structural unemployment

The labour survey data published by the Central Statistical Department today confirm that any worries that unemployment may not be shrinking are unfounded. The percentage of jobseekers in the third quarter of 2012 was 13.5% of the economically active population, which is the lowest indicator since the end of 2008.

Latvia is gradually losing its front-runner position in terms of EU unemployment figures. One-and-a-half years ago Latvia had the highest unemployment rate in the EU, but now, according to the results of the third quarter of 2011, it lags behind Spain, Greece, Lithuania, and Ireland.  It must also be noted that in Spain, Greece and Ireland unemployment keeps growing whereas in Latvia it has been dropping for a year and a half.

After falling rapidly since the last spring, it is not surprisingly that  the pace of unemployment drophas moderated at the beginning of this year.Central Statistical Agency (CSP) Labour Force Survey (LFS) points to a 0.3 percentage points drop in the jobseekers rate within a quarter, reaching 16.6% of the economically active population in the first quarter of 2011.

As forecast, the proportion of jobseekers in the fourth quarter of 2010 continued to shrink – to 16.9% of the economically active population. As a result of the gradual economic recovery, a drop in unemployment was observed for a third consecutive quarter and in the final quarter of 2010 – as before -- amounted to 1.1 percentage points.

Unemployment reached a record high in Latvia at the beginning of 2010 and has been on a downward trend since then. Nevertheless, unemployment problems are far from being resolved.  The unemployment rate remains elevated; moreover, concept of structural unemployment is increasingly mentioned in public debates.  What risks does structural unemployment inherit and can it be effectively grappled with? These issues are in the centre of discussions in Delfi columns.

Frictional unemployment