OVI for 2019: Mild decrease in labor demand, for the first time since 2010

January 9, 2020

Although the OVI index in December recorded an increase on an annual and on a monthly level, the total number of online job advertisements in 2019 was somewhat lower than in 2018. Seasonally adjusted values of the index suggest that labor demand stagnated at the very beginning (first quarter) and end (fourth quarter) of the year; however, a decrease in the seasonally adjusted quarter-on-quarter index values in the second and third quarters led to a 1.6 percent drop in the index value on an annual level. This is the first decrease of the OVI index on an annual level since the crisis year of 2010, which suggests either that the economic growth achieved last year was not based on new employment or that a lack of workforce on the Croatian labor market has changed the standard method of recruiting employees.
 
As in 2018, the five most sought-after occupations in online job advertisements in 2019 were sales assistant, waiter, cook, driver, and warehouse worker, which accounted for a third of all published job advertisements. The highest negative contribution to the decrease in total labor demand on an annual level—amounting to -1.6 percent— came from job advertisements for cooks (-0.7 percentage points), while the highest positive contribution came from job advertisements for sales assistants (0.6 percentage points). Lower labor demand, measured with published online job advertisements, was recorded in all regions except in central Croatia, which accounts for 60 percent of all published job advertisements. The largest negative contribution to the OVI index decrease on an annual level came from the northern Adriatic (-1.2 percentage points), followed by eastern Croatia (-0.6 percentage points) and the southern Adriatic (-0.2 percentage points), while central Croatia had a positive contribution of 0.6 percentage points.
 
Although job advertisements for fixed-term employment again predominated in 2019, accounting for 47.8 percent of all job advertisements, they contributed negatively to the total OVI index decrease (-1.5 percentage points), while job advertisements offering permanent employment had a positive contribution (0.8 percentage points). It is possible that this is also a consequence of a lack of workforce on the domestic labor market and that employers were thus more willing to offer permanent employment in order to attract potential employees. Interestingly, in 2019 job advertisements for employment through occupational training contributed negatively to the total OVI index decrease with -1.0 percentage points, which is in line with the Government’s announcements to revoke this type of employment.
 

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.