Bank of Estonia governor Madis Muller said the tourism sector was set to be hit with a labor shortage as it began to recover from the coronavirus crisis.
“The sectors related to tourism, hotels and entertainment are where the number of jobs has drastically decreased. These people have already found new jobs somewhere else. As this sector recovers, tourists return, people want to go out to restaurants and entertainment events, I think it will be difficult to find people to come work,” Muller said.
The central bank chief said labor shortages could bring forth a price increase in catering.
“If you ask entrepreneurs about what is holding their growth back, the first thing they talk about is a lack of employees. There are clear societal and political choices, which have to be made. What kind of labor do we need? Should we go after a more highly qualified employee or a lower qualified employee, who is needed in agriculture, for example?” Muller said.
Speaking about real estate prices, Muller said there were very few new apartments on the market. “This is linked to a rapid increase in construction prices and also the fact that it is hard for real estate developers to plan budgets.”
He noted that what was happening on the real estate market should not be called a bubble, because real estate prices had moved in lockstep with wage increases over the last decade.
“On average, the affordability of real estate has not worsened in terms of purchasing power,” Muller said.
He did note that real estate prices in Tallinn had grown by 15% over the last year, which was also higher than the wage increase rate.
“And there being so few on offer is not positive. The real estate price levels could be some 10 % lower, according to our calculations,” the central bank governor said. (ERR/Business World Magazine)
