Labour market

The FPB carries out various activities on the theme of  the labour market:

• The FPB studies and models interactions between macroeconomic evolutions and evolutions in the labour market. This allows the impact of potential government policies on the economy and of business cycle developments on the labour market to be assessed. Labour market modelling relies on a detailed analysis of the determinants of employment, wages, etc.
• The FPB draws up the Economic budget (see the theme ‘Short-term forecasting and business cycle’). This document provides the macro-economic short-term framework for drawing up the budget and reviews by the competent authorities and covers evolutions in employment, unemployment and wages.
• The FPB carries out detailed medium-term (6-year) forecasts of the evolution of the labour market on the national level and by industry (see the theme ‘Medium-term macroeconomic projections and analyses’). The FPB also produces these forecasts for each of the federated entities within the framework of the HERMREG project, in collaboration with the three regional institutions: SVR, BISA and IWEPS (see the theme ‘Medium-term macroeconomic projections and analyses > Regional Economy’).

Besides macroeconomic applications, analyses are also made based on individual longitudinal data, mainly in  the field of wage setting.  The impact of policies aimed at raising the participation rates in the labour market of certain groups is also studied through this approach.

Finally, the FPB also examines extensively its qualitative aspects, for instance the labour market segmentation according to demographic criteria or job characteristics.

Methods and Instruments

As well as different original analytical databases, the following instruments are used:

• the labour market modules of the national macroeconomic models MODTRIM, HERMES and Hermreg. HERMES contains specific modules for the working time, the labour costs, employment allocation between different types of work at branch level and for employment in the service voucher system.
• In HERMES as well as in HERMREG, labour supply is modelled using a sociodemographic module that can also project replacement demand created by exit of cohorts of workers from the labour market and the recruitment needs that should be met by new entrants on the labour market.
• panel, double difference and regression discontinuity analyses.