The unemployment rate is a very important indicator of a country’s economic strength and growth where a low unemployment rate is usually associated with a fast growing economy with plenty of new jobs being created. However, there are some cases where a low unemployment rate is either misleading or incorrect.
For instance, people who give up looking for work are no longer counted as unemployed because they are technically not a part of the labor market anymore. Also, some countries can create misleading statistics about unemployment that do not reflect actual unemployment or they may count part time workers as fully employed.
Independent professors in China have estimated that the actual unemployment rate is many times higher than what the government reports, and that the official figures are reported to strengthen people’s confidence in China’s economy.
Although the majority of these countries are located in Asia, there are several in both South America and Europe as well which demonstrates that having an abundance of jobs is not limited to any one region of the world. Some of these countries had even lower unemployment rates several years ago, and there has been an overall trend over time in some countries towards higher unemployment levels.
This has occurred because of lingering effects from the global recession of 2008, population decreases in some countries as well as the need for developing countries to increase their education levels and create more skilled workers to drive their economies forward.
For example, countries like India have slowly increasing rates of unemployment because they have too many rural part time workers and they need to make education a higher priority in order to generate more skilled workers to get the technical modern jobs that are available. So, here are the 10 major countries that have the lowest unemployment rates in 2014.
According to the Australian Bureau of Statistics, Australia’s unemployment rate has decreased to 5.8 percent due to the drop in the number of people seeking work. Only 9,000 jobs were created last September while participation of labor had plummeted. The economy is still lingering, jobs are at a low and discourage workers are at a high due to competition, lack of work experience and/or discrimination towards some people.
It is only after the baby boomers have retired that there will be an offset in the increased return of discouraged workers. Until then, countries like Australia need to make a better effort in creating more jobs for its people.
Even though unemployment rate is down to its previous levels of 5.4 percent, experts predict unemployment rate to skyrocket an additional five percent in the next few years. Russia is facing a slight brain drain of highly professional workers due to the lack of outlets the country provides for its professionals.
Sure, brain drain is great for countries who receive skilled immigrants, but for countries like Russia it is a true loss in innovation, investment and tax revenues. With a second recession on the rise and Russia’s debt from the Olympics, Russia cannot afford to cut spending and limit the number of jobs for its people.
Germany seems to be doing very well compare to most countries with high GDP rates. Right now Germany’s unemployment rate is at 5.1 percent, but most experts believe that unemployment rate will decline further in the near future.
Despite the fact that there were more jobs last year, unemployment had at first risen, but eventually declined towards the end of the year. This was partly due to the amount of untrained and long-term unemployed workers returning to the labor force.
According to a specialist at Berenberg Bank, Germany is expected to raise its wages in order to feed higher consumption rates. This will allow Germany to rely on domestic demand for growth instead of an unreliable export caused by the global crisis.
In the beginning of 2014, Brazil’s unemployment rate was at 4.3 percent, which was lower than economists had forecasted. Brazil’s unemployment rate is at 5.0 percent right now. However, the inflation rate has risen, which could have increased prices and drove up the unemployment rate.
Brazil needs to persist in addressing its high inflation rate of 5.68 percent that could lead to the discouragement of investments as well as a fall in money value. Regardless of Brazil’s slow growth rate in recent years, the country managed to provide regular jobs to its people.
In order to keep people spending, employers have given their employees wage increases while working conditions got better. Yet again, similar to Australia, fewer people now are looking for jobs while Brazil’s population growth becomes sluggish.
During the beginning of the global recession, Mexico peaked at 6.0 percent before going down to 4.7 percent this year. This 1.3 percent drop is due to the increase of jobs in the informal sector.
Sadly, the loss of jobs in the formal sector has forced highly-skilled workers to take up jobs in the informal sector, which has result in a loss of income. In order to promote economic growth and reduce poverty levels, countries like Mexico need to find a way to give better employment opportunities for women and youth.
China has a misleading low official unemployment rate of four percent, but many experts believe it to be much higher in actuality. According to many influential professors and researchers in China, including an expert at China’s National Bureau of Statistics, unemployment rate in China is reported to be consistently over 20 percent.
The government of China does not want to seem incapable and thus has routinely reported misleading unemployment numbers on a national and local level. Part of the problem is that party officials want to gain party approval and there is a great deal of fraud when reporting the unemployment rate in each district.
Despite this inaccuracy in unemployment rates, China’s growth remains at 10 percent per year and they remain the world’s second-largest economy.
India has a relatively low unemployment rate of 3.8 percent, but this number has been increasing since 2011 by about 0.1 percent per year. This trend is thanks to various signs that global economies are slowing down, while at the same time there is little business expansion ongoing in India.
The Indian Staffing Federation has stated that the government needs to take a more active role in providing better skills and education to young people in India as well as reduce India’s informal economy.
Informal jobs account for 94 percent of India’s workforce and are usually unprotected by contracts and low paying service or agricultural jobs. India will need to help create more highly skilled workers if it hopes to avoid a rise in its long term unemployment.
Japan’s unemployment rate has recently fallen to a six year low of 3.6 percent, yet inflation has increased in order to counter deflation in Japan following the implementation of “Abenomics.” On a high note, the Prime Minister of Japan’s economic policies seems to be succeeding in jump starting the Japanese economy. This could lead to Japan lowering its unemployment rate even further and increasing its economic growth even as it recovers from the tsunami that devastated the country’s energy industry and several coastal cities three years ago.
Although the Fukushima tsunami dealt a temporary setback to the Japanese auto industry and power grid, they have now recovered and are poised to expand rapidly in the next few years.
2: South Korea
South Korea has one of the lowest unemployment rates and fastest growing economies in the world, with a current rate of unemployment of just 3.5 percent. This is still considered above average for this country, which is matched only by Switzerland in its extraordinarily low unemployment rate.
Its strong economic performance may require the country to accept additional immigrants into the country to fuel the economy in the future. South Korea has experienced a low number of births in recent years while keeping net immigration at zero, so continued economic growth may depend on further increasing the population.
Switzerland is one of the most prosperous, stable, and dependable economies in the world today, with an unemployment rate of just 3.5 percent. The Swiss have many tools at their disposal to keep their economy growing strong, such as a central bank that used quantitative easing and low interest rates to rev up the economy following the 2008 global recession.
Another tool at its disposal is a short-term immigration policy, where the government can easily and effectively controls the flow of immigrants into the country and choose not to extend work visas if unemployment rates were too creep up too high. Finally, the most obvious and famous leader of the Swiss economy is of course the banking sector.
With its well-known secrecy and world-renowned status, this sector leads the Swiss economy and keeps capital rapidly flowing into the economy. Recently, however, the government of Switzerland has come under increased pressure to be stricter with foreign depositors who may be using it as a tax haven, leading to changes in their traditional banking policies.