Labour market recovery not on paper alone

A rapid drop in registered unemployment is continuing for a second consecutive month, with registered unemployment down 0.7 percentage points (to 13.2% of the economically active population) in May. Unemployment is thus contracting faster than last year and also other post-crisis periods after the restoration of national independence. 

A rapid drop in unemployment in spring and summer months is in part determined by seasonal work, whereas the impact of fundamental factors is reflected by data over a longer period of time. Compared to its historic high in March of 2010, registered unemployment has dropped by 4.1 percentage points, with the number of unemployed contracting by almost one fourth (to 149.6 thousand), i.e. under 150 thousand for the first time in twenty months. 

The number of people newly granted unemployed status hovered in April and May around 9 thousand a month, which is close to the average of 2004 –2005. Thus the period of 2.5 years when the labour market was characterized by cutting the number of employees or layoffs can be considered to have come to an end, and the rotation of personnel currently corresponds to the historical average. 

In the registers of State Employment Agency (NVA) there were 3.7 thousand vacancies at the end of May, the highest indicator in the last 30 months. In spring of 2011, for the first time since the labour shortage period (in the years of overheating economy), employers' information to NVA indicates an excess of the planned number of hires over the planned number of dismissals. This is a reflection both of demand for labour and worries of entrepreneurs that in a situation of dropping unemployment they may not be able to get the number of employees necessary for expansion; therefore enterprises turn to NVA early in order to find specialists or have time to train them. 

It must be noted that a drop in registered unemployment is taking place alongside a drop in actual unemployment as evidenced by the data of labour survey conducted by the Central Statistical Bureau (CSP). The number of employed is growing according to all available sources (CSP labour survey, enterprise survey, national accounts, data of the State Revenue Service). That serves to relieve worry that recovery in the labour market is taking place merely on paper and that the number of unemployed is dropping in NVA registers only because jobseekers have ceased registering with NVA.