By Fiona Mullen
Eurostat announced last week that the unemployment rate in Cyprus had reached a record 9.3% in December, up from 6.5% in January.
But this is just one of three competing figures produced for unemployment in Cyprus, which makes working out the real unemployment rate a little bit tricky.
The first and most comprehensive figure is the quarterly Labour Force Survey (LFS). It is based on a large sample of household and includes as unemployed anyone who reports that they have been actively looking for work.
The only problem with this survey is that it is published with a lag, so the most recent statistics are for the third quarter of 2011. According to the LFS, the number of unemployed was 30,829 and the unemployment rate was 7.3%, up from 5.8% in the third quarter of 2010.
The most up to date statistics are the registered unemployed. However, there are two problems with this figure.
First, the Statistical Service stopped producing a registered unemployment rate several years ago, finding it too misleading, so it only publishes the level.
Second, this measure counts only those who register for unemployment, so is bound to under-report the real unemployment level. For example unemployment benefit is typically paid only for six months, therefore not everyone registers once they stop being eligible for benefits.
According to the registered unemployed figures, at the end of the third quarter of 2011, registered unemployment was 20,671, rather lower than the 30,829 reported by the LFS for the whole quarter.
However, registered unemployment had climbed to 37,102 in January.
Finally, there is the monthly unemployment rate reported by Eurostat. Eurostat does not get its figure from the Statistical Service of Cyprus but simply estimates it based on a mixture of the LFS and the registered unemployment rate.
Eurostat reported an unprecedented unemployment rate of 9.3% and an unemployment level of (rounded) 38,000 for December.
This implies two things. First, that overall unemployment must have shot up by around 23% between September and December. This was certainly the case for registered unemployment, which rose by just over 24% from 26,483 at the end of September to 32,895 in December.
Moreover, the increase of LFS unemployment levels in 2010 (19.9%) was not that different from the increase in registered unemployment levels in 2010 (19.3% December to December).
So perhaps Eurostat is right to assume that the increase in overall unemployment from September to December was the same as the increase in registered unemployment in the same period.
Second, the Eurostat figure implies that the labour force in December was about 408,602.
This means that it rose by more than 5,300 from the 403,284 recorded by the Labour Force Survey in the third quarter.
Now, it is true that the labour force tends to grow in the last three months of the year because of school and university leavers. But even in the boom time of 2007, it did not rise by more than 3,500. And in the fourth quarter of 2010 it actually declined compared with July-September.
So let’s assume for a moment that the labour force in Q4 was only 1,500 higher than in the previous quarter, rather than the 5,300 implied by Eurostat.
What difference would that make to the unemployment rate?
The truth is, not much. It pushed the estimated unemployment rate up by just one basis point from 9.3% to 9.4%.
So whichever figure we look at, there is no denying it. Unemployment is at a record high and is likely to remain so for some time yet.
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