Economy Update: Unemployment Rate Down In Q2

On July 29, 2015 The Statistical Institute of Jamaica (STATIN) issued a press release on employment statistics for April 2015. A summary of the data released can be seen in the table below. Unemployment rates fell to 13.2%, a 0.4% reduction.  From the report, the number of persons unemployed fell by 6,100. This suggests that having less unemployed people lead to a lower unemployment rate.

April 2015 April 2014 Difference
Labour Force 1,301,000 1,311,000 -10,000 or -0.8%
Number Employed 1,129,000 1,133,000 -3,900 or -0.3%
Employment Rate 86.6% 86.4% +0.4%
Number Unemployed 172,000 178,100 -6,100 or 3.4%
Unemployment Rate 13.2% 13.6% -0.4%


However, is this the whole story? The data shows that although less people are unemployed, there are also less people employed. How can we account for this? The key to understanding this is the term labour force participation, a measure of all eligible persons looking for work or currently employed. That the labour force fell by 10,000 persons from April 2014 to April 2015 indicates a reduction in labour force participation. In a scenario with reduced labour force participation, it is likely that some people have left the job market entirely, rather than having found work.

Persons leave the job market for a number of reasons including enrolling in school, decisions to stay home with family, migration, disabilities or frustration with inability to find work. What is most interesting about this reduced labour force is its effect on the unemployment rate. In the data, this reduction in the labour force seems to translate to an improvement in unemployment rates.

Thus, though statistics show a reduced 13.2% unemployment rate for April 2015, unemployment did not actually decrease in terms of number of persons unemployed. The percentage of the reported decrease in unemployment accounted for by this decrease in the labour pool is an important topic for consideration.

Unemployment woes continue to fall disproportionately on the youth, especially young women. Though down 0.5% from April 2014, youth unemployment is still high at 33.2% for April 2015. The male youth unemployment rate is 27.6%, whereas the female youth unemployment rate is a staggering 40.6%.

Checkout the Lifestyle Dashboard for more information on changes in key indicators relevant to unemployment and employment in Jamaica.