Swedbank: Labor shortage keeping wage growth fast in Estonia

Swedbank ATM in Estonia.
Swedbank ATM in Estonia. Source: Priit Mürk/ERR

The labor shortage is keeping wage growth fast and the average gross salary will increase by 6 percent this year, Swedbank senior economist Liis Elmik has said.

Data from Statistics Estonia released on Monday shows unemployment decreased from 7.1 percent in the first quarter to 6.9 percent in the second quarter. There were 2,000 fewer jobseekers this spring than a year earlier, but nevertheless 13,000 more than two years ago.

"Despite the extremely rapid economic growth, it will take quite a long time for the unemployment rate to reach the pre-crisis level. Value added is growing mainly in capital-intensive industries, while many labor-intensive activities are still struggling with low demand. The third wave of coronavirus will increase risks again in several labor-intensive sectors, while we do not expect a complete closure of the economy in the baseline scenario of our forecast in the fall," Elmik said.

She said the decrease in unemployment should continue both this year and next.

"Demand for new employees has increased significantly in recent months in both industry and services. Employees were most wanted with the help of the Unemployment Insurance Fund in industry and trade. According to entrepreneurs, labor shortages are at pre-crisis levels in industry, services and construction. About 30 percent of entrepreneurs see labor shortage as their biggest obstacle to development," the senior economist said.

According to Elmik, such an extensive labor shortage with continued high unemployment shows the unsuitability of vacancies and job seekers both in terms of profession and place of residence. Altogether 44 percent of the unemployed have primary, basic or secondary education, without a specific specialty.


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Editor: Helen Wright

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