Virtuous cycle

Bartlomiej Owczarek weblog

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Is labour market really getting better?

It is a matter of fact that the unemployment rate, as reported by the Statistical Office, keeps on declining, or even, if you compress the scale like below, seems to be falling like a stone:

Unemployment rate in Poland, 2003-2006

At it doesn’t yet take into account data from July, when the rate is reported to drop further from 16.0% to 15.7%.

What conclusions should follow is a matter of heated discussion and depends on whom you ask. The government will be happy to accept the credit for the positive trend, while the unemployed and casual nay-sayers will point at increasing migration as the main culprit for this statistical miracle.

If you dive into peculiarities of the unemployment rate definition, you might think the latter may have something to it, for the indicator is not exactly intuitive. It is a ratio of number of the unemployed to the total economically active population. Then, the unemployed are defined as non-working people aged 15-74 who are actively looking for job and are in position to accept it within following two weeks, while active population is a sum of employed and unemployed people.

From this you can easily imagine scenario when unemployment rate would fall but little good would come out of it. For example, when unemployed people simply reached retirement age and left the active population pool, lowering unemployment rate but hardly helping the economy anyhow. Same effect, I suspect, could take place in case of migrations, but here the picture is so blurred that the experts do not seem to know any better so I will leave the topic for now.

Nevertheless, to satisfy my curiosity as to the topic question I found it most intuitive to simply take a look at the other side of the picture, that is, the number of people employed. These are the people paying the bills. Also, in contrast to the unemployed and the others, the concept of people employed seems more tangible.

Below the chart on how the number of people working in Poland has been changing:

Employment in Poland, 2003-2006

The image is quite comforting. The number of people working has been increasing significantly, from a yearly average of 13.6m at the end of 2003, to 14.2m at the end of 1Q 2006.

To have a full picture, one more chart below, presenting structure of the population above 15 years old from point of view of economic activity:

Population above 15 years old in Poland, economic activity 2003-2006

Employment ratio (people employed / population 15+) is increasing, but so is the share of the passive population, while share of the unemployed is falling. It would be interesting to take a look at the passive population too – is this number of pensioners, or students that is increasing?


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  1. August 15th, 2006 | 8:23 pm

    its really better – most of young & well educated people have left the country… my turn???

  2. February 27th, 2008 | 10:23 am

    […] made a nice chart about labor market once, maybe I should update it. Posted to […]