Insufficient education is the main unemployment risk factor

In line with our forecasts, unemployment is continuing to drop slowly. In the fourth quarter of 2015, 9.8% of the economically active population were looking for work. That is a year-on-year drop of 0.4 percentage points (and a 0.1 percentage point rise quarter-on-quarter).

Education level remains one of the main factors determining unemployment. It is worth remembering as we listen to the refrain repeated by the "talking heads" year after year about the supposed overproduction of university students. Among those with the much criticized higher education, unemployment hovers around 5%. Even though entrepreneurs in some sectors are bemoaning the lack of labour force in the segment of those with professional and vocational education, unemployment is almost two times higher in it [1]. The compensation level is also substantially higher among those with higher education. In view of all this, an artificial redistribution of students from higher educational establishments to vocational ones would be a rather dubious measure. Instead, educational reforms should focus on a rise in quality in all levels of education and thematic spheres, particularly because serious development is necessary in all three – higher, professional and vocational kinds of education.

The drop in unemployment is expected to drop, but at an increasingly slower rate. Unemployment will remain close to its natural level and the situation of macroeconomic balance will remain. Crisis is behind us and thus it is no longer possible to sustainably promote economic growth and lower unemployment with stimulating demand. The future success of the income convergence and unemployment reduction process will greatly depend on the implementation of structural reforms.