According to the Estonian Unemployment Insurance Fund (Töötukassa), the economic downturn did not initially lead to an increase in unemployment or a slowdown in wage growth. However, the fund does now expect unemployment levels to continue rising until the first quarter (Q1) of next year.
On average, 47,000 people were registered as unemployed in Estonia last year, 2,800 fewer than in 2021. While the number of people registered as unemployed began to fall in March this year, in recent months, things have moved in the opposite direction, due the more challenging current economic situation.
Based on the Ministry of Finance's economic forecast along with current trends, the Unemployment Insurance Fund (Töötukassa) expects the average number of people registered as unemployed this year to be around 52,300, an increase of over 5,000 when compared to a year ago.
The number of people registered as unemployed has also been affected by the influx of war refugees from Ukraine. This August, more than 4,600 Ukrainian war refugees registered as unemployed.
The Unemployment Insurance Fund forecasts that registered unemployment will continue to rise until the first quarter (Q1) of next year, when it may exceed 56,400.
In 2024, the average annual number of people registered as unemployed is expected to be around 53,000, approximately 700 more than in 2023.
From 2025 onwards, the Unemployment Insurance Fund expects the number of people registered as unemployed to fall, and in 2027 the number could be down to around 47,400.
Changes in the numbers of people registered as unemployed are, to a large extent, driven by those registered, whose capacity to work has not decreased, the Unemployment Insurance Fund said.
The fund also pointed out that the increase in unemployment along with rises in salaries and general price increases will have a knock-on effect on the cost of benefits and labor market measures over the coming years.
For the coming year, the unemployment insurance system is expected to generate €330.5 million in revenue and have expenditures totaling €314.7 million. By the end of the year, its net assets will amount to around €575.9 million.
Editor: Michael Cole