Growth rates of the respective magnitudes or indicators seems to be the prevailing
measure used by statistical offices, national and international organisations and media for
describing economic development over time. They need to be complemented by other easily
understandable statistical measures to facilitate the stakeholders to better understand the
situation in a broader framework.
Tables 2 and 3 offer two more statistical measures beyond growth rates that can additionally
describe the severity of the crisis related to levels of GDP and total employment for EU27
countries, United States and Japan: static index of fall from the peak level and S-time-
distance, which in this special declining phase indicates for how many years have the current
levels fallen back to levels already achieved earlier. Time distance analysis lead to a
summary statement that EU27 has in the current crisis lost 4 years of growth of GDP
and of total employment.
For 2010 it is expected that all EU countries except Poland will still be below their 2008
levels: from 1% to 22% according to one measure and falling back from 2.4 to 8 years
according to the time distance measure. USA are expected to return to its 2008 GDP level
while for Japan time distance would be 5 years. The time distance lag would be between 2
and 3 years for 5 EU countries, between 3 and 4 years 9 countries, between 4 and 5 years 7
countries and for 4 countries between 5 and 6 years. Mostly positive growth rates of GDP in
2010 were much too low to compensate for the fall in 2009.
Table 3 for total employment shows even a more difficult situation than for GDP even though
the fall of total employment in 2009 was -1.6 percent, i.e. less than for GDP of -4.2 percent.
In percentage terms total employment fell more in the USA, in EU and in Japan the fall
was similar. However, S-time-distance shows again a different picture. The time lag for the
USA is expected to be in 2010 about 6 years, for Japan about 21 years (USA level of total
employment is expected to be at their 2004 level and for Japan at their 1988 level), for the
EU27 about 4 years. The forecast for 2011 shows that for 7 EU countries total employment
would be shifted back to levels attained more than 10 years ago (before 2001). They are
Portugal and six earlier socialist economies (Czech Republic, Hungary, Romania and the
three Baltic members Lithuania, Estonia and Latvia). Even in static terms total employment
fell for 5 countries (which include Ireland) between 9% and 19%.
S-time-distance measure adds a perspective that is easily understandable by everyone.
This additional time distance perspective can be a very useful tool for better
understanding of the situation needed for policy discussions among social partners
in difficult circumstances. Looking only at growth rates of GDP and employment
does not give a clear indication of the severity of the crisis to policy makers and to the
general public.
The summary statement that EU27 has in the current crisis lost 4 years
of growth of GDP and of total employment needs to be complemented with diverse
situations in the countries. Also, the employment situation is shown to be even more
difficult than that with GDP. In the next paper we shall show that investment rate has
declined even more to affect the medium term possibilities of growth.
