Swedbank: Labour market is doing well in Estonia

SwedbankThe situation in the labor market is still good, despite the year-long recession in the economy. The number of the employed is record-high (up by 3.2%, over the year) and the unemployment rate is relatively low.

According to Statistics Estonia, nearly 700,000 people worked at least one hour in the first quarter, the highest number since the early 1990s. Companies hold on to their personnel and most expect bad times to be temporary. Also, the most recent crisis has hit sectors that are more capital-intensive (manufacturing, transport), while labor-intensive services are doing quite well. This year, the number of jobs has increased in accommodation, catering, healthcare, and education.

Ukrainian war refugees account for half of the employment growth. 11,000 refugees have found work so far and 5,000 are still looking for a job.

The unemployment rate has remained moderate despite the difficult economic situation. The number of people made redundant has increased, but there are still quite many vacancies. According to the Statistics Estonia’s survey, the unemployment rate even decreased in the first quarter, to 5.3%. The registered unemployment rate increased to 8.1%, during the same period.

The gap between the registry data by the Estonian Unemployment Insurance Fund and the survey-based estimate by the statistical office has widened. Last year, the difference was partly explained by the statistical office not taking into account the Ukrainian refugees. But this year, the refugees are included in the sample. The difference in the number of the unemployed between the two data sources – around 13,000 people in the first quarter – can be those who claim unemployment benefits and work only little (which is allowed) or unofficially or do not actually want to go to work, or perhaps a survey among 5,000 individuals does not give a precise picture and the actual unemployment rate is somewhat higher than what the statistical office estimates.

As the first quarter’s unemployment rate of 5.3% was well below our expectations, we would need to lower our unemployment forecast for this year.

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