Little evidence of rally in wages so far this year

Palace hotell in Tallinn.
Palace hotell in Tallinn. Source: Siim Lõvi /ERR

While a wage rally in the labor market is not likely to present in many sectors, with any wage rises likely to remain in-line with inflation, in some sectors, such as the accommodation industry, labor shortages are particularly severe, mainly because hotels had to lay off large numbers of staff when the pandemic arrived two years ago.

Most people laid off would have found employment elsewhere during that time, and are unlikely to come back to their old jobs months or years after being fired.

Economist at SEB Bank Mihkel Nestor told ETV news show "Aktuaalne kaamera" (AK) that: "There is a deficit in employment and participation in the job market, a situation similar to other countries," adding that this is happening even as economies are exiting the Covid crisis.

Unemployment, at 7.4 percent in the final quarter of 2021, had dropped to 5.2 percent by the end of the year, an unexpected development, Nestor added.

SEB has revised its unemployment forecast for 2021 downwards to 5 percent (from 5.3 percent) as a result.

Ain Käpp, manager of the Palace and Radisson hotels in Tallinn, told AK that large numbers of former staff had been lost during the Covid crisis, at a time when hotels stood virtually empty and were sometimes repurposed, for instance to house healthcare workers and first responders.

Käpp said: "We have lost ten thousand people in the sector, they have gone to companies and it is very difficult to get them back now. Perhaps today we will actually recruit new people a lot and have to train them in a short time, adding that the two hotels combined have a staff roster of around 150.

Käpp added that a higher demand is expected for the summer.

The CV-Online portal conducted a survey last month and found the number of job offers to be rising, though at the same time, a wage rally is not expected in many sectors, perhaps with some exceptions such as in IT.

Hotels were among those businesses who qualified for wage support from the state earlier on in the pandemic, but even this was insufficient to keep full staff rosters in place.

Domestic tourism, which rose in any case due to travel restrictions internationally, went some way to propping up the sector in 2020 and 2021.


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Editor: Andrew Whyte

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