05.04.2023
THE SUPPLY OF LABOR IS LIMITED, BUT THERE IS A SPARE RESOURCE IN THE LABOR MARKET
Commentary by specialist Adrian Nikolov, Institute of Market Economy
The year 2022 was marked by a series of crises - energy, inflationary, political. In no case, however, can we claim that they are accompanied by a crisis in the labor market. Quite the opposite - most indicators in 2022 exceed their pre-covid crisis levels, and the main challenge to further development is insufficient labor supply.
According to the 2022 Labor Force Survey overview, the employment rate in all age groups considered increased from 2021, with 15-64 year olds reaching 70.4% - slightly above the previous record high of 2019. when the share of working people among them was 70.1%. Among the 20-64 year olds, employment again approaches 76%, registering a significant growth of 2.5 points on an annual basis. It is noteworthy, however, that the significant difference in employment between men and women remains - 79.5% against 71.8% for 20-64 year olds. This also reflects the different rates of recovery and growth in industries dominated by both sexes (more on the role of women in the Bulgarian labor market in the IME special analysis here). Unemployment for the population aged 15 to 64 fell to 4.3%, one point less than the previous year. The very large differences according to the degree of completed education remain - while unemployment among university graduates is only 1.7%, among people with primary and lower education it reaches 25%. The observed growth of unemployment among the least educated is also cause for concern. This is a sign that the current expansion of the labor market continues to reduce the number of jobs available to people with very low skills and literacy. The number of inactive people remains high - 1.15 million people aged 15-64, mostly women (649 thousand). At the same time, the share of inactive youth aged 15-29 (the so-called NEETS, more about them here) remains relatively high, 15%. In other words, despite the apparent restriction of labor supply, there is still a spare resource in the labor market. Here the question is mainly what are the appropriate approaches to activation, literacy and acquisition of labor-relevant skills by the inactive, as at this stage state-led policies seem rather to fail to achieve the desired result. Insofar as the researches of the National Statistical Institute do not provide a direct assessment of labor demand, such can be found in the surveys of the Employment Agency. The findings of the latest survey, which refers to the end of 2022, point to a very active demand for workers, especially in industry, while employers indicate that finding suitable staff is increasingly difficult. An alternative view of the demand is also provided by the statistics of the web platform jobs.bg, where throughout 2022 a higher demand for labor is evident, even compared to the very strong years before Covid-19.
The latest data on the dynamics of the labor market unequivocally demonstrate that the demand for labor continues throughout 2022, despite the negative processes in other spheres. However, some structural problems remain unsolved - improving the skills of the poorly educated, who find it increasingly difficult to integrate into the modern economy, as well as the activation of the rest outside the labor market. It is also an open question whether the unsatisfied demand for labor will become a limiter of the potential for economic growth in the medium and long term.
