LFS unemployment rate up to 8.5% in Q4, registered rate to 12.7% in January

2010-02-25

The unemployment rate measured according to the Labour Force Survey (LFS) rose to 8.5% in the fourth quarter of 2009, up by 0.4 p.p. compared with the previous quarter and 1.8 p.p. higher than a year earlier, according to the Central Statistical Office (GUS).
During the analysed period the total number of people out of work stood at just over 1.47 million, which represented an increase of 317,000 compared with the corresponding period of the previous year. Meanwhile, the employment rate amounted to 50.4%, down by 0.5 p.p. compared with Q3 2009 and 0.6 p.p. lower than in Q4 2008. At the same time, the number of economically inactive persons rose by 0.7% during the quarter and exceeded 14.1m. As a result, the economic activity rate fell by 0.3 p.p. to 55.1% (on a year-on-year basis it was up by 0.4 p.p., though).
Simultaneously, the registered unemployment rate stood at 12.7% at the end of January. This was up by 0.8 p.p. compared with December and 2.3 p.p. higher than in the corresponding month of the previous year.



Although the Polish economy accelerated in recent months, the registered unemployment rate shot up to 12.7% in January, its highest level since August 2007. In our view, the sharp rise in jobless numbers was mainly the consequence of severe winter weather during this period (and the associated fall in demand for seasonal work) and the increase in the unemployment benefit that took effect on 1 January (some people delayed their registration until that time to be able to draw a higher benefit). Whilst unemployment should start falling in the spring as demand for seasonal work returns, we should not expect a durable improvement in the labour market situation until the economy gains more speed (experience shows that the Polish economy must expand by at least 3.5-4% y-o-y in order to generate a net increase in jobs). Therefore we forecast that at the end of 2010 the registered unemployment rate will stand at 12.5%.

Paweł Sionko
Senior Economist
PMR Publications