Jobless rate dropped over 2013

SLOVAKIA’S jobless rate shrank by nearly one percentage point in 2013, dropping to a still high 13.5 percent in December. Observers ascribe the drop to a moderate revival of the economy, job-supporting programmes and cleaning the job seeker registry. Prime Minister Robert Fico, now running for president, joined Labour Minister Ján Richter in an attempt to capitalise on the news.

SLOVAKIA’S jobless rate shrank by nearly one percentage point in 2013, dropping to a still high 13.5 percent in December. Observers ascribe the drop to a moderate revival of the economy, job-supporting programmes and cleaning the job seeker registry. Prime Minister Robert Fico, now running for president, joined Labour Minister Ján Richter in an attempt to capitalise on the news.

“At the economic growth rate of 0.6 percent [in 2013] we have lower unemployment than it was in 2011 during the reign of the rightist government [of Iveta Radičová], when we had a significantly more positive economic growth of 3.6 percent,” Fico said at the January 20 press conference. In December 2011 the jobless rate was at 13.59 percent, according to the Central Office of Labour, Social Affairs and Family (ÚPSVaR).

Richter informed that they managed to decrease the number of the unemployed in the risky categories – young people, those over the age of 50 and the long-term unemployed. The number of young job seekers up to 29 years-old fell by about 17,000, the unemployed among those 50-plus shrank by 4,000. Among the long-term unemployed, 48,333 people found jobs, the SITA newswire reported citing Richter.
Fico argues government work projects are behind the drop in unemployment. He attributed the drop in the youth jobless rate to a €70 million project that helped 12,000 people under 29 get a job last year. He added that another €200 million, €150 of which is to come from EU funds, should help to place other young people in the labour market in 2014 and 2015. The ambition of the government is to drop unemployment to the eurozone average by 2016 – currently at about 12 percent.

The jobless rate, calculated by ÚPSVaR based on unemployed who are ready to take a job, the so-called registered unemployment rate, amounted to 13.5 percent in December, a decrease by 0.94 percentage points compared with December 2012. Unemployment fell in all the regions except Bratislava, where it increased by 0.45 percentage points to 6.17 percent, though this is still the lowest rate of any region in the country.

Ľubomír Koršňák, analyst with UniCredit Bank Czech Republic and Slovakia, sees the composition of Bratislava Region’s labour market behind the increase when, contrary to the rest of the country, most Bratislavans work in services, a sector which suffered from a drop in consumption and is the slowest to bounce back from the years of stagnant economic growth.

“Industry always starts up the earliest and only afterwards other sectors, like services,” said Koršňák, as cited by the Hospodárske Noviny daily.

Boris Fojtík, an analyst with Tatra Banka, also notes the headquarters of large companies sitting in Bratislava trimming staff. Unlike in other regions, Bratislava’s low jobless rate means that it is ineligible to tap certain categories of EU funds.

Banská Bystrica Region registered the biggest drop in unemployment, down 2.55 points to 18.26 percent. While once the region with the highest unemployment rate, it now trails Prešov’s 19.35 percent, which was down by 1.31 points from the year before. Košice was third highest at 17.23 percent, down 2.35 points, followed by Nitra with 12.52 percent, down by 1.56 points. The jobless rate in Žilina decreased by 0.28 points to 12.51 percent. The rate in Trenčín shrank by 0.15 points to 10.74 percent. Unemployment in Trnava Region decreased by 0.27 points to 9.16 percent.

The registered unemployment rate remained unchanged in December, as compared with November. Job offices registered 364,225 job seekers ready to take a job in December, a decrease of eight persons compared with November. The jobless rate drop of 0.94 percentage points as compared with December 2012 amounted to 25,886 more people with jobs. The jobless rate calculated from the total number of job seekers shrank by 0.03 percentage points to 14.78 percent in December as compared to November, and dropped 0.98 percentage points on an annualised basis.

December’s developments contradicted analysts’ expectations, who originally expected that unemployment would increase because of the end of seasonal work.

“The December jobless rate did not increase for the first time since 2007,” Koršňák wrote in his memo. “Also, the moderate winter, which extended the season, especially to construction companies, might have influenced the better December figures.”

Ľudovít Kaník, a member of parliament for the opposition Slovak Democratic and Christian Union (SDKÚ), perceived the joint press conference of Richter and Fico as part of Fico’s presidential election campaign. According to him, a moderate winter increase in unemployment is a completely natural phenomenon in a normal and healthy economy and sees administrative interventions, including squeezing people out from the job seekers registers, as behind the stagnation and drop in unemployment.

Martin Baláž of Slovenská Sporiteľňa pointed out in the bank’s memo that a portion of the 0.9 point drop in the December jobless rate in annualised terms can be attributed to a change in methodology when calculating the jobless rate. Based on this, job seekers doing small municipal work were excluded from the group of job seekers immediately available to take a job. He calculated that this comprised 0.2 percentage points of the drop.

Baláž further highlighted that apart from unemployment rates, total employment in Slovakia has decreased – at least through 2013’s first three quarters. It fell by 84,000 people to 2.33 million during the third quarter of 2013 compared with the same period of the previous year. He links a larger number of people excluded from job offices’ registers for reasons other than finding a job with the drop in the unemployment rate of job seekers ready to take jobs immediately.

“However a drop in the number of the employed is visible in the whole eurozone, in which over one million people lost a job over the last year,” Baláž wrote.

The seasonally adjusted jobless rate in the eurozone was 12.1 percent in December, a level maintained since April. Greece and Spain continue to report the highest jobless rates, 27.4 percent and 26.7 percent respectively, while it is the lowest in Austria and Germany, 4.8 percent and 7.2 percent, respectively.

Luboš Sirota, the general director of McRoy Group, attributes the development in 2013 to a moderate revival of the labour market, government subsidised programmes and increased efforts of job offices to clean the registers from uncooperative job seekers. He also attributes late 2012’s poorer numbers (when compared to those of late 2013) to hikes in income and payroll taxes and changes in the Labour Code. Sirota expects positive developments to continue.

“We expect another gradual revival of the economy, which might head towards a moderate generation of jobs,” Sirota said, as cited by SITA. “Employment may increase by 1 percent. We also do not expect any additional restrictive measures by the state. The current political situation will break them down too, specifically the candidacy of Robert Fico for president.”

Baláž of SLSP does not expect a significant improvement in jobless numbers in 2014.

“The economic growth will be still too slow to generate new jobs, while these may arrive only along with the real growth of more than 3 percent,” Baláž wrote. “Thus it is probable that unemployment in Slovakia will decrease more extensively only in 2015. Based on our estimates the jobless rate might increase to 14.8 percent by the end of 2014.”

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