Labour market as a guide to the monetary policy

Red line corresponds to 2007, blue line to 2009 and green line to May 2014. The red one shows the reference of a labour market close to fullness. Thus, the more the irregular polygons draw closer to the red area (2007), the closer the turn in the FED’s policy will be.

Then, the improvement since 2009 is quite clear (remember that it was a year in which the worst scales were reached). The 2014 polygon is yet far from balance, especially regarding the long unemployment average duration. For its part, the involuntary part-time work has improved (accepted as “the lesser evil”) as well as the unemployment rate.

It would be worth creating a similar chart for Spain –although it would be like a monster full of peaks. I have done it myself, but with a small variation: the peaks stand for the arrows and the lines for the indicators.

labour market spain

The conclusion is that we are still getting worse. So, which policy should carry out the central bank?


About the Author

Miguel Navascués
Miguel Navascués has worked as an economist at the Bank of Spain for 30 years, and focuses on international and monetary economics. He blogs in Spanish at: http://

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