Friday, September 30, 2011

Ireland's employment rate: not terrible

Here is a Eurostat map showing EU and other European countries by unemployment rate in June 2011:
Ireland here has an unusually high unemployment rate, at 14.4%. The countries with the worst unemployment rates are:

Spain: 21%
Greece: 16.7%
Latvia: 16.2%
Lithuania: 15.6%
Ireland: 14.4%

The EU average is 9.5%. But there are other ways to measure participation in the workforce, because unemployment rate measures only those seeking work. That means that non-working students, for example, are not considered unemployed, even though they might have chosen study because they had failed to find a job. Likewise, large proportions of women in more traditional societies who work at home appear neither as unemployed nor employed.

So another way to measure labour participation is by looking at the employment rate for adults from 15-64. Below is the Eurostat map for employment rate in 2010:
In this case, Ireland is still below the EU average (64.2%), but not by very much. Where Ireland has the fifth highest unemployment rate, its employment rate is 15th lowest (where lower is worse).

Macedonia: 43.5%
Turkey: 46.3%
Croatia: 54%
Hungary: 55.4%
Malta: 56%
Italy: 56.9%
Lithuania: 57.8%
Spain: 58.6%
Slovakia: 58.8%
Romania: 58.8%
Latvia: 59.3%
Poland: 59.3%
Greece: 59.6%
Bulgaria: 59.7%
Ireland: 60%

So the ratio of workers to non-workers here may not seem as desperate as it initially appears.

I had noticed economist Stefan Karlsson using both employment and unemployment figures on his blog so I asked him for a comment. He adds this observation:
The reason is likely simple, Ireland has a higher labor force participation rate. Since the employment rate is a function of employment relative to population while the unemployment rate is a function of unemployed relative to the number of unemployed and employed and because non-employed who aren't actively seeking jobs aren't considered "unemployed", a higher participation rate can explain a higher level of both unemployment and employment.

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