When trying to understand unemployment is it important to understand what the labour force is. The labour force is the portion of the population within in a country that is employed in the formal sector or people who wish to be employed. People who do not wish to have a job, or are not actively looking are not considered to be part of the labour force and are therefore are not included in any unemployment figures.
Because of this difference between the labour force and unemployment it is possible for unemployment to rise even if the number of people employed also rises. This can happen if jobs are being created (causing unemployment to initially fall) but at the same time the number of people entering the labour force rises quicker than jobs are created, thus causing an increasing in the unemployment rate.
Immigration, supply side reforms, an increase in the national minimum wage (NMW), an increase in the equilibrium wage, a population boom and higher optimism are all reasons for people to enter the labour force.
Immigration is perhaps the largest determinant of changes in the labour force. Mass emigration (perhaps as a result of poor prospects at home) can lead to a fall in the labour force and mean there are fewer people available to work, ceteris paribus, this would lead to a fall in the unemployment rate as there are fewer people looking for work. Conversely, mass immigration can lead to a rise in the size of the labour force and hence cause unemployment to rise ceteris paribus.
An increase/decrease in the NMW would affect the labour force (LF) as it may help to determine the equilibrium wage (see below on NMW), if the equilibrium wage is too low then people may exit the LF as the wage isn't high enough for them to want to work, alternatively a high equilibrium wage may entice people back into the LF (or result in immigration causing the same effect).
A population boom can lead to an increase in the LF, but this would take many years to follow through, and hence may not be considered that significant. However the demographics of a country can affect the size of the LF over a long period of time. Some countries (e.g. Germany and Japan) are facing an issue of a high elderly population who will soon be exiting the LF, but because there are few children there wont be enough people to replace the elderly in the LF, meaning there is a higher dependency rate.
Optimism can also affect the number of the people in the LF; during a recession some workers who are unemployed may become disillusioned with the labour market and choose to exit the LF; during boom times people who previously didn't want to work may choose to re-enter the LF.
Finally, supply side policies can affect the size of the LF for a number of reasons. The rate of tax can affect whether a person decides to work or not, if tax rates are tremendously high then it makes no sense for some people to be looking for work. Similarly the value of benefits may also affect whether a person decides to enter or exit the LF - in certain countries it may be more economically beneficial (personally) for a person to live on benefits because the equilibrium wage is lower than the value of government benefits.
