Tension on the labour market slightly increased
The tension on the labour market continued to rise in the fourth quarter of 2015. The tension has seen an upward trend since the second quarter of 2014, but the labour market remains extensive (lower left quadrant). Demand for labour has increased. There was ample job growth and the number of vacancies has shown a steady rise for ten continuous quarters. At the same time, labour supply (the unemployment rate) has slacked somewhat, but is still above average.
Situation on the labour market
The labour market tension meter is a graphical representation of tension on the labour market. The tension is the result of the balance between the demand for extra labour and the available supply of labour. The tensions is calculated with the aid of the following labour market indicators: the unemployment rate is used for labour supply, and the total number of vacancies divided by the average number of jobs is used for the labour demand. Based on the relation between demand and supply, the tension meter places the situation on the labour market in one of four phases: slack, increasing tension, tight, or decreasing tension.
The figure below also illustrates labour demand and supply. The widest gap between unemployment rate and vacancy rate was recorded at the beginning of 2014. Since then, labour supply has fallen and labour market tension has been rising. The number of job vacancies has increased since the third quarter of 2013.
Job vacancies and unemployment, adjusted for seasonal variation