Nine Countries Where Everyone Has a Job

Earlier this month, polling agency Gallup released its 2011 global unemployment statistics for 148 countries. Of the nations Gallup surveyed, nine had unemployment rates below 5%. The majority are in Asia, with the remainder in central or eastern Europe. 24/7 Wall St. reviewed these nine countries to determine the underlying causes of their extremely low jobless rates.

We looked at these countries in light of the fact that some economists believe that unemployment of 5% or less is considered “full employment.” The argument is that less than 5% unemployment is impossible once normal turnover, job deferment and retirement are taken into account. In fact, the agency’s findings highlight the problem with comparing unemployment levels across nations; similar unemployment rates in different countries do not necessarily mean conditions are the same.

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After analyzing the data, 24/7 Wall St. concluded that only a minority of the countries with low unemployment actually have a healthy economy where middle-class jobs are abundant. Instead, in many nations, employment is either being created by temporary government public works or these nations have large amounts of subsistence farming, which is counted as employment.

Interestingly, low unemployment is not necessarily driven by large economies, the Gallup data show. Three of the nine countries with the lowest unemployment fall within the bottom half of countries with the lowest gross domestic product per capita out of 226 countries outlined by the CIA World Factbook. A few other countries, including Thailand and Montenegro, have similarly low GDP per capita, although not quite in the bottom half. This illustrates that low-earning countries also can have low rates of unemployment.

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Because of the difficulties in comparing unemployment rates, the Gallup study also reported the percentage of the population employed full-time by an employer — a measure believed to more accurately reflect the employment situation of each country. In an interview with 24/7 Wall St., Dr. Dennis J. Jacobe, Gallup’s chief economist, explained that this method helps take into account those who are working on their own and making just enough to get by. “We’ve decided to focus on employed full-time for an employer,” Jacobe said. “Our conclusion out of all of this has been that it is difficult to make an across-country comparison because the rules are so different, and what is defined as a job is different in each country.”

Matthias Rumpf, Organisation for Economic Co-operation and Development’s chief media officer, echoed Dr. Jacobe’s sentiments. Rumpt told 24/7 Wall St. that using unemployment rates to compare developed and developing countries was problematic for these very reasons.

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Many of the countries we examined, especially those in Asia, have unemployment rates less than 5%, but also have a relatively low percentage of their population working full-time for an employer. This includes countries with a great deal of subsistence farming. China, Thailand and Vietnam fall into this category. In China, between 30% and 39% of the population is working full-time. In Vietnam and Thailand, the range is between 20% and 29%. In contrast, most of the countries with the lowest unemployment rates have 50% or more of their population working full-time for an employer other than themselves.

There are also quite a few countries on this list that may have healthy economies in part, but their exceedingly low unemployment rates appear to be more a product of a government actively artificially suppressing rates through public programs. In Belarus, for example, everyone who registers for unemployment benefits must sign up for some public works project.

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24/7 Wall St. reviewed the nine countries with unemployment rates less than 5% in 2011, according to the Gallup survey. For each of these countries, we added the Gallup figures for the percentages of the population that were employed full-time by an employer. We collected GDP and GDP per capita data from the CIA World Factbook. We also looked at long-term unemployment and GDP trends by country, provided by the World Bank.

These are the nine countries where unemployment does not exist.

1. Austria > Unemployment: <5% > GDP: $351.4 billion (35th highest, out of 225) > GDP per capita (PPP): $41,700 (18th highest, out of 226) > Pct. working full-time for an employer: 50%+

According to the World Bank, Austria’s unemployment rate has remained below 5% — excepting a minor hiccup of 5.2% in 2006 — since the organization began recording the statistic in 1982. Austria has a highly advanced market economy, which thrives on its large service and industrial sectors. It has maintained low unemployment in recent years, including throughout the recession. This is due largely to the government subsidizing the reduction of work hours for companies. According to the Austrian Times, the country currently has the lowest unemployment rate among all EU countries.

2. Belarus > Unemployment: <5% > GDP: $141.2 billion (60th highest, out of 225) > GDP per capita (PPP): $14,900 (85th highest, out of 226) > Pct. working full-time for an employer: 50%+

Since the mid-2000s, former Russian satellite nation Belarus has had an above-average GDP growth nearly every year. In 2010, Belarus had the one of the highest rates of industrial growth (a separate measure than GDP growth) in the world, at 10.5%. This may have had some impact on the country’s extremely low unemployment rates, but there are other factors at work. According to the Belarus Digest, these low unemployment numbers are not all they appear to be. As part of public policy, those who register to receive unemployment benefits must register for a public works program. These positions are usually only part-time, and the pay is low. According to the CIA, there is a “large number of underemployed workers” in the country. Still, at least 50% of residents are working full-time for an employer.

3. China > Unemployment: <5% > GDP: $11.3 trillion (2nd highest, out of 225) > GDP per capita (PPP): $8,400 (119th highest, out of 226) > Pct. working full-time for an employer: 30% – 39%

Although China’s unemployment rate is reportedly below 5%, only 30% to 39% of the labor force are working full-time for an employer — a relatively small amount. This is likely the result of the country’s high rate of subsistence jobs. The country also has a large number of jobs in the public sector. Additionally, it is the world’s largest exporter. China enacted its 12th Five-Year Plan in March 2011, which “emphasizes continued economic reforms and the need to increase domestic consumption in order to make the economy less dependent on exports in the future,” according to the World Factbook.

4. Japan > Unemployment: <5% > GDP: $4.4 trillion (4th highest, out of 225) > GDP per capita (PPP): $34,300 (37th highest, out of 226) > Pct. working full-time for an employer: 50%+

Japan’s economy was hit hard by last year’s earthquake and tsunami. A large proportion of the country’s power grid was crippled, which has hurt Japan’s massive auto industry. The power grid remains crippled still. The country’s GDP has either contracted or grown at a very low rate in the past five years. Last year, it contracted 0.5%, the 14th-largest decline among the 215 countries measured by the CIA. Nevertheless, unemployment in the country is less than 5%, and at least 50% of the population is employed full-time by an employer.

5. Montenegro > Unemployment: <5% > GDP: $7.0 billion (152nd highest, out of 225) > GDP per capita (PPP): $11,200 (104th highest, out of 226) > Pct. working full-time for an employer: 50%+

The largest sector in Montenegro’s economy is aluminum, which accounts for 40% of its GDP and 80% of the country’s total exports, according to international trade service GlobalTrade.net. Agriculture and food-processing represent 15% of the economy, as does the expanding tourism industry. Already, more than 50% of the labor force work full-time for an employer. This share will increase as the country further privatizes its industries — a transition that already has begun.

6. Taiwan > Unemployment: <5% > GDP: $885.3 billion (19th highest, out of 225) > GDP per capita (PPP): $37,900 (28th highest, out of 226) > Pct. working full-time for an employer: 50%+

According to Taiwan’s Government Information Office, the country has not had a serious unemployment problem since 1950. This is largely due to exports. During the 1980s, the unemployment rate in the country actually fell below 2%, creating a labor shortage. Today, most of the major industries in the country are either export oriented or they are suppliers to export industries. Taiwan’s economy continues to grow quickly, especially with regards to general industry. According to the World Factbook, Taiwan’s annual industrial growth rate of 5.2% is the 18th highest out of 166 countries.

7. Thailand > Unemployment: <5% > GDP: $601.4 billion (24th highest, out of 225) > GDP per capita (PPP): $9,700 (112th highest, out of 226) > Pct. working full-time for an employer: 20% – 29%

Thailand has a highly-developed, market-oriented economy. Its driving force is exports, which account for more than half its GDP. According to the World Bank, Thailand has had an unemployment rate below 2% for the majority of the past decade. According to George T. Haley, professor of marketing and international business at the University of New Haven, in a CNN article, Thailand is doing so well partly because of investments redirected from China to nearby countries due to high wage inflation in China.

8. Ukraine > Unemployment: <5% > GDP: $329.0 billion (38th highest, out of 225) > GDP per capita (PPP): $7,200 (132nd highest, out of 226) > Pct. working full-time for an employer: 50%+

Like its neighbor, Belarus, the former Soviet Socialist Republic of Ukraine has among the lowest reported unemployment rates in the world. However, unlike Belarus, it has not been a model of consistent growth. According to the World Bank, GDP contracted 14.8% in 2009 and has grown only moderately the last couple of years. The CIA reports that the country has a large number of underemployed or unregistered workers. Nevertheless, according to Gallup, at least 50% of the population is working full-time for an employer.

9. Vietnam > Unemployment: <5% > GDP: $299.2 (42nd highest, out of 225) > GDP per capita (PPP): $3,300 (167th highest, out of 226) > Pct. working full-time for an employer: 20% – 29%

Although Vietnam has moved further from its strict, centrally planned economy, it is still dominated by state-owned enterprises, which account for 40% of GDP. Vietnam, as is the case with many Asian countries that have low unemployment rates, has a high rate of subsistence agriculture jobs. The rate of agriculture jobs has decreased from approximately 25% in 2000 to about 22% in 2011, according to the World Factbook, while the share of jobs in industry increased from 36% to 40% over that same period. This illustrates the modernization shift of the country’s economy.