The number of inactive decreased by 19,000 people, over the year, in the second quarter of this year. In addition to tight labour market, inactivity declined due to state reforms – an increase in the retirement age and the rearrangement of the social benefits system of the people with disabilities, who are now entitled to certain benefits only if they work or actively look for work. At the end of June, there were 5,000 people with reduced working ability looking for a job through the Estonian Unemployment Insurance Fund.
Employment growth remained surprisingly strong (+2.6%, after +1.1% in the first quarter, year-on-year). Estonian enterprises have handled the combination of low export demand, falling output prices and a strong wage growth relatively well, at least so far. One of the reasons behind the still rapid employment growth is the labour intensive part of the economy, i.e., the services sector, where 2/3 of the employees work, and which has enjoyed strong sales growth due to a rapid growth in consumption.
Employment decreased in the mining and energy sectors where output volumes have decreased substantially due to low output prices. Employment growth should continue in the second half of the year as enterprises plan to raise the number of employees in industry as well as in the services sector.
The number of unemployed stayed at the same level as last year and unemployment rate was 6.5% in the second quarter, the same as in the previous quarter and in the second quarter of 2015. Unemployment rate might have reached its bottom (excluding seasonal decline in the third quarter).