Declining employment level during crisis not yet recovered

A closed restaurant in Tallinn.
A closed restaurant in Tallinn. Source: Priit Mürk/ERR

In the first half of the year, the Estonian economy grew significantly despite the new wave of the coronavirus and new restrictions, but the labor market has recovered more modestly. Companies are still struggling to find competent employees.

Employment was lower in the second quarter than before the crisis arrived, while unemployment was also higher.

Although employment growth picked up, and conversely unemployment declined, in the summer months, when a lot of seasonal work is on offer, the further recovery of the labor market will largely depend on the state of the viral epidemic.

The coronavirus crisis has affected different areas differently, and made some people change their fields. In some fields, the number of employments and the created added value is much higher than it was before the crisis.

Areas such as health care, information and communication. In a lot of areas such as accommodation, catering, employment and added value is lower than it was before the crisis.

Bank of Estonia (Eesti Pank) economist Lauri Matsulevitch says that the number of free positions grew rapidly in the services and trade sectors, but in reality, the growth has been broad-based.

While the spring operating restrictions of 2021 generally had a milder effect than a year ago, they had a large impact on accommodation and catering. The wage compensation measure also proves that.

However, there is a growing concern among employers about the workforce shortage and again as many employees are being recruited from abroad as before the crisis. This is probably due to the fact that many of the unemployed have been hit hard by the crisis with backgrounds in activities such as accommodation and catering.

However, new positions are primarily created in other fields and the skills and experience of local job seekers often don't meet the requirements.

The growth of average salary has increased as well, in the second quarter of 2021, it was 7.3 percent.

Wage pressures can be expected to increase, this is predicted due to the rise of minimum wage, consumer price increase, decreasing of free positions.

while by the second quarter of 2021, compared to the pre-crisis period, labor productivity had increased more than labor costs, then in the future the situation may change.

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Editor: Roberta Vaino

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