Low Unemployment or a Statistical Illusion? Economist Raises Alarm and Points to Overlooked Data
Norges Bank faces a decision on interest rates. Among economists, there is an ongoing debate about the justification for a rate hike. Labor market data and their interpretation are crucial.
Jan Ludvig Andreassen warns that wars and geopolitical tensions, including the conflict around Iran, increase uncertainty and argue against an interest rate hike by Norges Bank.
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The central bank meeting will take place on May 7. The market expects an interest rate hike. Jan Ludvig Andreassen from Eika believes this is a bad time and calls the move irresponsible. He points to the uncertainty related to war and the global situation.
The Norwegian Labor Market. Two Surveys, Two Results
Jan Ludvig Andreassen criticizes in Nettavisen the reliance on NAV (Norwegian Labour and Welfare Administration) data, which show low and declining unemployment. According to him, this is an incomplete picture of the economy. He points to the AKU survey conducted by Statistics Norway (SSB). Unemployment is 4.7 percent, compared to 2.1 percent in NAV.
The differences result from methodology. NAV includes only registered individuals, while AKU covers all unemployed, regardless of registration. Among men, unemployment reaches 5.4 percent. This is a higher level than during the financial crisis. According to Andreassen, such data argue against a rate hike.
The differences result from methodology. NAV includes only registered individuals, while AKU covers all unemployed, regardless of registration. Among men, unemployment reaches 5.4 percent. This is a higher level than during the financial crisis. According to Andreassen, such data argue against a rate hike.
The economist believes Norges Bank is acting too impulsively.Photo: stock.adobe.com / Postmodern Studio / editorial use only
Who Falls Outside NAV Statistics
Some people do not appear in NAV data, including students without a job after graduation. Also mentioned are people on early retirement who want to return to the labor market. This group also includes homemakers. They often do not register because they are not entitled to benefits.
AKU also covers young people looking for part-time jobs. It also includes immigrants entering the labor market. This results in a higher unemployment rate in the survey. According to critics, NAV does not reflect the full scale of the phenomenon, which can lead to wrong decisions in fiscal policy.
AKU also covers young people looking for part-time jobs. It also includes immigrants entering the labor market. This results in a higher unemployment rate in the survey. According to critics, NAV does not reflect the full scale of the phenomenon, which can lead to wrong decisions in fiscal policy.
A different position is presented by Harald Magnus Andreassen from Sparebank1 Markets. He believes that NAV data better reflect the situation. He points to a large number of vacancies and a decrease in unemployment in four out of the last five months, totaling nearly 3,000 people. He emphasizes that the increase in unemployment in AKU mainly concerns young people and results from greater labor market activity. In his opinion, the data support an interest rate hike before summer, possibly in May or June.
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