Unemployment down to 3.3 percent in May

In May, 4.1 million people aged 15 to 74 years did not have paid work for a variety of reasons. In addition to the unemployed, 3.8 million people were not looking and/or immediately available for work recently. These people are not counted towards the labour force. Their number increased by an average 13 thousand per month over the past three months, mainly because fewer people from the inactive labour force started working immediately. This number was lower than the number of people who left the labour force because they stopped working and did not look or were not available for work.

Unemployment rate further down in May

In order to enable comparison of cyclical movements in the labour market between countries, the unemployment indicator of the International Labour Organization (ILO) is taken as a measure. According to this indicator, the ‘unemployed’ includes all persons who do not have paid work but who have been looking recently and who are immediately available. This covers the population aged 15 to 74 years. There were 309 thousand unemployed in May, equivalent to 3.3 percent of the labour force. Between March and August 2020, the unemployment rate rose from 2.9 to 4.6 percent. After that, it declined almost continuously.

Number of unemployment benefits further down in May

At the end of May, UWV provided nearly 250 thousand current unemployment (WW) benefits. This is 16.8 thousand fewer than in the previous month (-6.3 percent). This is the fourth month in a row that the number of WW benefits has dropped. Compared to May last year, the number of current WW benefits was 17.1 percent lower. In May, far more WW benefits were terminated (36.6 thousand) than started (19.8 thousand).

Fewer WW benefits in all sectors

In May, the number of current WW benefits declined across all sectors compared to April. The sharpest declines were seen in agriculture (-11.2 percent), temporary employment (-10.9 percent), construction (-10.3 percent) and accommodation, food and catering services (-9.7 percent). Here, seasonal work plays a role as well as the relaxation of the coronavirus measures, which leads to a higher demand for staff again.

Unemployment declined over the past three months

The decline in the number of unemployed over the past three months is the result of underlying flows between the active, unemployed and inactive labour force. This is visualised in the diagram below.

In May, 309 thousand people were unemployed. This number stood at 340 thousand three months previously, in February. Unemployment declined by 31 thousand over this period (10 thousand per month on average). As shown in the above diagram, unemployment can decrease from two sides: net outflow into employment or net outflow into the inactive labour force.

Over the past three months, unemployment mainly declined due to the net outflow to employment: there were more unemployed who found work (from unemployed to employed) than employed who lost their job and became unemployed (from employed to unemployed). On balance, this resulted in unemployment declining by 29 thousand over the past three months.

In May, there were slightly fewer people who started seeking work with no direct result (from inactive labour force to unemployed) than unemployed who stopped seeking and/or were no longer available (from unemployed to inactive labour force). As a result of this net outflow to the inactive labour force, unemployment declined by 2 thousand over the past three months, on balance.

Developments since 2014

From May 2014 through March 2020, there was a continuous net outflow into employment. This changed in April 2020, when more unemployed were added on balance. As of September, the balance was negative again and more unemployed people flowed into the active labour force than vice versa.

In April and May 2021, the contribution to the development of unemployment by flows to and from the inactive labour force was relatively small. From November 2020 through March 2021, there was a relatively large net outflow to the inactive labour force. During that period, the decline in the unemployment rate was therefore not only due to the net outflow from unemployment to employment. Such a situation is quite exceptional and last occurred during the previous crisis, when unemployment peaked in 2014.

Every month, CBS publishes figures on the labour force in accordance with international guidelines. The corresponding indicators, i.e. the employed and unemployed labour force, are used around the world to describe cyclical developments on the labour market. Monthly figures are essential in this respect. In addition, UWV issues its own monthly figures on unemployment benefits. Figures released by UWV do not correspond one-to-one with the labour force indicators.