by DoDo
Thu Feb 16th, 2006 at 11:52:29 AM EST
In this diary, I can connect the ongoing EuroTrib theme of debunking the mis-use of statistics in economics punditry and policymaking with my ongoing reportage of the mad election campaign in Hungary!
In the last two weeks, while the two smaller parties started traditional (e.g. uninspired contentless) poster campaigns with the basic message, "we're still there!", the two bigs rolled out some serious negative campaigning for the first time (first time under their own name).
It is more than grotesque that both parties try to outdo the other in socialistic rhetoric, while I won't trust either to be honest about that. Anyway, the two opposed poster campaigns try to trash the other's social record (the one in opposition ruled 1998-2002) with flashy numbers showing four-year turns for the worse.
The one that is worth to counter here is about jobless numbers - because the underlying truth is an inverted version of the trickery played by some in the West, say in the USA or the UK.
Said poster is one of the opposition right-populist party, and displays the number "400,000": the number of registered jobless people. Here is the development of that figure until last November:
Now that doesn't look good at all, does it? Only, you'll see an entirely different story if you look at the number of employed, too1:
What you see is two positive trends (overlaid by a minor 2003 boom/2004 bust cycle):
- a steady growth of employment, and
- an even faster return of people into the workforce (after the economic collapse and shock therapies - in Hungary, 1995 - of the nineties).
And even the negative trend in-between has a structure that lends to optimism: the growth is almost exclusively of the active unemployed, which indicates both (a) shorter-term unemployment, and (b) wider coverage.
All in all, this is the opposite of what is done in certain countries where a decrease of jobless numbers is touted as great success, while in truth the percentage of employed declined - and longterm jobless were pushed outside of the economy. Two more general thoughts:
The "demographic crisis"
You may have noted that my second graph doesn't display activity and joblessness as percentage of the active-age population, nor as a percentage of the adult population, but the entire population. The picture wouldn't change if I used the other two measures, but I'm trying to make a more general point with this - let me repeat one of my returning hobbyhorses below, the one on the "demographic crisis" of an ageing population.
I contend an ageing population is not the real issue (not an economic danger); the real issue is what percentage of the total population works, and what percentage is supported by those who earn for a living.
What ratio of these supports for non-workers takes the form of (a) payments into retirement funds, (b) taxes used for jobless benefits, (c) taxes used to support families with children, or (d) money parents spend on their children (or workers on their elders or housewives/husbands), is secondary.
If you reduce the number of pensioners by pushing up the number of the jobless, or reduce the jobless number by sending people into early retirement, or reduce the ratio of pensioners by having couples bear four children each, you won't solve any problems - you are only shifting costs between different accounts.
On the other hand, if the goal is to reduce the tax load of companies by making as many non-workers as much poorer as possible; or (as Jérôme argued) if a financier who'd like to take his hands on state-administered funds, the talk about a demographic crisis comes handy...
Comparing countries
I dug up comparable third-quarter numbers for two other countries, to calculate the employment figure according to the measure I argued for:
- Hungary: 39.0%
- Germany2: 47.2%
- USA3: 48.2%
One thing apparent is that the chronic 'Old European' problem isn't one, even if we don't consider the more generous definitions of US statistics and the employment effect of the military-industrial complex.
Another is that behind the impressive macroeconomic numbers of much-praised 'New Europe', you'll find a lot of people who disappeared in an employment black hole (either into the black market or into chronic poverty), and it is not just earnings in which we have to catch up with with Western Europe.
As a bonus, a third graph: development of income (which includes bonuses), brutto and netto wages in Hungary, inflation-corrected:
- Note: the activity graph is from the household survey, the previous is an absolute number of people tracked by employment agencies - active + passive unemployed roughly correspond to it. It must be noted that potential but lethargic job-seekers outside of the workforce are probably a much wider group than those covered by the household survey's criteria.↑
- Employment from most recent quarter numbers, population interpolated between 2004 number and 2005 estimate.↑
- 3-month average of monthly total employment from household survey; population 3-month average of Census monthly projections [Excel!] by the widest measure to include overseas military.↑
