OVI for May 2019: Decrease in labor demand in the tourism sector

June 4, 2019

After a recorded deceleration in April, in May OVI fell by 10.9 percent compared to the same month last year while seasonally adjusted values suggest a decrease in labor demand on a monthly level as well, considering that OVI fell by 6.6 percent compared to the previous month. In the first five months of this year, the index rose just by 0.9 percent compared to the same period in 2018, which additionally points to a deceleration of the strong growth trend in labor demand on the Croatian labor market. Although we could expect the positive effects of the high GDP growth in the first quarter to spill over into the labor market, the developments on the demand side in the first two months of the second quarter suggest the labor market has not caught up with the overall economic activity trends.
 
Reasons for the decrease in labor demand in May can be largely found in the tourism sector. Although the five most sought after occupations still included sales assistants, waiters, cooks, drivers, and warehouse workers, demand for waiters and cooks fell by more than 25 percent compared to May 2018, while in the first five months of 2019 demand for waiters and cooks fell by more than 10 percent compared to the same period last year. In addition, the largest negative contribution to the -10.9 percent total year-on-year index decrease in May 2019 came from job openings for waiters and cooks (-2.4 and -2.1 percentage points), which also contributed to the modest 0.9 percent index growth in the first five months negatively with -0.9 and -1.6 percentage points, respectively. It should be noted, however, that unlike May when labor demand for hotel/hospitality staff (hotel workers, receptionists, managers etc.) decreased by just over 10 percent, the first five months of 2019 saw a growth in the number of job advertisements for hotel/hospitality staff by just over 14 percent (contributing to the year-on-year growth with 0.4 percentage points).
 
In addition, the decrease in labor demand on an annual level in May can almost fully be attributed to the regions of northern and southern Adriatic, where the number of job advertisements fell by more than 25 percent compared to the same period last year. The southern Adriatic contributed to the total index decrease in May with -5.1 percentage points, while the northern Adriatic contributed -4.6 percentage points. The southern Adriatic contributed to the 0.9 percent index growth in the first five months of 2019 with -0.9 percentage points, while the northern Adriatic contributed -1.1 percentage points. Although these indicators point to a somewhat weaker tourist season, it is possible that the decrease in labor demand in May is just a consequence of a very high labor demand in 2018, or it could mean that employers have already filled their job openings for the upcoming tourist season.

What is OVI?
Online Vacancy Index (OVI) is a monthly index of online job advertisements developed by the Institute of Economics, Zagreb in cooperation with the web portal MojPosao. The index aims to provide timely information regarding current labor demands. OVI index is developed by means of simple enumeration of single new job advertisements whose application deadlines end within the same month for which the index is being calculated. Given that advertisements published by only one web portal are taken into account, the number of job advertisements is expressed as an index (with the base year being 2015). 

The index is to be interpreted in such a way that the values greater than 100 represent growth when compared to 2015, and accordingly, that the values less than 100 represent a decrease with respect to the base year. Index is seasonally adjusted using the X-12-ARIMA method.
 

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