Echo

Showing posts with label Global labor market. Show all posts
Showing posts with label Global labor market. Show all posts

Unemployment rate in Greece: seriously uncharted territory

Thursday, June 16, 2011

And you wonder why the Greek citizens are pushing back against austerity. Today the National Statistical Service of Greece released its quarterly labour force figures. From today's release (.pdf):

In the 1st Quarter of 2011 the number of employed amounted to 4,194,429 persons while the number of unemployed amounted to 792,601. The unemployment rate was 15.9% compared with 14.2% in the previous quarter, and 11.7% in the corresponding quarter of 2010
I'll first note that the period (.) at the end of 2010 was not in the release, i.e., even the presentation of the data lacks formality. However, the report doesn't need grammatical bells and whistles for one to see that the economy is disintegrating. According to the labour market, debt deflation, 'infernal devaluation' (as Marshall Auerback puts it) is taking its toll on the real economy.

The unemployment rate is (WAY) higher now than it was even before Greece joined the Euro area (2001).

The release also reports the female unemployment rate, which stood at 19.5% in Q1 2011 and up from 15.5% in Q1 2010. Furthermore, the aged 15-29 unemployment rate stood at 30.9% (35.8% for females) in Q1 2011, up from 22.3% in Q1 2010. Key parts of the labour force are being hit harder than others, i.e., young and female vs. males aged 30-44.

You wonder who's rioting? I bet its those younger citizens, 30% of the labour force, that are not working but WANT TO. This is a problem that's not going to disappear with more austerity.

Rebecca Wilder

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Eurozone unemployment rate up in September

Friday, October 29, 2010

Today Eurostat released the September unemployment rate figures for the European Union and the Eurozone. From the release:

The euro area1 (EA16) seasonally-adjusted2 unemployment rate3 was 10.1% in September 2010, compared with [downward revised] 10.0% in August4. It was 9.8% in September 2009. The EU27 unemployment rate was 9.6% in September 2010, unchanged compared with August4. It was 9.3% in September 2009.
The Eurozone unemployment rate has been above the EU (27) unemployment rate by an average 0.45% since the outset of 2007.

Across the Eurozone 16 countries, just 5 have seen their unemployment rates fall since October 2009 (I use the teilm020 table at Eurostat, which limits the time series to this time frame). Note that the unemployment rate in Italy rose over the month (8.1% to 8.3%), so unemployment rate is now unchanged since last year.

In the third quarter (the 3-month average ending in September 2010), the unemployment rate fell across 57% of the sample listed below (a highlight of the EU (27) countries plus Japan and the US). This is good, but the improvement is sluggish.

Rebecca Wilder

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Unemployment rates in Europe: improving ever so slightly

Wednesday, October 27, 2010

Based on internet searches that lead to my website, there's quite a bit of interest regarding unemployment across Europe. Usually, they are led to this post, which is quite dated.

Going forward, I plan to update the European employment trends as they are released on the Eurostat website. Generally this data is about one month lagged from the national statistics offices, since Eurostat harmonises the employment data for seasonalities and adheres to the International Labour Organisation (ILO) recommended definition . The current release is for August 2010; September will be released in two days.

The first notable shift is that the 3-month moving average ending in August of the unemployment rate (the average across three months) fell compared to that ending in May (a sort of proxy of quarters) across 52% of the sample illustrated in the chart below (many EU economies plus Japan and the US). The average percentage drop (not drop in percentage points) was fairly small, though, -3.5% over the two periods (i.e., the green dot hovers around the outside end of the blue bar). For the September release, we will see the quarterly shift in Q3.

In the Eurozone, the Eurozone 16 that is, the shift in the unemployment rate over the last year is down for just 5 economies: Finland, Italy, Germany, Malta, and Austria.

(Note: some of you may wonder why I compare October 2009 to August 2010. Well, that's the way that it is listed in table teilm020 at the Eurostat website. One can get a longer time series, but this is the table I will use going forward.)

So there you have it. The harmonised unemployment rates are generally screaming "weak" in Europe. Going forward, fiscal austerity is expected to directly pressure unemployment rates across those countries that are tightening. Also, a persistent strengthening of the currency (has yet to be determined) may play a role in key exporting industries, like Germany, where exporters hire large pools of labor.

Rebecca Wilder

Update: Click here for the September 2010 report.

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Relative employment is shifting

Friday, July 9, 2010

Today Statistics Canada released impressive June employment figures from its Labour Force Survey (LFS). In case you missed it, the April gains, +109,000 new jobs, set a record. And the June gains, +93,000, were nearly as spectacular. (Note: the unemployment rate for Canada in the chart to the left is through May, not June)

Canada’s labor market bounced back fully and then some. Spanning May 2008, when job loss became the norm as the global credit crunch started to take hold, to December 2009, 259k jobs were lost. However, this year through June 2010, the labour market added back 308k jobs, which is +50k new jobs during the expansion or roughly +500k in "US".

I’m afraid that the US labour market is a far different story. To regain employment lost since June 2008, 6.9 MILLION jobs need to be added back to the employment figures of the current population survey.

I digress. Every time I hear the Canadian statistics, I immediately multiply the statistic by 10 to control for the population differential; thus, +109,000 new jobs in Canada would be equivalent to roughly +1,090,000 in the US, all else equal. In translating the job gains into “U.S”, I understand the magnitude with more clarity – not very different form learning a new language by translating the words in your head.

Is +50k Canadian still equivalent (roughly) to +500k US? The short answer is pretty much – the 2009 US/CAN relative population was just over 9; but in thinking about relative population figures, I stumbled upon a rather remarkable relative employment figure between the US and Canada. The Canadian employment picture has become much much brighter than that in the US over the last decade.

The chart illustrates US employment relative to that in Canada, Germany, and Japan (Germany and Japan are there for comparison). As you can see, employment in the US relative to our neighbor to the North has dropped markedly. There is a secular downward trend in US employment relative to that in Canada.


And it’s not just a population issue. On a population-adjusted basis, the employment figures in Germany, Canada, and Japan are trending upward relative to that in the US - and for Canada, this is a secular trend rather than a cyclical phenomenon.

The US employment picture is fading compared to other developed nations. And remember, Japan and Germany saw near-zero annual population growth spanning the years 2000-2009.

Rebecca Wilder

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Crib notes for G7 unemployment rates

Friday, July 2, 2010

Unemployment rates across the G7 illustrate a broad-based labor recovery. Fantastic - now let's get to the underlying stories.

(Note: The US is the first to release the June 2010 figures. All other unemployment rates, except for the UK, are current as of May 2010.)

Germany, France, and Italy
: Germany's labor market is ostensibly improving, as the unemployment rate continues its descent. However, don't be fooled by these statistics: the German government is subsidizing firms to drop hours in lieu of outright layoffs.

And across the Eurozone, fiscal tightening will drive unemployment rates up; look at what fiscal austerity got Ireland.

The United States: Spencer, as usual, gives his insightful take on the US employment release: not good. The real problem is that the US private sector is sitting on an iceberg of debt; and the only way to avoid the economic pain of large-scale default is by dropping leverage via nominal income (wages) growth.

Workers have NO pricing power. How can they when the employment to population ratio dropped 0.2% to 58.5% in June? Note that 58.5% is consistent with a 1970's-1980's style labor force with fewer females working. Wages are going nowhere until the labor market improves substantially, and the private sector can't do it atop the iceberg of debt. We need the government's help there.

UK: The pace of the labor market deterioration is slowing (not evident in the unemployment rate, which dates to just March, but more evident in the claimant count). However, the unemployment rate is expected to rise as the government's self-imposed austerity measures are put into play. Furthermore, look for weakening labor conditions to push further default amid big household leverage.

Canada: The labor market is strong as illustrated by the marked improvement in the employment figures. Expansionary policy was very likely too expansionary, and the Bank of Canada has initiated its tightening cycle. The economy is hot right now.

Update: A reader notes that April GDP was released a couple of days before this article published. Indeed the economy posted 0% economic gain in April - not hot over the month. However, the jobs picture remains solid on a month to month basis, as May 2010 employment gains were +25,000 and all (in net) in the "full time" category. Being a small-open economy, much of Canada's economic outlook depends on external factors, especially the outlook of the US economy.

Japan: The labor market is weak, as most industries posted job losses in May 2010 (access Japanese labor data here).

Rebecca Wilder

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European Propaganda

Thursday, June 10, 2010

Dan (as in Rdan) sent me a link to this article published at Eurostat, “Impact of the crisis on unemployment has so far been less pronounced in the EU than in the US”. The report states:

The unemployment rate in the EU27 has grown since the first quarter of 2008 as a result of the economic crisis. However, the increase has been smaller than in the US, where the rate has overtaken the EU27 despite having been much lower at the start of the crisis. On a more detailed level, similar patterns in the evolution of unemployment by gender and educational level during the crisis can be observed in the EU27 and the US.
Admittedly, the US unemployment rate has seen a much sharper upward trajectory than that of Europe (see chart below); but that is nothing new. Historically, the US labor market has been more flexible than the European labor market.

Alas, this report is nothing more than European propaganda; and in my view, it was written to assuage the public during a period of heightened political pressure. Pointing out that the US labor market is in worse shape perhaps makes European policymakers “feel” better.

It’s all a mirage, though (see chart below). And furthermore, the European labor market is sure to worsen markedly with fiscal austerity all the rage in Europe.

Back to the point: so why exactly is this propaganda? At 18% of the EU27’s employment in 2009 and 20% of nominal GDP, Germany’s labor policies skew the unemployment rate for the European Union as a whole. From the OECD 2010 Economic survey of Germany:
While the increase in the unemployment rate in the average OECD country was 3 percentage points, the German rate rose by only one half percentage point although the fall in German GDP was above average. This was primarily due to increased flexibility on the firm level that allowed a reduction in labour input by decreasing working hours instead of employment. In addition, the short-time working scheme, whereby the labour office replaces some of the lost income of employees if they work shorter hours, has been used extensively especially as this programme was made more generous during the crisis.
Point: The German government paid firms to hoard workers.

If you take out Germany from the EU27, you get a slightly different picture – one that is not as rosy as the Eurostat report suggests.

In the chart above, I illustrate the reconstructed unemployment rate for the EU27 ex-Germany alongside that for the US and Germany through April 2010 (using the Eurostat data, which is only available through April 2010 on the website although the May unemployment rate has been released).

Clearly, the EU27 unemployment rate is affected by Germany policy. In April the EU27 ex-Germany unemployment rate was 10.3%, which is 0.6% above that of the EU27 as a whole (including Germany). Furthermore, the EU27 ex-Germany unemployment rate surpassed that of the US, rather than the other way around as the report suggests, in January 2010.

Just thought that you should know.

Rebecca Wilder

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Latvia's cost cutting does stand out

Wednesday, March 3, 2010

Latvia recently reported a 12% decline in average wages in Q4 2009 compared to Q4 2008. I was referred to A Fistful of Euros blog, specifically Edward Hugh's points, regarding the economic implications of this decline (later, Morten Hansen followed up).

Edward Hugh asserts that Latvia's progress in raising competitiveness via wage cuts is little indeed. The lat is pegged to the euro, and the economy is in deep recession so work hours are falling. Therefore, the proper measure of competitiveness is hourly wage growth measured in euros. And by this measure, the headline 12% drop measured overstates the nature of Latvia's competitiveness.

I disagree. In order to address relative wage shifts, one must analyze a cross-section of wage data across the European Union rather than that of Latvia alone. And in that respect, Q3 labor costs - hourly labor costs measured in euros - fell at quicker pace than most of the EU countries. Furthermore, the annual trend illustrates much progress in 2009 compared to 2008.

The chart below illustrates the Q3 quarterly growth rate of hourly labor costs across 24 EU countries for which Q3 data is currently available. Latvia's hourly labor costs are worth note, -6.8% over the quarter, or -2.7% over the year.

Although Latvia it is in good company - hourly labor costs declined in 13 of the 24 EU countries - it did see the fourth biggest drop. And compared to to Greece, +4.9% Q/Q, Latvia's efforts certainly stand out.

But Latvia's wage-cutting efforts are not limited to Q3 2009.

The chart above illustrates the growth of hourly labor costs in the first three quarters of 2009 over the same period in 2008 (red) compared to the 2008 annual growth rate (blue), sorted by the 2009 rates. Although Latvia's labor cost cutting efforts are mainly a Q3 story, hourly labor costs have dropped from growing at a 22% annual pace in 2008 to just a 2.8% clip in 2009 (to date).

Latvia's progress has been significant, but the Eurostat data is only 3/4 of the 2009 story. Latvia has released average (gross) wage growth through Q4 in lats, another -3.5% over the quarter.

Latvia's relative economic importance in the European Union pales to that of even Greece, 2007-2008 average 0.9% and 1.9% of EU GDP, respectively. However, compared to key EU sovereigns, Latvia is taking the necessary steps toward improving its export contribution to growth. But more is needed, since exports barely crossed over the 0% threshold into positive Y/Y growth territory in December 2009, +4.4%.

Note: You can follow the IMF updates on Latvia's progress here.

Rebecca Wilder

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Unemployment in Europe: it's not just Spain

Saturday, January 2, 2010

The New York Times published an article about Spain's "soaring" unemployment rate among those aged 15-24. Across Europe and in the US, the unemployment rate for young workers surged in 2009.

Labor reform is needed in Spain, which is the overall theme of the NY Times article; but the article confuses slightly the long-run phenomenon that is Spain's growing structural unemployment versus the cyclical surge in unemployment across Europe:

But the sharp increase among young people is particularly problematic. It has jumped from 17.5 percent three years ago at the height of the boom to the current 42.9 percent.
A three year rise in unemployment is a structural issue in Spain, rather than surging unemployment rates in 2009, which is a cyclical trend.

The chart illustrates the unemployment rate for those aged 15-24 across the European Union when available and for the US (for comparison). The data are sorted by largest % YTD (year to date) rise in the unemployment rate from Ireland (largest gain) to Belgium (smallest gain). Sorting the data this way focuses on the cyclical unemployment rate rather than the structural rate, i.e., the unemployment rate in Spain is starting from a very high base, 32.5% in January 2009.

The rise in Spain's unemployment rate for young workers 15-24 is great, +32.0% since January; but that in Ireland (52.7%), the Czech Republic (47.1%), Denmark (37.9%), Bulgaria (32.8%), and Slovakia (32.2%) are larger in magnitude. Across Europe, younger workers are being forced into unemployment - or schooling, which is common for this cohort.

The data indicate that Spain's unemployment rate is the highest. However, this is an incomplete picture since just 21 out of the 30 (27 EU member plus 3 candidate) countries listed unemployment rates for workers aged 15-24 (you can see the Eurostat labour - labor in American English - market survey data here) in the latest month, October 2009.

Including those countries not listing monthly 15-24 unemployment data, and focusing on the total unemployment rate, Spain's surge is not the strongest nor is its level the highest.

According to the OECD (in the 2009 Economic Outlook No. 86), Spain's labor market problems have likely peaked, while those in other parts of Europe are only getting started (like that in Germany, which could rise significantly in 2010):
the largest part of the total expected increase in unemployment in Spain has already taken place, while in other European countries significant further increase in unemployment is expected going forward.
The Baltic States are taking a beating, Latvia's unemployment rate was already 20.9% in October. And since the Baltic economies are expected to drop (see the European Commission's autumn forecast) the most in 2009 and 2010, a lagged indicator like the unemployment rate is bound to rise further.

Rebecca
Wilder

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