Summary
Monitoring the unemployment rate is important for policymakers to make informed decisions about economic policy and to ensure that the economy is healthy and robust. It helps policymakers to make informed decisions about economic policy, including monetary and fiscal policy, and identify intervention areas that may be needed.
EU-ERA estimates the unemployment rate would be around 3.45% to 3.75% for the year 2023, which the actual expectation depends on the GDP growth rate. If GDP grows at a rate of 4.5%, the unemployment rate is projected to reach 3.45%. If the economy is able to grow at a rate of 6.5%, the unemployment rate is expected to decrease to 3.45%. Nevertheless, the estimated unemployment rates in 2023 have not yet returned to the pre-pandemic situation which reached 3.3% in 2019.
There are some recommendations to speed-up the employment absorption in the economy which include raising wages, boosting demand through high-employment multiplier sectors, interventions to improve labor supply outcomes and optimizing job creation through inclusive hiring and improved job matching mechanism. As far as the 2023 target is concerned, the recommendations are more relevant for short-term measures instead for medium-term interventions.
