The unemployment rate is the proportion of the labor force that is unemployed. The labor force is the working population—that is, those citizens of working age. The population as a whole is comprised of the working population (the labor force) and those who are too young (children), too old (the elderly), or otherwise choose not to work. Those who are not fully capable (people with disablilities) are, in some countries, also not counted as part of the labor force. Also, those who are not actively seeking work, or are economically inactive, might also not be counted. Typically, governments try to understate unemployment in their reported statistics, since high unemployment is a sign of a nation in economic trouble.
In this example, the table indicates that the labor force is 150 million in Year 1, with the number unemployed being 7 million. Therefore, the unemployment rate in Year 1 is 7/150 × 100 = 4.67%. Similarly, the unemployment rate in Year 2 is 7.2/160 x 100 = 4.5%. The rate decreases from Year 1 to Year 2 even though there are 0.2 million more unemployed people, since the labor force increases more (by 10 million people).
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