The unemployment rate, measured by the labor force methodology for the 15-74 age group, fell by 1.9pps y/y to 4.3% in January, the statistical office (KSH) reported. The rate reached a new record low on the back of continued strong labor demand. There were 197,600 unemployed during the period and their number declined by 29.2% y/y. The average duration of unemployment was 18x months and the share of long-term unemployment remained relatively high at 46.8%, in our opinion suggesting a need for measures to reduce mismatches in labor demand and supply.
Employment growth rose by 3.8% y/y in January and its growth picked up compared to the 3.6% y/y increase in the previous month. Employment growth was the strongest since Q4/2014, which we think should be mainly related to private sector hiring. We consider the data as encouraging in that the strong minimum wage hike in 2017 has not affected employment much. The data period, however, includes the Nov-Dec months of last year so we consider more data necessary for a reliable conclusion. Employment growth in the period was driven by the domestic primary labor market. Employed on the domestic primary labor market rose by 4.5% y/y while employment by the public work scheme was down by 7.7% y/y, the data showed.
Labor supply also increased, up by 1.8% y/y in January. The increase was due to rising participation rate, which was 61.3% for the period and stayed close to its record-high levels from the previous months. Labor force activity rose for both men and women over the period.