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Pool of unemployed workforce almost exhausted, says finance ministry

The Ministry Building at Suur Ameerika 1 in Tallinn, where several ministries are located including the Ministry of Finance.
The Ministry Building at Suur Ameerika 1 in Tallinn, where several ministries are located including the Ministry of Finance. Source: (Postimees/Scanpix)

Estonia has reached the end of its labour supply amongst the unemployed, according to the finance ministry.

"No swift mitigation can be expected for the shortage of labour as unemployment is relatively low as it is, and the decrease of working age population will further enhance it. This means that businesses will need to take into consideration that in the future they will have to get by with fewer people if they intend to expand or reorganize their activity," said Erki Lõhmuste, analyst at the Ministry of Finance, on the release of the latest employment figures.

The labour force survey, published by Statistics Estonia on Tuesday indicated that the number of employed persons in the third quarter of 2018 remained unchanged year-on-year (y-o-y) at 666,600.

Low unemployment

Similarly, there had been no significant change in unemployment, which remains at 5.2%, he said [though the unemployment insurance fund, the EUIF, puts the figure of registered unemployed at 4.6%-ed.].

Whilst the unemployment rate is thus hardly negligible, the proportion of newly-unemployed persons has grown over the past six months. At the same time, within the employed sector of the population, a large number of individual entrepreneurs has emerged whilst the number of payroll employees has fallen by 3,200 y-o-y, according to Mr Lõhmuste.

This is part of a longer trend for a fall in the proportion of salaried employed persons since the economic crisis of 10 years ago, Mr Lõhmuste said, which is now at 89% compared with around 92% pre-crisis.

More part-time workers

The proportion of full-time to part-time employment has also shifted, in favour of the latter, Mr Lõhmuste added.

In conclusion, he said, the petering out of employment in conditions of moderate economic growth such as being experienced at present might suggest that the 'reserve' workforce was almost depleted.

"Among working age people, employment is at a historical high of 68% which is one of the highest in the EU. We still have some way to go to become one of those with the lowest unemployment, but the shortage of workforce, being voiced by entrepreneurs increasingly, indicates that finding additional employees is no longer possible at the same conditions as earlier," he added.

Mr Lõhmuste's findings echoed statements made by the Bank of Estonia on Tuesday, that the job market is an employees' one, and particularly active, with around 7% of the workforce changing its workplace in each of the first three quarters of 2018, meaning employers are having to provide higher wages and better conditions to attract staff. A greater number of older people are in employment too, according to recent Statistics Estonia research

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Editor: Andrew Whyte

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