Tension on the labour market further up
Tension on the labour market continued to grow in the third quarter of 2017. The labour market tension meter has seen a continuous rise since the second quarter of 2014. The labour market has been in the quadrant of increasing tension for three consecutive quarters. Demand for labour has increased further. There is sustained employment growth, while the number of unfilled job vacancies has seen a rising trend for over four years in a row. Furthermore, labour supply (the ratio unemployed labour force/labour force) has decreased further. Nevertheless, the labour supply is still larger than 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.
Unemployment (ILO-definition) and job vacancies, adjusted for seasonal variation