Polish labour market index shows continued rise in September

The Labour Market Index (LMI), which predicts future unemployment trends, rose by 1 point in September, marking the second consecutive month of growth. Notably, the magnitude of this increase in September was nearly double that of the previous month.

It is typical for the LMI to rise during the summer months, but currently, only two components are indicating a potential decrease in the index, which would suggest a drop in the unemployment rate. In contrast, five components point toward an increase in the index, suggesting a worsening of the labour market situation. However, whether this is part of a lasting trend or a temporary fluctuation remains unclear, especially as the labour market has yet to experience any significant economic shocks. This is reflected in the fact that the registered unemployment rate has remained relatively stable. In August, the unemployment rate did not change from the previous month, and its values continue to oscillate at levels seen in mid-2022. According to the Labour Force Survey (LFS) methodology, the unemployment rate was 2.7% in Q2 2024, slightly up from 2.6% in the same period last year.

A key variable contributing to the rise in the unemployment rate is the total amount of unemployment benefits paid out. Adjusted for seasonal variations, this figure has seen a steady increase: up 3.3% in June, nearly 10% in July, and 5.6% in August. June each year marks the implementation of indexed benefit levels, which, due to inflation, have been subject to spikes in recent years. These spikes sometimes show up in the statistics with a delay due to compensation payments. The significant increase in benefits suggests that the changes are not solely a result of benefit adjustments. The 2.1% rise in unemployment inflows in August compared to July further implies that a greater proportion of the unemployed are qualifying for benefits. It is also possible that the composition of those qualifying for the increased benefit level, particularly those with long work experience, has shifted.

Additionally, data concerning unemployment caused by company-related dismissals offers moderately negative signals. By the end of August, the number of registered unemployed individuals dismissed for company reasons had risen by 4% compared to the end of July. While this change is not significant in absolute terms, it marks a notable shift relative to prior months.

The number of job offers registered with labour offices also saw a decline in August, falling 18% month-on-month and more than 16% compared to August 2023. However, on a positive note, 8% more unemployed individuals found employment in August than in the previous month.

In a slight improvement, the results of the industrial business survey showed a reduction in the percentage of firms planning redundancies. The balance between firms looking to increase employment and those intending to make cuts improved by around 2 percentage points, from 9% in August to nearly 7% in September. Despite this, a negative balance remains in overall company assessments, with double-digit figures still prevailing, which may continue to hinder job creation.

Source: BIEC