As defined by the International Labour Organization, "unemployed workers" are those who are currently not working but are willing and able to work for pay, currently available to work, and have actively searched for work.
So what does that definition imply? If a bunch of people decide to give up the search then guess what! The number of "unemployed workers" decreases hence the "unemployment rate" drops. How wonderful! Now we can cure all unemployment by giving all those who are seeking for a job a nice share of welfare so they would stop seeking. Eureka
The bottom line is that many formulas like these are very misleading and do not reflect the actual condition of the economy. Critical decisions are made by government officials and top executives basing on these misleading numbers. Resulting only to cascade and magnify the incorrect information.
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