Analysis of unemployment and monetary poverty in European

countries

Analýza nezamestnanosti a monetárnej chudoby v krajinách Európy

Ing. Ing. Iveta StankovičováIveta Stankovičová, PhD., PhD.

Faculty of managementFaculty of management

Comenius University BratislavaComenius University Bratislava

The aim of the article one and multidimensional statistical analysis of two

negative phenomena: unemployment and poverty in European countries. These two phenomena are very closely linked together and they are both intensified during the economic crisis.

For this analysis the following methods were used: descriptive statistics, time series analysis and factor analysis, (cluster analysis).

The situation of unemployment and monetary poverty in European countries was compared and the situation in Slovakia was determined.

The facts The rate of unemployment in the time of the current

economic crisis increases quickly. At the beginning of 2010, the average rate of unemployment reached about 10% in both the USA and Europe and is still increasing. In Slovakia, the rate exceeded 14% (March 2010: 14.1%)

The high level of unemployment leads also to deepening of poverty of population.

79 million people in the EU are at the risk of poverty, which represents 16% of EU population and 19% of children. In Slovakia, the risk of poverty rate is 11%.

The facts

17% of Europeans suffer from 17% of Europeans suffer from material material deprivationdeprivation, which means that their living , which means that their living conditions are severely affected by the lack of conditions are severely affected by the lack of resources.resources.

Social transfers reduce the risk of poverty by 38% Social transfers reduce the risk of poverty by 38% on average in the EU, but this impact varies from on average in the EU, but this impact varies from less than 10% to nearly 60% across the EU.less than 10% to nearly 60% across the EU.

Indicators Unemployment:

1. unemployment rate (month, quarter, annual average, total %)

2. long-term unemployment in % of unemployment (annual average, total %)

Poverty:

1. at-risk-of-poverty rate (total %)

2. relative median at-risk-of-poverty gap (%)

3. inequality of income distribution - income quintile share ratio (S80/S20)

[tsdec450] - Unemployment rate, Total (definition)

Unemployment rates represent unemployed persons as a percentage of the labour force. The labour force is the total number of people employed and unemployed. Unemployed persons comprise persons aged from 15 to 74 who were:

a. without work during the reference week, b. currently available for work, i.e. were available for paid

employment or self-employment before the end of the two weeks following the reference week,

c. actively seeking work, i.e. had taken specific steps in the four weeks period ending with the reference week to seek paid employment or self-employment or who found a job to start later, i.e. within a period of, at most, three months.

[tsdec450] - Unemployment rate, Total (definition)

long-term unemployment (over 12 months) in % of unemployment

[tsdsc230] - At risk of poverty rate Total % (definition)

The indicator is defined as the share of persons with an equivalised disposable income below the risk-of-poverty threshold, which is set at 60 % of the national median equivalised disposable income (after social transfers).

[tsisc010] - Inequality of income distribution:

Income quintile share ratio S80/S20(definition)

The ratio of total income received by 20 % of the population with the highest income (upper quintile S80) to that received by 20 % of the population with the lowest income (lowest quintile S20). Income must be understood as equivalised disposable income.

[tsdsc250] - Relative median at-risk-of-poverty gap - % (definition)

The relative median at-risk-of-poverty gap is calculated as the difference between the median equivalised total net income of persons below the at-risk-of-poverty threshold and the at-risk-of-poverty threshold, expressed as a percentage of the at-risk-of-poverty threshold (cut-off point: 60% of median equivalised income).

The EU aggregate is a population weighted average of individual national figures. In line with decisions of the European Council, the risk-of-poverty rate is measured relatively to the situation in each country rather than applying a common threshold to all countries.

Data File statistical units:

countries: EU-Member States (27) neighbouring countries: Iceland, Norway,

Croatia, Switzerland, Turkey USA – for comparison AggregatesAggregates: EU27 : EU27 - - average of indicatorsaverage of indicators

time: Time series 2000 – 2010 Comparison 2005 and 2008

Unemployment rate in EU27 and USAQuarterly data (2000Q01 – 2010Q02)

Unemployment rate in EU27 and SKMonthly data (2000M01 - 2010M04)

2009 M05:

EU27 8.8%

SK 11.2%

2008 M09 a M10:

min SK 8.8%

2000 M07:

SK 19.6% 2004 M04:

SK 18.9%

2008 M02, M03:

min EU27 6.7%

Long-term unemployment in % unemployment (EU27 and SK)

2006 Q02: max 70.7%

2009 Q01: min 31.4%

2009 Q02: 52.2%

2006 Q02: max 45.8%

2009 Q01:

min 50.9%

Unemployment rate in April 2010

At risk of poverty rate 2005 and 20082005:

Slovakia 13%

2008:

Slovakia 11%

Inequality of income distribution S80/S20

2005:

Slovakia 3.9

2008:

Slovakia 3.4

Relative median at-risk-of-poverty gap %2005:

Slovakia 23%

2008:

Slovakia 18%

Factor weight after rotation1.1. factorfactor – integral representation of poverty– integral representation of poverty

2.2. factorfactor – integral representation of unemployment – integral representation of unemployment

Graph of factor scores 2005

Graph of factor scores 2008

Cluster analysis – dendrogram 2005

Cluster analysis – dendrogram 2008

Average education expenditure (retraining) EUR / 1 unemployed (2007)

Thanks you for attention!

Questions?