Douglas Adams, in his famous series of books “Hitchhikers guide to the galaxy” describes an alien race who builds a supercomputer that is given the task of finding the ultimate answer to the question of life, the universe, and everything. Having churned away at the questions for eons, the computer finally answers with a single number: 42.
The fact that the JustJobs index stands at 52.5 in 2000, and 56.5 in 2012 may at first glance seem similarly informative as the supercomputer’s answer. However, it is possible to interpret a complex index, one just have to be careful about it.
First, the construction of the index is such that if an indicator improves its value, then the index will increase. How much it improves depends on how much weight we have given the index, and also on how the indicators have been given a common scale.
Second, it is difficult to evaluate how much the index has improved without some thought. The reason for this is that the index is somewhat like the Celsius or Fahrenheit temperature scales. It is clear that they measure temperature, but 0 degrees and 100 degrees are arbitrary points, chosen because we think they are good references.
We know that when it is 0, then it is rather cold, and water boils at 100 degrees Celsius. But 10 degrees is not two times five degrees. At the same time we know that 25 degrees Celsius is a relatively pleasant temperature. Put in another way: we have to establish some reference in order to interpret temperatures.
The way to interpret the JustJobs Index is much the same as with temperatures. We know that, for example, that Nordic countries have working conditions that most would consider relatively beneficial to the workers. Thus, Norway has an enhanced JustJobs Index of 87 and Sweden one of 85 in 2012, and in 2000 the Norway had 81 and Sweden the same value as in 2012. In contrast, China has an index of 49 in 2012 and 41 in 2000, while Turkey had 36 in 2012, up from 27 in 2000.
Now, if we know something about the labor market in the four countries, we can give some meaning to the scale. Also, we know that the global improvement in the scale during the period from 2000 to 2012 was less than the improvement that China or Turkey had.
Another way to adress the question is if all countries in the world reduces their unemployment rate by one percentage point, what would the effect on the index be? The answer is that the average of 54.1 would increase to 54.3. That tells us that the gloable increase from 52.5 in 2000 to 56.5 in 2012 is a significant increase.