Normal and broad EU and EA unemployment: not the same story. Two graphs.
Normal unemployment in Europe (EU) is going down. Which is a good thing. Thank you, mister Draghi. And mister Salman bin Abdulaziz Al Saud.
But…. some remarks have to be made and not just the one about the unique and no doubt temporary combination of less austerity (zero, in fact, when my information is correct), low interest rates, low oil prices and a shift of tourism from troubled ´Arab´ countries along the Mediterranean towards ´European´ mediterranean countries and islands (I count Malta as a European island as it is a member of the EU).
First, the fine print:
´Among Member States, rates have been revised by more than 0.1 percentage points (pp) upwards for Lithuania and Portugal (both by 0.4 pp) as well as for Greece and Italy (both by 0.2 pp)´.
Second: a little arithmetic. Since October 2015, a full 52% (more than half) of the decline of the seasonally adjusted number of unemployed in the Euro Area (I´m switching from the EU to the EA here) took place in one country: Spain. Which despite this still has unemployment of over 20%. Most of the rest of this decline took place in Germany plus the Netherlands. Which leaves not much for the rest. Outside the EA Poland does really well. On this blog, I’ve pointed out a strong decline of French unemployment since this summer. This decline has more or less been locked in but it has not been continued.
Third, broad unemployment does not seem to be declining (people available for work but not actively seeking, people with part-time jobs who want to work more and people seeking but not immediately available). See graph 1. Source of the graphs: Eurostat, retrieved 18 February 2016.
It is interesting to give a more detailed view of broad unemployment. Graph 2. It seems as if the decline of unemployment in the individual EA countries is larger than the decline in the entire EA. But this is a trompe l’oeil. I’ve calculated the decline since peak unemployment and it turns out that unemployment has been a kind of a tidal wave which did not reach all countries at the same time (). Unemployment has been declining in Germany since 2009 Q3 (and in Turkey since 2009 Q2) while it is still increasing in Finland… Think also: Romanian construction workers remigrating from Spain to Romania. Which means that we have to look at EA and even EU wide unemployment, too. Mind that at this moment, unemployment in Latvia is, despite a very welcome decline (partly due to massive out-migration), not yet low and in fact increasing again, while it is stalling in Estonia, the upward revision of the monthly Lithuanian data has not yet been incorporated in these quarterly data. For quite a number of countries we see almost no decline of broad unemployment since peak unemployment, which suggests that during upturns the decline of normal unemployment overstates the recovery of the labour market while, during downturns, it understates the crisis. Unemployment is going down. Which is good. But broad unemployment has to go down, too. Which takes even more time than the decline of normal unemployment, it seems.