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The number of discouraged recorded an unprecedented increase at the start of the pandemic which reverted back in 2021

29.10.2021

Economics in a picture: The number of discouraged recorded an unprecedented increase at the start of the pandemic which reverted back in 2021

At the start of the pandemic, the number of discouraged, that is, those individuals without work which were available to work but did not actively seek for a job, increased by approximately 150,000, an unprecedented increase in terms of magnitude and speed. The number of discouraged was particularly high at times when containment measures were tighter. Under normal circumstances, part of these individuals would have been classified as unemployed. They were classified as inactive because they did not actively seek work owing to restrictions on mobility and the decrease or interruption of normal job-search channels associated to the stoppage of business activity.

Despite some volatility, this increase saw a sharp reversal, which was completed by the second quarter of 2021. However, at the end of the first half of 2021, the breakdown of discouraged by education and age showed some changes from the figures observed before the pandemic.  In particular, the median age increased, as well as the  share of discouraged with tertiary education. During this period, there was an increase in the share of newly discouraged coming from trade and from accommodation and food services.

 

For more details see Box 5 “A characterisation of developments in discouraged individuals during the pandemic“, published in the Economic Bulletin of Banco de Portugal, October 2021.

 

Prepared by Fernando Martins and Domingos Seward. The analyses, opinions and findings expressed above represent the views of the authors and not necessarily those of Banco de Portugal or the Eurosystem.

 

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