The idea that a certain percentage of the unemployed work force have no skills that can be used productively by employers.

Structural Unemployment and Frictional unemployment account for approximately 4.5% of the unemployed work force, and is excluded from calculating Potential GDP. Therefore, if there is 7% of the work force unemployed at a particular time, roughly 4.5 percentage points of that 7% is either frictionally or structurally unemployed and not truly available to work. Therefore, the economy is actually operating at about 2% less than full employment potential.