Unemployment rate down to 3.6 percent

In January, 4.1 million people aged 15 to 74 years did not have paid work for a variety of reasons. In addition to the unemployed, 3.8 million people were not looking and/or immediately available for work recently. These people are not counted towards the labour force. Their number rose by an average of 7 thousand per month over the past three months.

Unemployment further down in January

In order to enable comparison of cyclical movements in the labour market of different countries, the unemployment indicator of the International Labour Organization (ILO) is often taken as a measure. According to this indicator, the ‘unemployed’ includes all persons who do not have paid work but who have been looking for paid work recently and who are immediately available. This concerns the population aged 15 to 74 years. There were 337 thousand unemployed in January, equivalent to 3.6 percent of the labour force. This percentage is still higher than in March 2020 (2.9 percent), when the coronavirus crisis started. Between March and August, the number of unemployed rose by more than 150 thousand and the unemployment rate from 2.9 to 4.6 percent. Since then, unemployment has been falling again on a monthly basis.

More over-25s in work, fewer young people looking for work

On the one hand, unemployment declined because the number of unemployed who found paid work exceeded the number of employed who lost their jobs. In the past three months, the number of employed increased only among the over-25s. On the other hand, unemployment fell as a result of the outflow of unemployed entering the inactive labour force, i.e. those who are no longer immediately available for work and/or no longer seeking work. This outflow also exceeded the flow in the opposite direction. The growth of the inactive labour force concerned young people up to age 25.

UWV: small increase in unemployment benefits in January

At the end of January 2021, UWV provided 289 thousand current unemployment (WW) benefits, 2.9 thousand more than in the previous month (+1.0 percent). This represents a small increase compared to the same month in previous years. In January, the inflow into the unemployment benefit scheme came out slightly higher than the outflow; 40 thousand new WW benefits were granted and 37.2 thousand terminated.

UWV: more benefits in retail trade and accommodation and food services

The sectors with the sharpest increase in WW benefits in January 2021 compared to the previous month included retail trade (+4.2 percent), accommodation, food and catering services (+3.9 percent), temporary employment (+3.7 percent) and culture (+2.4 percent). These sectors suffered from the impact of the stricter lockdown. In addition, due to the usual seasonal effect, the number of benefits rose in the construction sector (+5.3 percent) and in agriculture (+2.1 percent).

Lower number of unemployed

The decline in unemployment over the past three months is the result of underlying flows between the active, unemployed and inactive labour force. This is visualised in the diagram below.

In January, 337 thousand people were unemployed. This number stood at 406 thousand three months previously, in October. This means that unemployment declined by 69 thousand over this period (23 thousand per month on average). On the one hand, this was because there were more unemployed who found work (from unemployed to employed) than employed who lost their job and became unemployed (from employed to unemployed). On balance, this resulted in unemployment declining by 39 thousand over the past three months.

On the other hand, unemployment also declined because there were fewer people who started looking without immediate result (from inactive labour force to unemployed) than people who stopped looking and/or were not available (from unemployed to inactive labour force). On balance, this resulted in 30 thousand fewer unemployed. This balance has been negative for three months in a row. The last time such a series occurred was in 2014.

More people in work

The active labour force grew by 57 thousand over the past three months. This was not only because more unemployed entered the labour market than employed people became unemployed (+39 thousand). There were also 192 thousand people who entered the labour market and found work immediately (from inactive to active labour force), while fewer people (174 thousand) stopped working and left the labour market (from active to inactive labour force). As a result, the active labour force grew by another 18 thousand.

Every month, CBS publishes figures on the labour force in accordance with international guidelines. The corresponding indicators, i.e. the employed and unemployed labour force, are used around the world to describe cyclical developments on the labour market. Monthly figures are essential in this respect. In addition, UWV issues its own monthly figures on unemployment benefits. Figures released by UWV do not correspond one-to-one with the labour force indicators.