The unemployment rate drops to 3.3 percent in May
In May 2021, 309 thousand people were unemployed. That is 3.3 percent of the labor force. On average over the past three months, the number of unemployed fell by 10 thousand per month. The number of employed persons decreased by an average of 4 thousand per month over the past three months. This is according to the CBS on the basis of new figures. UWV registered almost 250 thousand current WW benefits at the end of May.
In May, 4.1 million people aged 15 to 75 were without paid work for various reasons. In addition to the unemployed, there were 3.8 million people who had not recently sought work and/or who were not immediately available for work. They are not counted as part of the labor force. Their number increased by an average of 13 thousand per month in the last three months, mainly because fewer people from the non-working population went straight to work. That number was lower than the number of employed people who left the labor force because they stopped working and did not look for work, or were not available.
Unemployment rate down further in May
To compare the cyclical developments in the labor market in different countries, the unemployment indicator of the International Labor Organization (ILO) is used. According to this indicator, people are unemployed if they do not have a paid job, but have recently sought one and are immediately available. This figure relates to the population aged 15 to 75. With 309 thousand unemployed in May, 3.3 percent of the labor force was unemployed. Between March and August 2020, the unemployment rate rose from 2.9 percent to 4.6 percent. After that, the rate fell almost continuously.
WW decreases further in May
The UWV issued nearly 250 thousand current WW benefits at the end of May. This is 16.8 thousand fewer than in the previous month (-6.3 percent). This is the fourth month in a row that WW benefits have declined. The number of current WW benefits was 17.1 percent lower than in May 2011. In May, far more WW benefits were terminated (36.6 thousand) than started (19.8 thousand).
Decline WW benefits across all sectors
In all sectors the number of current WW benefits was lower in May than in April. The most substantial decreases occurred in agriculture (-11.2 percent), the temp sector (-10.9 percent), construction (-10.3 percent) and the sector hotels and restaurants (-9.7 percent). Here, both seasonal work plays a role and the relaxation of corona measures leads to more demand for staff again.
Decrease unemployment in past three months
The decline in the number of unemployed in the past three months is the result of underlying flows between the employed, the unemployed and the non-employed. The chart below shows those flows.
In May, 309 thousand people were unemployed. Three months earlier, in February, there were 340 thousand unemployed. During this period, the number of unemployed fell by 31 thousand (an average of 10 thousand per month). As can be seen in the chart above, unemployment can decrease from two directions: net outflows to work or net outflows to the non-working population.
In the past three months, unemployment decreased primarily through net outflows to work: more unemployed people found jobs (from unemployed to employed), than employed people lost jobs and became unemployed (from employed to unemployed). On balance, this reduced the number of unemployed by 29 thousand in the past three months.
The number of people who started looking for work without immediate results (from non-employed to unemployed) was slightly smaller in May than the number who stopped looking and/or were no longer available (from unemployed to non-employed). On balance, this net outflow to the non-occupational labor force caused the unemployment rate to decline by 2 thousand persons over the past three months.
Development since 2014
From May 2014 to March 2020, there was a continuous net outflow to work. In April 2020 this changed, and on balance more unemployed people joined from the employed. Starting in September, the balance was negative again, with more unemployed people flowing into work than the other way around.
In April and May 2021, flows to and from the non-working population made a relatively small contribution to the trend in unemployment. From November 2020 through March 2021, however, there was a relatively large net outflow to the nonoccupational population. Thus, during that period, the unemployment rate did not fall only because of the net outflow from unemployment to work. Such a situation is quite exceptional and last occurred during the previous crisis, when unemployment peaked in 2014.
Source CBS