HGK: The period of intense seasonal employment and declining unemployment has ended

It can be predicted with great certainty that with August, this year’s period of seasonal employment growth and declining unemployment has ended – no year has recorded such a trend extending into September. Namely, more intensive employment ends with the conclusion of the main tourist season or more intensive employment in tourism and related activities: in August, the number of employees in legal entities in the “Accommodation and Food Service Activities” increased by 2,600, which is more than half less than in the previous three months.

The last month of favorable trends in the labor market was somewhat better than the same month last year – the number of employed increased (it fell in August last year), while the number of unemployed decreased three times more. However, this mismatch in the dynamics of employment and unemployment also produces a stronger reduction in the working-age population and confirms that the influences on unemployment are also found outside the sphere of employment, such as negative demographic trends and increased economic emigration. In such a context, data on the dynamic reduction of unemployment become less relevant as an indicator of the quality of labor market recovery.

When we compare the current state of certain contingents in the labor market with their state in August 2008, a certain shift is visible. Namely, it is evident that in August 2008, a lower unemployment rate was achieved with a higher number of unemployed persons because there was also far more working-age population. There were significantly fewer retirees and significantly more insured persons, and their ratio was considerably more favorable: now 17 fewer insured persons pay pension insurance for every 100 retirees.

Also, when assessing the Croatian labor market, it is necessary to place it in the context of the EU. Thus, the seasonally adjusted unemployment rate published today (according to the Labor Force Survey) still positions Croatia in the third worst place with a general rate of 12.9% (4.3 percentage points above the EU average) and in the fourth worst place according to the youth unemployment rate (data for June 31.7%, which is 13 percentage points above the EU average), although both rates are declining.

Thus, the trend of employment and unemployment movement is in a good direction, but its slope is too mild in the context of the need to compensate for a six-year crisis, and at the same time, the relationship of their dynamics is unfavorable. At the same time, a quality recovery of the labor market requires a context of more dynamic economic growth, alignment of the characteristics of labor supply and demand, and a strategic approach to demographic and emigration issues (especially of highly educated labor force).

– Although the trends in the sphere of employment and unemployment, after eight months, are somewhat more favorable than last year, the state of the labor market remains among the worst in the European Union, which primarily implies a high unemployment rate, especially among youth, and a reduction in the active population, said Zvonimir Savić, director of the Sector for Financial Institutions, Business Information, and Economic Analysis of HGK.