The unemployment rate, measured by the LFS methodology for the 15-74 age group, dropped by 0.8pps y/y to 3.8% in April, the statistical office (KSH) reported. The unemployment rate fell by 0.1pps m/m, slightly lower than the average seasonal decline for this period, in our opinion because of constraints from the tightening labour market. There were 177,000 unemployed people in April and their number fell by 15.3% y/y, maintaining a generally stable pace of decline compared to the previous periods. The average duration of unemployment was 17.1x months and the share of long-term unemployment was 43.5% in April. Both indicators deteriorated considerably m/m, which we think indicates strong labour demand so that newly unemployed people find jobs quite quickly. The lack of sustained improvement in long-term unemployment suggests that the remaining pool of unemployed are not competitive on the labour market and this is likely to prevent further decline of the unemployment rate, in our view.
Both labour demand and labour supply continued to increase in April but we think the balance indicated continued tightening on the labour market. Total employment rose by 1.5% y/y and maintained stable growth compared to the previous couple of periods. The employment growth remained on account of the domestic primary labour market. Employment growth on the domestic primary labour market was 3.1% y/y, also unchanged from March. Employment by the public work scheme contracted by 22.6% y/y in April and employment by local units abroad fell by 13.2% y/y. The employment rate rose by 1.5pps y/y to 68.8% with the improvement being the most pronounced among the 55-64 age group, which we think could be due to the government’s job protection programme and initiatives to activate retired people to work.
Labour supply expanded by 0.8% y/y in April due to further growth of labour participation. The participation rate was up by 0.7pps y/y/ to 62.1%, close to the all-time high of Q3/2017. We consider it likely that labour participation is likely to continue rising, stimulated by the strong wage growth and ample employment opportunities. Shrinking population should still restrict the increase in labour supply and the labour market is likely to remain tight in the short- to mid-term, in our opinion.