Estonia's first quarter unemployment rate 6.5%, labor market figures still stronger than expected

The offices of the Estonian Unemployment Insurance Fund. Photo is illustrative. (Postimees/Scanpix)
5/13/2016 3:10 PM
Source: BNS
Category: Business

While Statistics Estonia reported a 6.5 percent overall unemployment rate in Estonia during the first quarter of 2016, the employment rate came in at 64.1 percent, and according to Swedbank Senior Analyst Liis Elmik, Estonian labor market figures for the first quarter were stronger than expected.

According to Elmik, in the first quarter of 2016, “The number of the people employed increased and the number of unemployed decreased a little. Compared to the first quarter of 2015, the number of job-seekers dropped by 600 and the unemployment rate declined to 6.5 percent. At the same time, data from the Estonian Unemployment Insurance Fund showed an increase in joblessness. In the first four months of this year, the number of registered unemployed was approximately 1,700 greater than a year earlier. Because of this, registered unemployment was 0.2 percent higher than the year before.”

Employment mainly grew among part-time salaried workers in the services sector, which was influenced by vigorous growth in consumption. The number of people employed in agriculture decreased, however, owing to drops in product prices, as well as the effects of the spread of African swine fever in Estonia.

Meanwhile, Estonian Tax and Customs Board data indicated a decline in the number of salaried employees, noted Elmik. According to the tax authority’s data, the number of salaried employees decreased in March for the eighth month running.

The bank expects the number of employed to decrease somewhat and unemployment to increase this year as the total working-age population declines and growing labor costs increasingly force businesses to replace workers with machines.

“Employment should also decrease in some branches of export, where demand is weak and/or prices have fallen significantly,” added the analyst.

In her opinion, the upcoming state reform will also reduce the number of people employed in the public sector, while work ability reform will force people with reduced labor capacity to seek employment. “As companies’ readiness to hire people with reduced work ability is limited, statistical unemployment will grow at least initially,” noted Elmik.

Employment numbers in the first quarter of 2016

According to Statistics Estonia data, unemployment in the first quarter of 2016 increased by 0.1 percent compared to the fourth quarter of 2015, a difference which can be largely explained by seasonal effects, as several economic activities require less labor in winter, but decreased by 0.1 percent compared to the first quarter of 2015.

In the first quarter, there were approximately 630,000 employed and 43,600 unemployed persons in the Estonian labor market. The labor force participation rate, i.e. the share in the labor force of the population aged 15-74, increased by 0.8 percent compared to the first quarter of 2015, bringing approximately 6,400 more persons into the labor market.

The employment rate, i.e. the share of the employed in the population aged 15-74, was 64.1 percent in the year’s first quarter, which was an increase compared the first quarter of the previous year, but lower than all other quarters of 2015.

Differences remain in labor market indicators based on various socio-demographic characteristics. By age group, the employment rate was lowest among 15-24-year-olds, as due to unfinished studies, approximately 79,200 young people were considered not active in the labor market during the first quarter of 2016, also thus representing the majority of inactive persons aged 15-24.

Compared to the first quarter of 2015, the employment rate of 15-24-year-olds decreased by 1.4 percent, while employment indicators improved in all other age groups. The employment rate of 50-74-year-olds was 54.3 percent, a 1.8 percent increase compared to the same period the previous year.

The unemployment rate of ethnic Estonians was just 5.1 percent, a decrease of 0.7 percent, while that of non-Estonians was 9.8 percent, an increase of 1.2 percent, during the first quarter of 2016; compared to the first quarter of 2015.

The employment gender gap between men and women ages 15-74, i.e. the difference between men’s and women’s respective employment rates, was 6.5 percent in the first quarter of 2016. Among 20-64-year-olds, the employment gap was 5.9 percent; in both age groups, the employment gap had decreased compared to the first quarter of 2015.

Editor: Aili Sarapik

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