ANALYSIS | Thousands have lost their jobs in tourism

Tallinn Old Town that is usually bustling with tourists has been empty this year.
Tallinn Old Town that is usually bustling with tourists has been empty this year.

Around 15,000 people have lost their jobs in the process of collective layoffs during the coronavirus pandemic. At least 3,000 of them are either directly or indirectly tied to the tourism sector, while the actual number of jobs lost in tourism is greater still.

It is difficult to find accurate information on tourism sector layoffs and bankruptcies. The Estonian Unemployment Insurance Fund admits that because tourism is not included in the classification of areas of activity, it is difficult to determine which companies work in tourism either directly or indirectly. The food chain is long in tourism – caterers, accommodation providers, transport services provider, as well as laundries that cater to hotels, not to mention souvenir shops all depend on tourism.

As companies only report collective layoffs to the Unemployment Insurance Fund, statistics is incomplete. Individual layoffs are not reflected in statistics, meaning that the real picture is gloomier still. While people can register as unemployed, those who quit as a result of an agreement with the employer might never report it.

The fund cannot say for certain who worked in tourism or a field that supports it. Nevertheless, ERR attempted to get an idea of how many companies have gone out of business and people lost their job in the sector.

There cannot bee too many bankruptcies as the option was taken off the table for the duration of the emergency situation and two months after that. The government also introduced a temporary measure used to support tourism sector companies to keep them from laying people off and closing shop. However, the instrument ran its course by late summer and because tourists never really got the chance to come Estonia in summer and definitely will not come in fall, a lot of companies have burned through reserves.

That is why bankruptcies number so few. These are often long and arduous processes and not enough time has passed.

Bankruptcies have been declared by a Tallinn cafe that sold handmade ice cream, a dry cleaners that operated in the Kristiine Keskus shopping mall, a premium hair and beauty salon aimed mostly at Finnish tourists next to Viru Square and a company that ran three four- and five-star hotels and several top restaurants in and around the Tallinn Old Town. But also a transport company registered in Tallinn, a restaurant and entertainment establishment in Tartu and a labor rental company in Võru County.

The disappearance of Finnish customers could also be behind a Narva medical instrument manufacturer's bankruptcy. At least ten companies so far. In other words, it is hard to tell where the effects of lost tourism end. We also do not know how many bankruptcy proceedings are ongoing or looming.

Dispassionate statistics that only tells half the story suggests that 29 companies active in accommodation or catering have reported mass layoffs since the beginning of the emergency situation on March 12. They laid off 1,219 people between them. Collective layoffs were also carried out by nine companies active in transport and warehousing and concerned 207 positions. These are the results of collective layoffs.

In truth, more people have been laid off. Since March 12, 14,608 people have registered with the fund after being laid off. 2,060 of them worked in accommodation or catering and 937 in transport or warehousing for a total of 2,997 people.

Two-thirds of those laid off in accommodation and catering were in Harju County, with Pärnu, Tartu and Ida-Viru counties following.

Most jobs lost in accommodation and catering

Data from Statistics Estonia clearly shows that jobs have been disappearing the fastest in accommodation and catering since Estonia declared an emergency situation in spring. The trend hit bottom in May when the sectors had 17 percent fewer jobs than in January. There was some recovery in summer months, but the number of jobs fell back to 16 percent below the January level as soon as August ended. There were 25 percent fewer jobs in accommodation and catering in June year-over-year.

The number of lost jobs fits inside 3 percent in all other sectors, while the number of filled positions grew by 15 percent in July compared to January in agriculture and forestry. The sector has 8 percent more jobs than it did in January today. Of course, it is peak season in agriculture, meaning that the figure will start going down again soon. That said, summer is usually also the peak season for hotels and caterers.

Unemployment Insurance Fund data suggests that the overall number of registered unemployed exploded when the emergency situation began. The situation stabilized in summer, while unemployment seems to be growing again now.

"There will be collective layoffs. We are told in advance, while people will be laid off later. Baltic Sea shipper Tallink sent its first layoffs notice in September, while the deadline is December," Jana Rosenfeld, press representative for the fund, says.

"Collective layoff is a longer process that starts with preliminary notice, followed by negotiations and the final notice. That is why they reflect in the number of unemployed a few months later. It is difficult to say what kind of figures we will see. There is still a lot of uncertainty on the labor market," Rosenfeld finds, adding that unemployment figures could change after a few months as layoffs are not reflected in statistics today.


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Editor: Marcus Turovski

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