UK Unemployment History and Natural Rate of Unemployment

UK unemployment was stable after the Second World War upon till 1970s; this had been because of the government’s promise of full employment after the war. At one time it got as low as 2% which has never seen since. Also at that time there were not as many women seeking work as they tended to stay at home and be housewives. This trend has changed totally as most families need both partners working to afford the mortgages and lifestyle they want. (Politics.co.uk, 2009)
The problem started in the 1970s with the high rise in fuel prices. There were two energy crisis in 1970s, one in 1972 and another in 1979, between them they caused a situation not known before “stagflation”. This was unusual situation of rising inflation but also unemployment. A situation that according to Philips Curve was not possible. The miners unions at the time were very powerful and strikes were not infrequent. The problem of powerful unions was that they kept wages high, making it hard for companies to compete. (Economics help, 2009)
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