Region: Staying home

As labor ministries around the European Union begin rolling out their final unemployment numbers for 2010, the countries of the Visegrad Four (the Czech Republic, Hungary, Poland and Slovakia) all find themselves at or above the EU average jobless rate of 9.6 percent.

Only the Czech Republic, which jumped from 8.6 percent to 9.6 percent from November to December, finished the year in single digits. Poland saw its unemployment rate increase from 11.7 percent in November to 12.3 percent in December, according to figures released by its Labor Ministry Jan. 7. Meanwhile, Hungary and Slovakia only recently released numbers through November, reporting 10.7 and 12.2 percent, respectively. According to Eurostat, Slovakia has the highest unemployment rate among small EU nations and is second overall only to Spain, which has the Continent's highest rate at 20.6 percent.

Numbers released by the Paris-based Organization for Economic Cooperation and Development (OECD) paint only a slightly rosier picture for the Visegrad Four. According to the OECD's "harmonized unemployment rates" compiled in cooperation with Eurostat and adjusting for any slight deviations from country to country, the EU average is 8.6 percent. Based on these numbers, the Czech Republic's rate of 7.3 percent is the only of the four to fall below the average. Hungary, Poland and Slovakia registered adjusted rates for November of 11.3, 9.8 and 14.5 percent, respectively.

"These four countries were hardest hit by the recession between 2008 and 2009," said Pascal Marianna, a labor analyst with the OECD. "Much of the world started [losing jobs] in 2007. As the crisis unfolded in this region in the third quarter of 2008, it lagged a little bit in terms of the impact [on employment]. So it will also lag as it comes out."

Jan Rutkowski, the World Bank's lead economist for Europe and Central Asia, said numbers from labor ministries can be misleading, though, as governments rely on unemployment benefit claims for their data, whereas analysts from Eurostat and OECD base their numbers on labor market surveys in which people are asked personally about their work status.

"It is generally assumed that [those surveyed] are telling the truth," he said. "Those people filing for benefits with the government aren't necessarily always unemployed. They just want the benefits."

Labor market surveys, Rutkowski added, are showing more positive signs than reports released by labor ministries.

Analysts agree that the high year-end numbers can at least partly be attributed to seasonal effects as some jobs simply disappear once the weather changes late in the year.

"Most of these numbers aren't seasonally adjusted," said Tomáš Vlk, an analyst at Patria Finance in Prague. "In the winter months, sectors like construction and agriculture don't have as much work and lay off their seasonal workers. The end of the year is typical for corporate layoffs, as well. These kinds of factors play into the increase of unemployment in the winter."

Marianna said those seasonal factors could be largely responsible for the high unemployment numbers in Poland, where the effects of the economic crisis were not nearly as severe as they were elsewhere.

"Poland has resisted," he said. "There was no recession [in Poland] in terms of negative GDP. But the agriculture sector is quite important there. You have 20 percent of the working public that is self-employed."

Slovakia and Hungary, however, have seen their unemployment rates climb as their GDP has fallen. In 2009, Hungary's GDP plummeted 6.7 percent while Slovakia's fell 4.7 percent. The governments of both countries have begun 2011 with an emphasis on job creation and growth. Residents in Slovakia recently declared unemployment the country's No. 1 problem, according to a survey conducted by the Public Affairs Institute, a think-tank based in Bratislava.

Hungarian Prime Minister Viktor Orbán, responding to outcries for job growth, unveiled Jan. 21 the "New Széczenyi Plan," a package of economic development initiatives he said will create 1 million jobs in the next decade. The first initiative is a focus on increasing participation in the labor market. Only 55 percent of Hungarian adults below retirement age are employed full time. That number trails only Malta in the EU.

"It cannot stay like this," Orbán told reporters after announcing the plan. "We need to raise it to the European average of 65 percent. Then we will have to achieve the highest participation in the whole of Europe."

Those lofty ambitions may not be realistic in the short term. Marianna said he expects to see residents of the Visegrad countries slowly getting back to work by 2012.

"A lot of us expected 2011 to be the year unemployment would fall in these countries, but that doesn't seem to be the case," he said. "You've still got two-thirds of the people in Slovakia unemployed long-term and one-half in Hungary. These numbers will start to recede only slowly in the next two years."

The biggest disconnect in the labor markets of all four Visegrad countries is that unemployed workers - who are mostly unskilled laborers - are not qualified for the available jobs, which tend to be either white-collar or service-oriented jobs.

"They're having a hard time moving from one sector to another," Rutkowski said. "As the economy starts to rebound, blue-collar jobs will come with it. But for the time being, those people aren't qualified for the jobs that are out there."

While the current numbers are still alarming, Marianna and Rutkowski agreed they have yet to approach the region's darkest days of the early 2000s, when unemployment hovered around 20 percent in the Visegrad countries.

"It's gotten bad, but not to the levels that we've seen in the past," he said. "We've seen this region at its worst, and this isn't it."

Jack Buehrer can be reached at
jbuehrer@praguepost.com