Registered unemployment drops after slight a seasonal rise

After the usual slight rise at the beginning of the year caused by seasonal factors, in March unemployment once again dropped (by 0.1 pp., to 11.7% of the economically active population). At least during the next six months, the number of the unemployed is expected to go down, with the level of registered unemployment approaching a one-digit figure.  

It must be borne in mind, that the census data have yet to be reflected in the registered unemployment statistics. Namely, for registered unemployment calculations, the overestimated number of the economically active population is used. Thus the registered unemployment level based on census data  could be about 2 percentage points (p.p.) higher.

It is expected that the new census results will have an impact on the regional distribution of unemployment. The largest corrections will affect Latgale region with the widest gap between the census data and those of the population register (both because of the internal and international migration). For example, our provisionary calculations indicate that registered unemployment is higher by 1.3 p.p. in Riga, 2.5 p.p. in Zemgale, 2.9 p.p. in Vidzeme and Kurzeme, and 5.7 p.p. in Latgale.[1]

This correction applies only to registered unemployment and not to actual unemployment or the jobseekers rate. Within the framework of the survey of labour force by the Central Statistical Bureau (CSB), the jobseekers rate is calculated by surveying a sample of households, and the changes in the number of population have no impact on it. Since the beginning of  2010 to the end of 2011, jobseekers rate has dropped from 20.5% to 14.3% of the economically active population. This drop has taken place on account of growing employment, which is observed in all data sources (the number of employees calculated by the State Revenue Service: increase by 41.6 thousand.; CSB business survey – by 52.1 thousand; Eurostat national accounts data – by 69.8 thousand; CSB labour force survey data – by 70.5 thousand). The latest Eurostat report confirms the increase in employment in Latvia as one of the most rapid in the EU.

The unemployed status can be obtained not only by jobseekers but also by economically non-active population (the status serves as confirmation of a lack of a job, allowing the recipient to apply to social benefits). In this case, by plotting the number of the registered unemployed only against the economically active population, we obtain a rather high unemployment rate, which does not however reflects the availability of labour. . In Latgale and Vidzeme, e.g., even the official registered unemployment level exceeds the jobseekers rate obtained in the CSB labour survey. In terms of labour market policies, a clear vision of fostering the effectiveness of active employment policy measures is necessary. A plan earmarked specially for Latgale should be developed with a clear aim: to help the region get out of the prolonged "bad equilibrium" where there is a lack of both the high-grade vacancies in the private sector and the respective labour.

Registered unemployment rate in March 2012 (% of economically active population)