A situation which exists when members of the labour force wish to work but cannot obtain a job. It is therefore used in the sense of ‘involuntary’ unemployment, rather than the voluntary decision on the part of someone to choose leisure rather than work. Most post-war governments up until the mid 1970s took it as a prime object of policy to keep aggregate national unemployment at a minimum. The rapid acceleration in the rate of inflation through the 1970s led however to increased emphasis on control of inflation, and rates of unemployment have risen sharply in the U.K. and throughout the O.E.C.D. economies. In a general sense unemployment represents a waste of resources: the economy is producing below its potential capacity and so the total output of goods and services is less than it could be – everyone is worse off than they need be. The burden of unemployment tends also not to be equally shared: it bears particularly heavily on youth and ethnic minorities and particular localities and regions. It is arguable that high rates of unemployment create greater social tensions and stresses than high rates of inflation.
Reference: The Penguin Business Dictionary, 3rd edt.