Layoffs up on year in manufacturing

Metal industry.
Metal industry. Source: ERR

The number of layoffs this fall are up in comparison with the same time last year. Manufacturing companies, whose competitiveness has been hit by soaring energy prices, are among the hardest hit. The Standard Furniture Factory, which announced it would be making layoffs this week, has now let 163 people go.

The highest number of combined annual layoffs over the last three years was in 2020, when 7,500 jobs were cut across 204 organizations. At that time, administration and support activities, as well as accommodation and food catering services, felt the biggest impact. By contrast, the previous year only saw a total of 1,305 layoffs.

Annika Koppel, head of communications at the Estonian Unemployment Insurance Fund (EUIF) (Töötukassa), told ERR that this year so far, the EUIF has received 91 layoff notices- from employers, affecting around 2,600 workers.

"This year, the manufacturing industry stands out," Koppel said. "It's a sector where there has always been a need for labor, but today a lot of companies are quite worried and don't know how the energy sector, or exports will perform over the coming months."

In the case of larger, or collective layoffs, companies are required to inform the EUIF. However, there are also so-called 'regular layoffs', where jobs are cut, but not on such a large scale. Koppel explained that while many of those laid off are able to quickly move on to jobs with now companies, in 2020, 21,300 registered with the EUIF, with that figure dropping to just under 10,000 last year and 8,100 for 2022 so far.

According to Koppel, there is often a time lag between people being laid off and registering with the EUIF.

"This means that those laid off this fall could come to us by the end of the year," Koppel said. "However, I want to tell people that if they have received a notice of their being laid off, they can already get access to counselling and certain other services from the EUIF. They should definitely come to us right away, they don't have to wait until their last day at work," she explained.

Standard Furniture layoffs will continue until end of January

The Standard Furniture Company announced on Tuesday, that it would be temporarily halting part of its production operations, and laying off a section of its workforce as a result.

Standard has now submitted two layoff notices to the EUIF, with the second increasing the total number of layoffs to 163. The layoffs at the furniture company will continue until January 27 next year.

Annika Koppel believes, that increased input prices and reduction in revenues were the main reasons behind Standard's decision to cut jobs. Koppel also pointed to developments in the period between the EUIF's receipt of the two layoff notices, including wood panel producer AS Repo filing for bankruptcy at the end of September, which caused a significant reduction in Standard's production levels.

According to Koppel, the EUIF has already met with employees of Standard Furniture, as it tends to do when collective layoffs are made, to provide information about job vacancies.

She also explained, that in many cases, those being laid off have already found new jobs.

"We always ask employers if they are planning to take on more people in the near future, so we can put them in touch with suitable people who need jobs," she added.

Koppel noted that the current situation is still such, that employers are looking for people who want to work. The EUIF is also prepared to organize a mini-fair if necessary for Standard employees, to which employers who are currently recruiting would be invited.

"Those laid off include machinery operators, carpenters and many other people ,who have the kinds of skills needed on the labor market. We are pleased that some employers have already contacted us with job offers (suitable) for Standard's (former) employees," Koppel added.

EUIF confirms it can cope with benefit payments

When asked whether the EUIF's financial reserves would be sufficient if the number of companies facing difficulties were to increase significantly, Koppel confirmed that there would be no issues.

She explained, that the EUIF is in good shape financially and that no one need fear missing out on benefits or subsidies.

"We have had quite a lot of experience of large-scale restructuring in recent years - you may recall Tallink and Baltika, for example. There are a few people on the payroll at the moment, who have been laid off," Koppel said.

The EUIF's reserves totaled €838 million at the end of 2020. However, as of August this year that figure had fallen by more than €300 million, mainly as a result of the coronavirus pandemic and the wage subsidies implemented to alleviate it.

Over the summer, Minister of Health and Labor Peep Peterson (SDE) proposed 0.2 percentage point rise in the unemployment insurance contribution for employees and 0.1 percentage points for employers to restore reserves. However, in September the government approved a separate proposal from the EUIF to maintain the current contribution rates of 2.4 percent for a four year period, with 1.6 percent paid by employees and the remaining 0.8 percent covered by employers.


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Editor: Michael Cole

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