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Jobless stats don't tell whole story

While the government searches for an answer to unemployment, which rose to a record-breaking 20.1% at the end of 1999, analysts have taken a deeper look into jobless figures and have found that the unemployment statistics used by the government are misleading, and cost taxpayers billions of crowns annually.
Unemployment data in Slovakia are measured by both the National Labour Bureau and the Statistical Office. However, labour bureau figures (used for official purposes by the government) consistently differ from those provided by the Statistics Office, the preferred source of economic analysts. The difference between these figures, according to pundits, reflects the number of people who are actually working yet at the same time collecting social benefits handouts.

While the government searches for an answer to unemployment, which rose to a record-breaking 20.1% at the end of 1999, analysts have taken a deeper look into jobless figures and have found that the unemployment statistics used by the government are misleading, and cost taxpayers billions of crowns annually.

Unemployment data in Slovakia are measured by both the National Labour Bureau and the Statistical Office. However, labour bureau figures (used for official purposes by the government) consistently differ from those provided by the Statistics Office, the preferred source of economic analysts. The difference between these figures, according to pundits, reflects the number of people who are actually working yet at the same time collecting social benefits handouts.

"When you compare the rates between the labour bureau and the statistics office, you can see that there is around a 2% difference," said Ján Tóth, an analyst for the Dutch investment bank ING Barings. "So, if you read in the paper that unemployment is 20.1% in December, you can deduct 2% and get a more realistic idea of what it actually is."

The difference between the two figures reflects variations in the way the data is collected. The labour bureau gathers its numbers from the amount of people actually registered at the unemployment office, while the statistics office collects data via an anonymous quarterly survey.

Tóth said that the discrepancy represented about 65,000 people nation-wide, and estimated that people receiving unemployment insurance while actually working cost the government 5.7 billion crowns ($138 million) annually, 0.7% of Slovakia's GDP.

"It's very costly for people to be claiming to be unemployed who actually are not," he said. "You have to pay their unemployment benefits, but that's not the whole story. Those people also do not pay social insurance, so the state has to pay them at the taxpayers' expense," Tóth said.

Martin Barto, head of strategy at the state-owned bank SLSP, saw the problem as of utmost importance in the government's quest to straighten out the economy. There is no one simple solution, he said, as the problem needs to be fought on several levels such as increasing transparency in the economy, creating more effective laws and creating a more attractive environment for foreign investors.

"I think this is a very important problem. It needs to be addressed as soon as possible because devising a suitable programme will take time," Barto said.

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