"The number of unemployed people increased by 5,300 compared with the same period last year and the unemployment rate rose to 8.6 percent — 0.8 percentage points higher than a year ago and 1.2 percentage points higher than in the last quarter of 2024," said Tea Vassiljeva, analyst at Statistics Estonia.

Vassiljeva added that the unemployment rate for men was 9 percent and for women 8.2 percent. "Of all regions, only Ida-Viru County saw a decrease in unemployment, with a rate of 12.7 percent. Despite the decline, it still has the highest unemployment rate in Estonia," she noted.

The biggest increase was seen in the number of people who had been unemployed for a year or longer, totaling 16,000 in the first quarter — 3,200 more than at the same time last year. The number of people unemployed for less than six months was 38,100, an increase of 1,700 compared with a year earlier and 4,800 more than in the previous quarter.

The number of employed people in the first quarter of this year was 681,600. Over the year, employment fell by 11,700 across Estonia — most notably in South Estonia (Jõgeva, Põlva, Tartu, Valga, Viljandi and Võru counties), in West Estonia (Hiiu, Lääne, Pärnu and Saare counties), as well as in Tallinn. The employment rate — defined as the share of employed people among all 15-74-year-olds — stood at 67.4 percent, down one percentage point from the first quarter of 2024.

General employment rate drops but growth in service sector

The employment rate increased in Harju County outside of Tallinn and in Central Estonia (Järva, Lääne-Viru and Rapla counties), with the largest rise — 3.3 percentage points — seen in Ida-Viru County, which traditionally has a significantly lower employment rate than other regions of Estonia. According to first-quarter data for this year, the employment rate declined in West Estonia, dropping by 3.4 percentage points. Employment also fell in South Estonia and in Tallinn.

The number of employed women decreased by 6,900 and the number of employed men by 4,800. By economic sector, employment declined in industry and construction, as well as in agriculture, forestry and fishing. At the same time, the number of people working in the services sector increased, with nearly three-quarters — or more precisely, 73.8 percent — of all employed persons working in services.

Total number of working-age people shrinks

Vassiljeva explained that the overall decline in the number of employed people was primarily due to a drop in the number of self-employed persons. Compared with the first quarter of last year, the number of employees decreased by 1,000, while the number of self-employed persons without employees was down by 2,100 and the number of self-employed persons with employees decreased by 7,400.

"In the first quarter, the number of economically inactive people — those not considered part of the labor force — increased by 4,300 compared with the same period last year. The largest increases in inactivity were seen in Tallinn and South Estonia, while the number declined in Ida-Viru County," Vassiljeva noted.

The labor force participation rate across Estonia was 73.7 percent, down 0.5 percentage points from the first quarter of last year.

As the overall population declined compared with 2024, the total number of working-age people (aged 15 to 74) also decreased by 1,900.

Economist: Registered unemployment figures different

Bigbank chief economist Raul Eamets said that if you look at the Unemployment Insurance Fund's current data, the number of registered unemployed is on average about 5,000 lower than at the beginning of last year.

"Unemployment traditionally rises in the first quarter, but in this case, the increase is clearly too large, especially considering other macroeconomic indicators. Everything points to the economy having turned toward growth. A rebound in the economy doesn't typically come with a sharp rise in unemployment. At this point, I would definitely place more trust in the registered unemployment figures," Eamets added.

Why does Statistics Estonia data differ from the number of registered unemployed?

There are two main sources used to measure unemployment in Estonia: the Unemployment Insurance Fund's register (which counts individuals who have officially registered as unemployed) and Statistics Estonia's Labor Force Survey (a questionnaire-based study). Sometimes these figures align closely; other times, they differ significantly.

The number of registered unemployed can be tracked daily (a live number is posted on the Unemployment Insurance Fund's website) and it has been decreasing this spring. Each figure reflects a real individual who has registered and is available to start work. In contrast, Statistics Estonia's data is based on survey responses: in the first quarter, about 2,800 households participated — roughly 5,500 individuals. This method involves a significant time lag: first-quarter results were published today, in the middle of the second quarter. Since unemployment typically rises at the start of the year, an increase in the first quarter is expected. In spring, unemployment usually declines, so the current situation is likely better than the snapshot provided.

According to Statistics Estonia's methodology, a person aged 15-74 (in some datasets, even up to 89) is classified as unemployed if all three of the following conditions are met:

• They are not working in any capacity and are not temporarily absent from work.
• They are available to start work within two weeks.
• They are actively seeking employment.

Registered unemployed, on the other hand, are aged 16 up to retirement age. This figure is also strongly influenced by legislation, which can impact a person's motivation to register. For example, access to health insurance may encourage registration, while obligations like job-seeking and counseling requirements may discourage it.

In summary, because Statistics Estonia and the Unemployment Insurance Fund use different definitions and methodologies, their figures cannot be directly compared. A few years ago, for instance, there was a period when the number of registered unemployed exceeded the number of people who self-identified as unemployed in the labor force survey.

The article was updated to add comments from Raul Eamets and clarify the differences between methodologies for calculating unemployment.

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