the unempoyment rate).

However I’m not very sure of it. Could someone confirm or deny that the the rate of women working is higher in the EU?
I’m affraid I can’t remember the way statistics are established in France. But I remember they have been modified twice in my living memory, each time resulting in a sudden drop of the number of people unemployed. The last reform, IIRC, was supposed to bring french statistics closer to the european/international norms (besides nicely reducing the unemployment figure) and if I’m not mistaken resulted in :

-excluding people not actively seeking a job, at least through official channels (the french unemployment agency. People will register with it in order to get unemployment benefits, but once these benefits stop, after two years, they might stop registering or use its services but still seek a job. They won’t be considered as unemployed anymore, though, IINM).

-excluding people having worked for any duration during the month, instead of only people who worked at least half-time.
Concerning differences, I also vaguely remember that US statistics are based on surveys while french ones are based on actual numbers based on people registered with the unemployed agency. But I’m not sure of this, either, ad anyway, it should’t make a significant difference if the survey is large enough and properly done.
I would also note that, for the same country, you could find different figures, one established according to the current rules in the country, and others by some international organization using its own methods. I just googled to find an information and my first result was article discussing a 1% discrepancy between the french official figure and the estimated figure published by a french economical survey organization using other criterias, supposedly closer to international norms (the official figure being at the time of the article 9.6 % and something like 8.6 % according to this organization). The article was too technical for me to understand (discussing the inclusion of lack thereof of “category 3” unemployed or such things) but apparently there were differences regarding people working in temporary agencies, people formerly self-employed, people working free-lance, etc…

I would also note, on the other hand, that people in “pre-retirment” (understand people who are in their 50s and instead of being just laid off, received an early and significantly lowered retirment package). In this case, the french figures would be under-estimated, since these presumably for the most part, accepted this not because they wouldn’t want a job but because they thought they couldn’t find one. And I assume that we could find other different instance of under-estimation. So, statistics are definitely tricky.
I would nevertheless tend to assume that estimated figures published by an international organization using its own criterias (rather than mentionning official figures from each country) would be fairly reliable as a comparison tool, even though they might underestimate unemployment everywhee by not including some categories. Of course, even in this case, there would be a bia if for instance an excluded category is more represented in some country than in another (for instance, for some reason, part-time jobs/ temporary jobs are more common in country X). Nevertheless, the difference in the figures available for the EU and the USA are so large that I strongly doubt they could be simply explained away by some statistical discrepancies.