Unemployment rate will fall below 6% in 2020, the Bank of Portugal foresees
In spite of a decrease in unemployment, employment hasn't fully recovered from pre-world crisis levels. Salaries will continue increasing moderately.
The unemployment rate will continue falling until 2020, but the number of employed people hasn’t fully recovered yet and salaries will remain contained. This is the scenario described by the Bank of Portugal in their new macroeconomic projections, disclosed this Wednesday.
The 2020 unemployment rate will stand at 5.6%, a lower amount than the one from 2008 (7.6%), the year that marks the beginning of a world crisis. This year, the forecast is that there will be a 7.3% unemployment rate, which will continue to decrease. In 2017, it retrieved to 8.9%.
According to the bank, this continuous decrease took place due to the fact that employment could be “followed by slightly positive variations in working population”, related to “the return to some inactive individuals to the labor market in this favorable stage of the cycle and also related to the progressive increase of the age of retirement”.
However, in spite of the smaller unemployment rate, the number of employed people will not be larger than in the beginning of the world crisis: according to the Department of Economic Studies, the average level of employment will be 1.6% lower than in 2008.
After the significant growth in unemployment last year (3.3%) — “higher than the GDP growth and about twice as much as the average of the period between 2014 and 2016” –, the increases expected for the upcoming years will be more contained, which will not allow for a recovery of losses generated in 2008 with the world crisis.
Employment should increase 1.9% this year, decelerating to 1.3% in 2019 and 0.9% in 2020.
“The projection implies a weak growth of product per worker”, the bank acknowledges, adding it sees a halt in the evolution of this indicator in the continuance of a robust recovery of the labor market.
Although it acknowledges a “moderate deceleration of nominal salaries and prices, in the context of a gradual reduction of the available margins in the labor market and productive capacities”, the bank warns against repercussions in real salaries, which will be scarce.
The institution also states there will be a “contained increase in real salaries, steeper in 2018 due to the update in minimum wage“.
