Flash comment: Lithuania - May 18, 2012: Unemployment increased temporary in the first quarter of this year

1. Flash comment: Lithuania
Economic commentary by Economic Research Department May 18, 2012
Unemployment increased temporary in the first quarter of this year
Employed, unemployed persons and
activity rate of the population Given global uncertainty and seasonality job creation is sluggish
aged 15–64 despite the continuing economic growth and enterprise revival. In
the first quarter of this year unemployment rate increased to 14.5%
1.8 78%
from 13.9% in the forth quarter of 2011. Compared with the same
1.5 75%
period last year unemployment is lower by 2.7 percentage points.
1.2 72%
0.9 69% Over the quarter the labour force decreased by 0.3% compared
0.6 66%
with 4Q 2011. The number of employed persons was 1% less than
a quarter ago and increased by 1.9% in annual terms. The highest
0.3 63%
number of employed persons was lost by construction (9.8% qoq)
0.0 60%
and agriculture (12%) enterprises, while industrial companies
2007 2008 2009 2010 2011 2012
Unem ployed pers ons , m (ls)
increased the number of employed (1.7%).
Employed persons , m (ls)
Activity rate of the population aged 15–64 (rs) The number of unemployed grew by 4% compared with the quarter
Source: Statistics Lithuania before, but was 16.8% lower than in the same period last year. The
major share of the unemployed (50.5%) was persons who had lost
Unemployment rate, % their jobs one year or more before. This long-term unemployment
rate increased to 7.3% or by 0.2 percentage points compared with
40%
35% the last quarter in 2011 and remains at uncomfortably high level.
30% Furthermore, in comparison to 4Q 2011, number of inactive
25% persons who lost hope of finding a job has marginally declined.
20%
15% The good point that the youth (aged 15-24) unemployment level
10%
dropped to 28.7% - the lowest level in three years. However, only
5%
0% 8% of people aged 15-24 are actually unemployed, since big part of
2007 2008 2009 2010 2011 2012 the youth are studying and are inactive in a job market. Only less
Unemployment rate than 30% of youth in Lithuania are active in a labour market.
The youth (aged 15–24) unem ployment rate
Long-term unem ployment rate
Source: Statistics Lithuania Outlook
In our opinion the increase of unemployment level is temporary as
Employment expectations for the next 2- enterprises are still trying to increase efficiency of their activities. It
3 months, pts will diminish slowly starting the next quarter but remain high due to
40 persistently high activity rate of the population aged 15-64 (71.6%).
Labour activity will continue to be on high level also due rising
20
retirement age starting this year.
0
Employment expectations of companies in manufacturing,
-20 construction and services were still positive and even increased
-40 (excl. retail trade) in April meaning that there are more companies
planning to increase number of employees than those planning
-60 Indus try Construction layoffs. Consumers’ unemployment expectations have decreased
Retail Services
-80 during the same period, reflecting more safety of existing jobs.
2010 2011 2012
Source: Statistics Lithuania
We forecast unemployment rate will be at 13% on average this
year. A lower unemployment will have small positive impact on
wages as well as consumption.
There is an upside risk that unemployment could be higher than our
current forecast as enterprises may remain cautious to employ new
staff due to the uncertainty in the euro area and possible negative
impact on Lithuania’s economy. Thus increasing number of
employees might be postponed. New job creation will depend on
growth in different sectors and new investments.
Lina Vrubliauskienė
Senior Economist
+ 370 5 258 2275
lina.vrubliauskiene@swedbank.lt

2. Flash comment: Lithuania
Economic commentary by Economic Research Department May 18, 2012
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