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Unemployment in Denmark: Two ways to count

An example of the misuse of statistics based on different ways to define unemployment.

During the campaign leading to the parliamentary election in Denmark in 2011 - the Liberal Prime Minister (Lars Løkke) several times stated that: “although unemployment had risen under his government it was still below the unemployment rate under the previous government.”

The Liberal government took office in 2001 – but lost the election in 2011.

The development Lars Løkke referred to was:

Registered net unemployed, 000s

Source: www.dst.dk  11/2013. Extracted by Karsten Duus

The graph shows that after the Liberal government took office in 2001 the number of people unemployed grew a little, but between 2004 and 2008 it fell rapidly. The problem for the former Government was that the unemployment grew rapidly in 2009 and in 2010. And rising unemployment is often bad for public votes.

Perhaps therefore, as the former Prime Minister had emphasized that, although the unemployment had risen the number of unemployed at the start of 2011 was still less that the numbers before the Liberal government took over in 2001.

And the graph supports this analysis!

 

But - the unemployment numbers behind the graph were based on a different way of counting the unemployed, which led to smaller numbers being presented:

The Statistical Bureau in Denmark uses three ways to define unemployment:

1) Registered unemployed, Brut: All unemployed people who are registered at a work center, including those involved in community activity programs for the unemployed.

2) Registered unemployed, Net: All unemployed people who are registered at a work center excluding those involved in community activity programs for the unemployed.

3) Unemployed people according to the quarterly workforce survey. The definition of unemployment is: All people aged between 16 and 64 who are actively seeking employment and who are able to take a job at short notice.

 

The Prime Minister. Lars Løkke, used the second definition. If he had used either the first or the third definition his statement would have been false.

The reason for this was primarily that in 2009-2011 the local authorities activated many unemployed people to work in short term projects. But those people were therefore excluded from “the net-unemployment” definition.

Unfortunately the real unemployment figures between 2009-2011 were much higher than the Prime Minister had stated:

ILO-unemployment in Denmark, seasonally adjusted, 1.000


Source: www.dst.dk  11/2013. Extracted by Karsten Duus

This second graph show the results of the national Workforce Survey. A survey based on the same definitions used in other EU countries. These numbers could be compared with unemployment figures from all other EU-countries and worldwide where the ILO-definition is used.

If the two unemployment definitions are combined and focus on the period 2001-2011, this was the picture:


Source: www.dst.dk  11/2013. Extracted by Karsten Duus.

The graph tells two different stories. But unfortunately it is the black line which showed the real number of unemployed in Denmark at that time.

The Prime Minister lost the election when a coalition of Social Democrats, a Socialist Party (SF) and a Social Liberal party (Radikale Venstre) took power after the elections in 2011. This was not because of the “false” unemployment statement he used, but because the economy (and therefore unemployment) were badly influenced by global, and European, financial crises. However a few voters might have changed their allegiance due to his statement.

In the last week of the election campaign the question of defining unemployment became a big issue. The opposition was furious and many people suddenly realized that the Danish Statistical Bureau actually published three different ways to describe unemployment. And that the Prime Minister had chosen the one which was suitable for his purpose.

In a global economy, with daily comparisons possible, it is important that numbers are compared based on the same principles. Therefore the Statistical Bureau in Denmark today (2013) puts more emphasis on either the ILO-definition or registered unemployment, brut!

/Karsten Duus 11/2013