Real EU unemployment rate at 10.2%+4.1%+4.7%: Eurostat Update

Marianne Thyssen, Member of the European Commission in charge of Employment, Social Affairs, Skills and Labor Mobility, gave a press conference to present the EC proposed guidance to member states to better help long-term unemployed return to work. Date: 17/09/2015. Location: Brussels - EC/Berlaymont. © European Union, 2015 / Source: EC - Audiovisual Service / Photo: Georges Boulougouris.

Marianne Thyssen, Member of the European Commission in charge of Employment, Social Affairs, Skills and Labor Mobility, gave a press conference to present the EC proposed guidance to member states to better help long-term unemployed return to work. Date: 17/09/2015. Location: Brussels – EC/Berlaymont. © European Union, 2015 / Source: EC – Audiovisual Service / Photo: Georges Boulougouris.

This newspaper has been closely following the evolution of real unemployment over the past few years, on the base of Eurostat statistics. It has proved that real unemployment is much higher than the official rates. In January 2014 the European Sting, using Eurostat data, found that, in the third quarter of 2013 real unemployment was double than the official percentage. Last week, Eurostat, the EU statistical service, released the detailed results of its 2015 Labour Force Survey. Again, Eurostat found that apart from the 23 million of the ‘officially’ unemployed EU citizens, there are millions more who could be counted as unemployed.

The reason for this discrepancy is that the EU follows the UN’s International Labour Organisation definition of unemployment, which excludes from been counted as jobless certain forms of idleness. There are three forms of joblessness which do not count as unemployment, according to this UN-ILO definition. Firstly, it’s the part-timers who want to work full-time but cannot find an appropriate job. Then, there are the jobless persons seeking a job but not being immediately available for work, and lastly, the jobless who are available for work, but are not seeking a job.

Unemployed part-timers?

Now let’s dig into the data that Eurostat released last week for 2015. For one thing, the EU’s statistical service found that, last year, “Among the population aged 15 to 74 in the European Union (EU), 220 million were employed, 23 million were unemployed and 136 million were economically inactive”. However, among the 220 million of employed persons a rough percentage of 20% worked part-time (44.7 million). Of those part-timers a round number of 10 million persons wanted to work more, but couldn’t find a full time job. Understandably, those 10 million people are at least underemployed.

However, they do not differ largely from the unemployed, because if they could find a normal full time job, they would have got it. In essence, then, and from a macroeconomic point of view, they can be classified in the unemployment region of the labor market. Eurostat didn’t release the information about what percentage of the total labor force which those 10 million of ‘underemployed’ part-timers represent. However, ‘The European Sting’ indirectly estimated it at 4.1%. The survey reckons though that they represent 4.6% of total employment. Understandably, total employment is a smaller figure than the total labor force.

Seeking a job but not being available or don’t seek at all

Now let’s pass on to the other two categories of unemployment. In this category belong those who are seeking a job but are not immediately available plus those who are available but are not seeking a job. The former category possibly includes students towards the end of their studies or training. The latter group is probably made up mainly by women and older men who are tired of looking for a job without success and have settled down in one way or another. Eurostat calls them collectively as ‘potential additional labor force’. This definition though refers directly to straightforward unemployment.

According to Eurostat, those last two categories of unemployed are estimated to be 11.44 million people. The statistical service also released their percentage of the total labor force at 4.7%. At this point, it must be reminded that Eurostat didn’t directly release the percentage of the total labor force of the part-timers who want to work more. It seems then that the EU statistical service may consider the part-timers as employed persons and the other two categories as unmistakably unemployed.

What does Eurostat think?

The idea behind this assumption about what the EU statisticians think, is that for the part-timers Eurostat doesn’t directly give us their percentage on the total labor force, so as to discourage media from outright adding it to the official unemployment percentages. It does however supply us with the percentage regarding those seeking employment but not being available and those who are available but not seeking at 4.7%. In short, Eurostat tells us that this 4.7% can be outright added to the official unemployment rates, while the statisticians are not sure if the part-timers who want to work more, can also be added to the official unemployment rates, in order to arrive at the real rate.

In a statistical or macroeconomic debate though, it can be very easily defended, that all those three categories must be added to the real rate, in order to calculate the real unemployment percentage of the total labor force. A deficit in job offers clearly means unemployment in any economic theory. In short, the percentages of 4.1% and 4.7% have to be added to the official March 2016 unemployment rate of 10.2%. This would add up to a pretty good estimate of the real unemployment at around 19%.

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