Speedy drop in jobless rate unlikely

CYPRUS should not expect a drop in unemployment any time soon, a top economist said yesterday, as jobless rates hit a new high in January, reaching 7.2 per cent.

“We should expect a labour recovery in two to three years because unemployment always recedes last after a recession,” Nobel laureate Christophoros Pissarides said.

The number of unemployed in January reached 28,914 people, a 2.9 per cent rise compared to December 2010.

The year-on-year increase was 22.3 per cent or 5,269 people, the statistics service said.

Speaking after a meeting with Labour Minister Sotiroulla Charalambous, Pissarides, who specialises in labour economics, said unemployment was always a concern.

Pissarides said Cyprus’ rate was low compared to others and “we should consider ourselves lucky”.

“It is one of the lowest rates in Europe, especially if we take into consideration the many foreign workers,” Pissarides said.

He said unemployment in Cyprus is also affected by seasonality – the island’s large tourism and service sectors meant that jobless rates increased in winter.

Pissarides said what was of concern at times like this were unskilled workers who lost their jobs and could not be employed in other sectors.

The more educated people are, the easier it would be for them to be absorbed by the economy, he said.

“This is one of the laws of the jobs market,” Pissarides said. “More time is needed during a recession for them to be absorbed but it is not worrying.”

Pissarides suggested that Cyprus should not try to keep alive sectors that cannot recover. New jobs should be found and those working in the old ones should be re-trained to fill those positions.

The Labour Minister said Pissarides would be extensively briefed on the government’s labour development programmes in order to get his input.