Unemployment
26. Oct 2022
Unemployment at an all-time low
Revised unemployment figures
Unemployment figures have been revised as part of general updates to Statistics Faroe Islands’ data systems. Due to the revised figures, the national unemployment rate, especially for the 2016-2019 period, has dropped by 0.1%, and in some months by 0.2%. The revised compilation method also allows for quicker publication of unemployment figures. Read more about these changes at the bottom of this article.
Unemployed people are registered as unemployed with the Faroese unemployment system and the social welfare services, fully available to the labour market and actively seeking work.
The graph below shows the unemployment rate and the trend. The semi-transparent line represents the unemployment rate, and the solid line shows the unemployment trend.
In September, the unemployment rate was 0.5%, which is equivalent to 150 full-time unemployed people.
A full-time unemployed person is defined as one who is unemployed throughout a full month. When two persons are affected by unemployment for half a month each, they are converted to one full-time unemployed person for the month in question. In September, about 170 people were affected by unemployment.
For comparison, the unemployment rate in September 2021 was 0.9%. The trend shows that unemployment has been on a steady decline in recent years. The rate went up slightly in 2020 due to the pandemic, but it has now gone down again.
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Lowest rate for both sexes
The unemployment rate in August and September was at its lowest ever for both sexes.
In September, 0.6% of the male and 0.5% of the female labour force were unemployed. This is equivalent to about 90 unemployed men and 60 unemployed women. In September 2021, the rate was 1.1% for both sexes
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Lowest rate in all regions
The map below shows the unemployment rates in each region of the country. In September, Eysturoy and Vágar had the lowest unemployment rate at 0.2% and Suðuroy had the highest at 1.1%.
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Few unemployed youths
The lowest unemployment rate is found in the 16-24 and the 45-54 age groups, while the highest is in the 35-44 and the 55-66 age groups.
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17% are long-term unemployed
The graph below shows how long people have been unemployed. In September, 29 people (17% of all unemployed people) had been out of work for more than a year, compared to 50 people (16% of all unemployed people) in September 2021.
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Revised unemployment figures
Statistics Faroe Islands has revised its methods for compiling unemployment statistics as part of structural changes to its data system. This report is the first one using the revised data system, which seeks to streamline the compilation of statistics.
Quicker publication
The previous system had a two-month lag in the unemployment statistics. This lag was implemented to ensure accuracy in the reports as some figures were delayed.
The revised system allows for less lag and thereby quicker publication.
However, this may result in minor changes to the unemployment figures for the previous months.
Slightly lower rates in 2016-2019 period
Due to the revised compilation method, the national unemployment rate, especially in the 2016 - 2019 period, has dropped by 0.1%, and in some months by 0.2%.
The graph below shows unemployment rates using the new and the old method.
The revised system affects the unemployment rate in some regions and in some age groups more than in others from 2015 to today. The reason is that minor changes are more pronounced in relatively small regions and age groups.
For example, the unemployment rate in Sandoy is decreasing. In April of this year, the rate was 0.9% according to the old system. In the new system, the rate was 0.5%. This is because the new system counts 3 full-time unemployed people while the old one counted 6.
Unemployment as a concept
Statistics Faroe Islands and other statistics agencies across the world use the definitions of unemployment given by the International Labour Organisation (ILO), which is a United Nations agency.
According to this definition, the unemployment rate reflects the proportion of the labour force that does not have a job but is available and actively looking for work.
Statistics Faroe Islands’ compilation methods have been revised in accordance with this definition. This has led to minor adjustments, which are outlined below.
Fewer unemployed people from the social welfare centre
Under the old system, people who applied for maintenance grants due to being unemployed and people who had been issued such grants were given the same unemployment status.
Since a person’s circumstances may change during the processing of such applications, and since further details about the person may emerge during processing, another maintenance grant than the one originally applied for may be issued. For example, a person may apply for a maintenance grant due to being unemployed, but during the processing the person’s circumstances may change and a maintenance grant may instead be issued due to illness.
A decision has now been made that only those who have been issued a maintenance grant due to unemployment are regarded as unemployed. In other words, applicants for maintenance grants due to unemployment who end up being issued grants for reasons other than unemployment are no longer regarded as unemployed.
This results in a slight drop in the number of unemployed people registered through the social welfare centre.
New rules regarding suspensions from unemployment benefits
In the old system, persons who had been suspended from receiving unemployment benefits due to having resigned from a job without a valid reason were not included in the unemployment statistics until their suspension had been lifted.
Persons in this situation are now regarded as being covered by the ILO definition of unemployment despite their suspension. It has therefore been decided that these persons should be included in the unemployment statistics. This results in a slight increase in the number of unemployed people registered with the ALS unemployment office.
Duration of unemployment
The old system measured the duration of unemployment by the number of consecutive days in which the person has been unemployed.
This method implied that the unemployment period had to be reset every time the person failed to meet the unemployment requirements for a single day, e.g. by refusing to undertake work on a specific date.
Under the new system, a person’s unemployment period is regarded as continuous even if the person fails to meet the unemployment requirements for up to one week.
Example: a person is unemployed for 30 days. For various reasons, the person then fails to meet the unemployment requirements for 7 days but is subsequently unemployed for the next 60 days. Under the old system, this person would be listed as having two separate unemployment periods – one 30-day period and one 60-day period. The new system regards this person as being unemployed for a period of 90 days.
Thus, more long-term unemployed people are included in the new system.