ANNUAL REPORT 2008 - Polymer Bank Notes of the World

Table 4 Labour market developments(percentage changes compared with the previous period; percentages)2005 2006 2007 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3Labour force 1.0 1.0 0.9 0.3 -0.0 0.2 0.2 0.3 0.4 0.2 0.3 0.3 0.1Employment 1.0 1.6 1.8 0.6 0.3 0.4 0.5 0.5 0.5 0.3 0.4 0.2 -0.0Agriculture 1) -0.7 -1.9 -1.2 0.8 -1.3 -0.3 0.4 -0.5 -1.0 -0.4 0.5 -1.2 -0.8Industry 2) -0.0 0.6 1.4 0.2 0.3 0.5 0.6 0.3 0.0 0.1 0.2 -0.3 -0.7– excluding construction -1.1 -0.3 0.3 0.1 0.1 0.1 0.0 0.1 0.0 0.1 0.3 0.1 -0.3– construction 2.7 2.7 3.9 0.5 0.8 1.5 1.8 0.6 -0.1 0.0 0.0 -1.2 -1.5Services 3) 1.4 2.2 2.1 0.7 0.3 0.4 0.5 0.7 0.7 0.4 0.4 0.4 0.2Rates of unemployment 4)Total 9.0 8.4 7.5 8.5 8.2 8.0 7.7 7.5 7.4 7.3 7.3 7.4 7.6Under 25 years 17.5 16.3 14.9 16.5 15.9 15.9 15.2 14.8 14.8 14.7 14.6 15.1 15.525 years and over 7.9 7.4 6.6 7.5 7.2 7.0 6.8 6.6 6.5 6.4 6.4 6.5 6.6Sources: Eurostat and ECB calculations.Note: Data refer to the euro area including Slovakia.1) Includes fishing, hunting and forestry.2) Includes manufacturing, construction, mining and quarrying, electricity, gas and water supply.3) Excludes extra-territorial bodies and organisations.4) Percentage of the labour force according to ILO recommendations.the year and the unemployment rate rising fromthe second quarter and accelerating towards theend of the year (see Box 5 for more details).Taking a sectoral perspective, employment inthe construction sector was contracting at anannual rate of 2.7% by the third quarter of 2008,after having grown at a very strong rate of 3.9%in 2007 (see Table 4). Employment in industryexcluding construction increased in the firsthalf of the year, continuing an unusual patternthat began in 2007 after years of job losses, butreverted to its historical downward trend in thesecond half of the year. Employment growthin the services sector was relatively resilient,recording an annualised quarter-on-quarter rateof change of 1.6% in the first half of the year.The average monthly increase in the number ofunemployed persons during 2008 stood at around170,000. The unemployment rate was 8.1% inDecember 2008 (see Chart 31).Labour productivity growth, measured as GDPdivided by total employment, slowed to almostzero in 2008 on average (with falls during thesecond half of the year), down from 1% in 2007.This sharp deceleration in labour productivitygrowth was mainly due to the business cycle. Itis costly for firms to recruit and dismiss staff,particularly those with permanent contracts, asthis often involves large losses in firm-specifichuman capital. Companies may thus initiallyretain staff at the beginning of a slowdown ifthey expect it to be mild or relatively short-lived,or if they wish to wait to assess its magnitude.Chart 31 Unemployment(monthly data; seasonally adjusted)2.52.01.51.00.50.0-0.5-1.0-1.5-2.0annual change in millions (left-hand scale) 1)percentage of the labour force (right-hand scale)2002 2003 2004 2005 2006 2007Source: Eurostat.1) Annual changes are not seasonally adjusted.200810.09.59.08.58.07.57.06.56.066 ECBAnnual Report2008