Good news from the labor market front in Portugal. The unemployment rate in 3Q-2013 is estimated to be 15.6%. Still high but lower than expected. As the number of unemployed has decreased this is unambiguously good news both for people and for public finances. Nevertheless we need to stay objective and fully accept what the unemployment rate measures. Portugal labor force and employment have been shrinking since last year (but not in the last quarter). As an illustration consider the following thought exercise: what would be the unemployment rate if the labor force did not decrease an stayed at her 3Q-2012 value of 5,527.2 million persons. (click to enlarge)
I understand the point you want to make, but it's arbitrary to assume that the number of jobs in the economy would have been the same if the labor force had stayed constant. For example, it is plausible that there would have been more downward pressure on wages, leading to more job creation.
ReplyDeleteFollowing your reasoning: to have more pressure you would have needed higher unemployment rate. So first, higher unemployment rate, second, job creation, third lower unemployment rate. The question is where the labor force went? And the implications. Lower labor force, lower unemployment rate (good) but less pressure on wages, less employment creation (employment went down).
DeleteMigration? From the point of view of European integration and the sustainability of the euro, this level of labor mobility should be good news.
DeleteGood point, migration has been large in 2012 (around 50k permanent and 60k temporary). If similar numbers apply for 2013 that would be around 2% of labor force. That is the right order of magnitude. Will try to check how many went out of the labor force into inactivity.
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ReplyDeleteMixture of migration (2013 vs 2012) and sazonality (3Q 2013 vs 2Q 2013), right?
ReplyDeleteNot much to celebrate for now, it seems.
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