Discouraged job-seekers are persons of working age who during a specified reference period were without work and available for work, but did not look for work in the recent past because they view job opportunities as limited. For example, they may believe that in an economic environment characterized by large-scale dismissals there are no jobs available, there are none for which they would qualify, or they just have given up hope of finding employment.
Discouragement regarding current job opportunities may also result in decisions to postpone labor market entry, in particular by youth who may extend their education or training beyond their initial targets, or to withdraw from the labor force and retire, especially by older workers that grow pessimistic about their actual chances of being offered a job.
Using the standard definition of unemployment, which includes "seeking work" as one criterion, discouraged persons are classified as outside the labor force. An increasing number of workers who lose their jobs and become discouraged would therefore result in a decreasing labor force participation rate. These facts underscore the need to look at other labor market indicators in conjunction with unemployment rates to adequately assess labor market.
Sources: ILO (International Labour Organisation): Key Indicators of the Labour Market, 9th edition. Global Employment Trends, 2011, Geneva, ILO, 2011.