According to SEB analyst Mihkel Nestor, it is unlikely that the pressure on wages will ease anytime soon. Creating jobs outside Tallinn would have the biggest impact on unemployment.
“A significant easing of wage pressure is unlikely at the moment, as businesses remain optimistic when it comes to hiring, and the number of job vacancies has grown substantially,” SEB Pank analyst Mihkel Nestor told BNS on Tuesday.
“In its forecasts, SEB is starting from the assumption that the work capacity reform will at least statistically increase unemployment somewhat. The duration of this effect depends first of all on the general economic climate, but also on the services of the Unemployment Insurance Fund. Many people with reduced work capacity have been doing heavy physical work earlier, and finding a suitable office job requires them to have totally different skills,” Nestor said.
He added that creating jobs in places situated far away from Tallinn would have the biggest potentially positive effect. “Where labor force participation in the biggest centers is close to 75 percent, in Põlva County for instance it was 54 percent, and in Valga County 59 percent last year,” he added.
The economic situation of Estonia’s rural areas has become an increasingly urgent subject in the course of the ongoing implementation of the Administrative Reform Act. The debate surrounding the Rail Baltic railway project as well as other instances of infrastructural development has also contributed to keeping the topic on the table.
On the government side, several ministries and state institutions are currently considering moving some of their jobs away from the capital to increase the presence of the state in more remote regions.
Editor: Dario Cavegn
Source: BNS, ERR