Rising Unemployment Gains Momentum: Predicts Previous Crisis Record

Unemployment peaks in February

According to the Employment Service (UT), in 2021. January 1,277,1 thousand were registered in the country. unemployed, representing 16.1%. of the total working-age population of the country.

This compares to 2020. December 1 – 10.5 thousand. more, and compared to the same period last year – 126,7 thousand. plus. According to UT, registered unemployment increased 7.4 percent during the year. point.

It was also reported that registered unemployment increased in all municipalities of the country in December. It grew more in the municipalities with more agricultural activities and
tourist complexes.

According to UT, this was mainly influenced by the seasonality of the labor market or the tightening of quarantine in individual municipalities, which limited the activities of service companies.

When UT was asked to provide unemployment growth forecasts, it stated that in the near future the labor market situation in 2021 will be better reflected in the annual forecast and survey prepared by UT.

According to the survey, the data collected compared to 2019 shows a bleaker mood in 2021 and a more subdued optimism about the future.

About a tenth (9.8 percent) of the companies surveyed predicted that in 2021 they will have to reduce the number of employees, 17.7 percent. – reduce investment in equipment and technology, 5.4 percent. predicted a lower average salary in the company.

The number of employees decreased by 24.2 percent last year. companies participating in the survey, when in 2019 only 4.4 percent. the employers intended to fire the company’s employees.

Inga Balnanosienė, head of the Employment Service, previously told BNS that, according to her, at the end of 2020, 16 percent. official unemployment has not yet reached the top of the mountain; the peak can be expected in February.

“It is certainly not the top of the mountain, but I would stick to the previous view that we should reach the top in February,” the UT chief told BNS.

Predict record unemployment

Delfi also asked economists what unemployment rates will look like this year and how much they could grow.

Tadas Povilauskas, an economist at SEB Bank, predicted that registered unemployment would peak at the end of the first quarter, which could be attributed to both seasonality, when unemployment usually rises in January and February and registered unemployment begins to decline in March -April, as to seek benefits for change of course.

“But at the end of the first quarter, in February or March, I suspect that it will be surpassed in 2010. The registered unemployment record of the previous crisis was reached: 16.8 percent.

And despite the fact that since the end of last year, the government has changed the compensation to subsidies for workers in downtime, when the employer no longer needs to contribute their own funds and can receive 100 percent. compensation in case of compensation for downtime of up to 1.5 MMA, therefore, in reality, the employer who sees the light at the end of the tunnel does not aim to lay off employees, because he is still compensated by the state for costs labor ”, assured T. Povilauskas.

After reaching a peak in the struggle, the economist said, registered unemployment will start to decline due to the gradual easing of restrictions, leading to faster growth and the number of unemployed employed or reverting to self-employment.

“Because the increase in unemployment in November and December is closely related to these restrictions, when a self-employed person could not work due to restrictions and was forced to register as unemployed.

It should also be noted that the requirements for job search benefits have tightened significantly since this year, so it will be interesting to look at the behavior of registered unemployed who have signed up only to receive a lump sum and are not actually looking for work, that is, how many of them. there will be no need to be registered as unemployment.

Perhaps part of your job search allowance will only encourage you to look for work, so having a job offer here is very important, and it will obviously only be higher after the pandemic situation has improved. Let’s not forget that the monthly minimum wage has been raised again this year, which has increased, albeit slightly, the motivation to seek the part of the unemployed who can normally get a job at the MMA level, ”he said.

T. Povilauskas also added that economists tend to evaluate the unemployment indicators published by Statistics Lithuania more. According to the economist, they more accurately reflect real unemployment.

“It is in 2020. Third quarter was 9.3 percent, and our projections for 2020 Fourth quarter stood at 9.9 percent, and in 2021. it will increase 10 percent in the first quarter, but will start to decline. starting in the second quarter, “he said.

Unemployment was the fastest growing in Europe

Indrė Genytė-Pikčienė, chief economist at the asset management company INVL Asset Management, also assured that with regard to unemployment, it would be more convenient to talk about the data published by Statistics Lithuania, which reflects a more realistic situation and prevents unemployment . both benefits.

The economist said that although the Lithuanian economy weathered the pandemic in 2020, the growth of unemployment in Lithuania during the year was one of the fastest in Europe.

“This shows that we have not made enough effort to maintain jobs, while the major Western European countries have chosen job retention as their starting point and that was their cornerstone,” he explained.

When asked to forecast whether unemployment would continue to rise, he said that we could not prevent unemployment from rising.

“It just came to our notice then. The first half of the year will generally be challenging and the fact that the quarantine ends at the end of January is unlikely as the vaccination processes are only gaining momentum.

Thus, in the first half of the year, companies will not yet have the opportunity to return to a normal rhythm and, consequently, to generate sufficient income from their activities to recruit people and return to a normal life, so the rate of unemployment may continue to rise.

In the second half of the year, we expect a recovery in domestic demand, a rebound in consumption and we will all long for those goods and services that are now in the quarantine peak. At that time, other macroeconomic indicators will begin to improve, ”said the economist.

In the pessimistic scenario, unemployment is 20 percent.

Delfi has previously written that unemployment in Lithuania can grow by up to 20%. Boguslav Gruževskis, director of the Lithuanian Center for Social Research, presented a possible pessimistic scenario for this year.

Speaking of what the year 2021 will be, he said that the main characteristics of the pessimistic scenario are related to the insufficient impact of the vaccine on the morbidity of the population.

According to him, this could lead to the quarantine being extended until May and the country, due to the existing restrictions, will see a new economic recession.

“In this way, we can see the lack of budget funds as a consequence, since, consequently, employment, turnover and many other things will decrease.” Increased unemployment, insufficient social support, and if there is a shortage of budget funds, clearly there will be less generous benefits, not to mention the indexation of pensions, and as a result, increasing poverty and social tensions, “he said.

According to B. Gruževskis, according to the pessimistic scenario, unemployment could rise to 20% in January and February. and more, and youth unemployment could reach around 30 percent in January, February.

“From February to March, it would be necessary to reduce wages, first of all, of course, for the public sector. Long-term unemployment will also increase and, in terms of the labor market, the capacity of the Employment Service to help and contribute to the support it will decrease significantly, ”said B. Guževskis.

Read about what year the sociologist promises and what is the optimistic scenario.