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Think tank: Ukrainian refugees doing better than expected on labor market

Ukrainian war refugees arriving in Tallinn in March 2022.
Ukrainian war refugees arriving in Tallinn in March 2022. Source: Ken Mürk/ERR

Ukrainian war refugees have integrated into the Estonian labor market more successfully than in other countries. However, there remains room for improvement when it comes to matching the qualifications of those arriving from Ukraine with appropriate jobs, according to a report published by independent Riigikogu-based think tank the Foresight Center.

More than a third of Ukrainian war refugees, who have arrived in Estonia have found employment, with 27,000 people having now entered the local labor market. Ukrainians with jobs now make up around 4 percent of Estonia's labor force.

According to Foresight Center expert Märt Masso the participation of Ukrainian refugees in the Estonian labor market will provide a boost to the Estonian economy. "The growth in expected value added, which can be connected to refugees is projected at €142 million this year, and the additional tax revenues from Ukrainians will reach €56 million," Masso said.

Although the arrivals from Ukraine have led to an increase in the overall number of people in employment in Estonia, the unemployment rate among Ukrainian refugees is still higher than among locals. The report also observes that the downturn in the economy means the need for employees, including those who have arrived from Ukraine, will decline in the coming months.

The report by think tank the Foresight Center finds that a large share of the Ukrainians, who have arrived in Estonia, are working in jobs for which they are overqualified. "Matching the qualifications of refugees with jobs is a challenge in many countries in Europe, and one part of that is the need to recognize skills through the education system. If we can get more refugees into jobs that match their skills though, their job security, incomes and economic benefit to Estonia would all increase", said Märt Masso.

Bringing in an income from employment allows refugees to manage independently. The income earned from work by those Ukrainians under temporary protection averages around 70 percent of the Estonian average and 86 percent of the average earned from work by non-Estonian citizens.

The Foresight Center notes that there are also significant costs involved in helping Ukrainian refugees. The cost of supporting the integration of refugees and their families in Estonia amounts to between 0.6 and 0.8 percent of GDP, which is in line with the projections the think tank had made at the start of Russia's full-scale invasion.

At that time, the Foresight Center and the Estonian Center for Applied Research (CentAR) estimated that the annual cost of helping each individual refugee would be €7,590, or a total of €227 million for the 30,000 refugee, who were expected to stay in Estonia. In 2022, the Estonian Ministry of Finance calculated the actual cost to be around €224 million. The actual number of refugees in Estonia is higher than forecast, however the cost for each refugee has turned out to be slightly lower, at €6,281.

The money spent by Ukrainian refugees in Estonia has also boosted the Estonian economy. It is estimated that each adult with temporary protection spent an average of €797 on goods and services in Estonia. That makes a total of €242 million of spending a year, with the increased consumption resulting in additional GDP growth of €287 million per year.

The report on how Ukrainian refugees have affected employment in Estonia and the Estonian economy is part of the Foresight Center's research stream on the long-term impact on Estonia of the war between Russia and Ukraine.

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Editor: Michael Cole

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