The third-quarter employment rate in Estonia stood at 68.3%, the highest it has been in 20 years, and according to Swedank, fast economic growth is increasing the demand for the labor force.
“Due to enlivened economic activity, demand for the labor force has increased,” Swedbank senior economist Liis Elmik said. “The number of people employed in the third quarter rose as expected, by 13,000 people compared to the same period last year. Employment increased in services.”
According to Statistics Estonia, the estimated number of unemployed in the third quarter decreased by a full third, or 16,000 people. Statistics Estonia assesses changes on the labor market by the labor force survey, in which 5,000 people participate every quarter.
Figures from the Estonian Unemployment Insurance Fund (EUIF) show that the number of officially registered unemployed in the third quarter increased by 3,000 people YoY, Elmik said, noting that the number of unemployed in the EUIF register increased as the number of persons with limited work ability doubled as a result of the nationwide work ability reform. At the same time, the numbers of the remaining unemployed had fallen by 8% YoY.
The unemployment rate in the third quarter decreased to 5.2%.
“According to the monthly survey of the Estonian Institute of Economic Research, consumers consider the danger of unemployment low,” Elmik said. “The number of people away from the labor market decreased by 3,000 people compared to the same time last year. The number of people taking care of children and other family members decreased the most among those not active on the labor market. The decrease in inactivity is encouraged by the lack of working hands.”
There is continually less labor force on the labor market that has not been implemented yet. During the second quarter of 2017, the number of vacant job positions was the highest in 9 years. Labor shortage was the main factor hindering business activity in October among a third of industry and service companies and among a half of construction companies, which is why pressure for wage growth remains. Figures from the Estonian Tax and Customs Board (EMTA) show that wage growth accelerated in the third quarter.
The number of employed is expected to increase slightly next year. Although the demand for the labor force is increasing, labor supply is limited, which is why Swedbank is anticipating an increase in the number of free jobs and the continued decrease in the number of people away from the labor market.
Statistics Estonia reported that the labor force participation rate in the second quarter of this year remained at the highest level seen in recent years, but characteristically to the summer season, unemployment in the third quarter decreased and employment increased, resulting in the highest employment rate of the last 20 years. Compared to the third quarter of last year, there were 13,000 more employed persons in the third quarter of this year. (ERR/Business World Magazine)