Do you employ more workers as the crop per hectare increases?

Figures net of seasonal effects imply that unemployment rate stood at 11.7% in July. It is seen that the rate has stuck at this level over the last three months. The lowest level of unemployment rate before the crisis was achieved in April 2008 with 10.0. Then the rate tended to rise steeply reaching 14.8 percent in April 2009. In short, though the rate recently showed a significant downwards trend, it is still 1.7 points above the pre-crisis level and it has not shown any movement for the last couple of years.

On the other hand, data on agricultural employment generally attract expert's attention. Employment in agricultural sector dropped by 465 thousand from July 2005 to July 2008. The substantial part of this fall in agricultural employment took place in 2006 whereas the employment in agricultural sector did not vary significantly in 2007 and 2008.

But when employment figures for July 2010 are compared with those for July 2008, a completely different outlook emerges:  a 677 thousand rise in agricultural employment. What is more interesting is that this took place in 2009, when the global crisis was felt the most severely. So, you start to ask what is going on with agricultural employment.

We had better compare the employment data with production data. The figure below shows agricultural value added and agricultural employment between 2005 first quarter and 2010 second quarter, both net of seasonal effects.

Figure 1. Agricultural value added and employment (net of seasonal effects).

It is seen that particularly as of early 2007, employment increased as production increased. In this context, one could think that there is nothing to 'worry' about the recent 'boom' in agricultural employment. But after you think it through, questions appear in your mind:

Do you employ more workers as the crop per hectare increases? You plant the same type of seed or face the same cost for pest control. You use the harvester when harvesting. Of course there are also modern agricultural businesses, different types of crops, harvests and harvesters. However agricultural employment does not have to move side by side with agricultural production. What is more, given the large population recorded as employed in the agricultural sector, the opposite is more reasonable. For instance, between 2005 and 2006, agricultural employment decreased (roughly) while agricultural production increased.

It appears that the rise in agricultural employment and the resultant fall in overall unemployment rate will occupy the agenda for a longer time.

This commentary was published in Radikal daily on 21.10.2010