High unemployment or high employment rate?

In yesterday's Agenda, Finance Minister Magdalena Andersson (S) was asked how it feels for a Social Democratic Finance Minister that unemployment is now up 7.1 percent despite several years of boom.

"It would be much more worrisome if it was because there were few who were employed, but that's not the problem," said Magdalena Andersson.

She referred to figures on employment rates that have increased every month since September 2016, but which have not increased in the last four months, according to Statistics Sweden's latest Statistics Sweden Labor Force Survey.

- What is extremely good is that the employment rate has been so high, that so many more jobs have been created in Sweden. More people have applied to the labor market. That is why unemployment has not fallen any more, even though employment has gone like a train, Magdalena Andersson said.

Although she was pressed with more questions about the unemployment rate of over seven per cent, she maintained how good she is with the high employment rate.

So what's the point?

To understand what Magdalena Andersson is talking about, you have to keep track of a few definitions.

The employment rate is a measure that shows how much of the population in working age between 15-74 years is employed.

But unemployment is not measured against the population of working age as the employment rate does, but against the total number of employed and unemployed people in the population. It is thus a measure that constantly relates to how many people are employed.

For example, people of working age who are not counted as employed or unemployed can be students, pensioners, home workers, conscripts and long-term sick people.

- It is relevant to look at both the measures of unemployment and employment rate, says Linnea Johansson Krueger, who works with the Labor Force Surveys at Statistics Sweden. She thinks that it is difficult to answer which of the measures is most relevant.

According to Statistics Sweden, the employment rate was 68.3 percent in August 2019, but has decreased by 0.9 percentage points since the same month last year. On an annual basis, the employment rate has increased from 64.4 per cent in 2010.

Unemployment was 7.1 percent in August and has increased by one percentage point since August 2018.

Linnea Johansson Krueger believes it is too early to say what is the driving factor behind the unemployment rate of 7.1 percent.

- These people may have gone from employment to unemployment. Or they have come into the workforce and actively start looking for jobs, and are now counted as unemployed. In order to answer that, we must analyze the flows more carefully, ”she says.