A closer look at single-digit unemployment
The April unemployment rate, which shows the average of March, April and May, was 9.6 percent. Thus, after nearly two years, we were able to see single digits again in unemployment, a significant decline from the 10.5 percent we saw in May last year.
But how realistic is it to say that we have come a long way in reducing the rate of unemployment only by comparing it with last year’s figures?
Single-year comparisons of limited data - primarily the labor force statistics and unemployment rates - do not produce very healthy results. The unemployment rate in the first months of 2017 was higher than 2016 due to the impact of 2016 and the July 15 coup attempt.
The impact of this coup attempt threw off the balances in the economy and the unemployment rate climbed precipitously toward the end of 2016. The trend, of course, would not have reversed in December 2016 and would have naturally continued into 2017. That is why the unemployment rate was so high in the first quarter of last year and could not be reduced to single digits in later quarters.
Therefore, it would be bad economic analysis to try to find meaning in a comparing of this year’s labor force statistics and unemployment rate to last year’s alone, just as it would be wrong to aver that unemployment has increased dramatically by comparing some of the months of 2016 with 2015. Need to look at the average A better approach would be to benchmark and compare to other years. That’s why we have compared the unemployment rate of 2018 to the period of 2011-2017. The reason we took 2011 as the starting point is that 2008 and 2009 were the years of the global crisis and unemployment was so high that the effects of this crisis persisted into 2010 as well. Beginning in 2011 eliminates these distortions.
The result is that over the first four months of this year we have seen no difference in the trend compared to the previous years. In fact, the 2011-2017 average unemployment rate in January and March was exactly the same in every respect to this year’s unemployment rate
We are pleased to be releasing a single digit unemployment rate in April this year, after a long time, but the rate for 2011-2017 was 9.2 percent, well below the 9.6 percent of this year. It is useful to keep this fact in mind.
When the May data, which shows the average of April, May and June, are released next month, we will see that the unemployment rate will be lower than 9.6 percent. This is not a prophecy, of course, it is a seasonal trend. With the increase in employment in the agricultural and tourism sectors, the lowest unemployment rate for any year is normally reached in May. Then the rise starts again and continues until January.