Labour market tension reaches new high
Tension on the labour market continued to grow in the fourth quarter of 2018. This has pushed the tension meter up to a level slightly exceeding pre-crisis levels in 2008. Labour market tension has shown an upward trend since the second quarter of 2014. The tension meter has been in the tight labour market quadrant for five consecutive quarters now. Labour demand has increased further. The number of employee jobs has risen substantially, while the number of unfilled vacancies has reached a new high again. Furthermore, labour supply (the unemployed labour force/labour force ratio) has declined further.
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