Every fifth child has a parent working abroad

According to one batch of data from an international children’s well-being survey conducted from January to June, 22 percent of Estonian sixth-grade students said one or both of their parents worked abroad.

University of Tartu researcher Kairi Talves, who analyzed the data, told Eesti Päevaleht daily that the children viewed their long-term plans and coping more negatively, and that their general well-being was also lower.

Of the 230 children (1,000 were sampled) most said one parent worked abroad. In the case of 189 children, it was the father. In the case of 13, both parents worked abroad, and most of these were raised by their grandparents.

The study of children’s well-being in Estonia is part of an international project in 13 countries, funded by the Jacobs Foundation in Switzerland.

Source: ERR News

20 pct cut in unemployment insurance premium proposed

The Unemployment Insurance Fund board has approached the Cabinet with a proposal to lower the unemployment insurance premium from 3 percent to 2.4 percent.

Currently employees pay 2 percent and employers 1 percent. Under the new proposal, the split would be 1.6 percent and 0.8 percent.

The fund’s board, which is currently chaired by the head of the country’s unions, Peep Peterson, said Monday’s offer was a compromise.

“The new premium rate would allow us to cover the needs of the work ability reform and to continue amassing reserves at a reasonable rate,” said Peterson, as reported by uudised.err.ee. “The board reviewed the potential crisis scenarios before making the decisions and we can be sure that we can get by with the with the insurance resources we have even in complicated times.”

Read more from ERR News

Products meant for Russian market can be sold in Estonia

Russian-bound food turned back at the border can be sold in Estonia if special permission has been granted by the Veterinary and Food Board and the sale outlet is furnished with Estonian-language information, the agency’s director said. To this point no company has pursued this option.

“It is allowed in exceptional cases to market food packaged for the Russian market in Estonia, if a company needs to do so,” said Ago Pärtel, the director general of the Veterinary and Food Board, on ERR radio.

Meanwhile, Pärtel said, the agency has been sending out letters to far-flung markets to inquire about import requirements for milk products. The countries included Indonesia, Taiwan, Kenya and Tanzania.

Russian Prime Minister Dmitri Medvedev announced on August 7 that Russia would slap a one-year ban on all EU, US, Australian, Canadian and Norwegian meat, dairy and produce. In particular, the Estonian dairy and fishery sector could be heavily impacted.

Source: ERR News

Estonian Air to fly to Bromma, Sweden

Moving in to claim a segment vacated by Flybe, Estonian Air will offer another way to get to Stockholm next month.

It will fly to Bromma airport, which is just 8 kilometers from the city center and near headquarters of some Estonian-based companies, twice each weekday, starting September 29.

“Meetings with business customers and market analysis showed that the flights to Sweden require more freedom of choice,” said a member of the national carrier’s management board, Indrek Randveer, on Postimees’s online site.

One of the only options for the one-hour hop across the water, the carrier’s flight to Arlanda, is generally priced at 150-200 euros. The introductory rate for the Bromma link will be about half that.

Estonian Air flies to Arlanda 23 times a week.

Source: ERR News

Cabinet approves loan interest ceiling restriction proposal

The Cabinet has signed off on a draft law that sets a ceiling for the annual percentage rate on consumer loans.

Part of a package of legislation to address tactics from the instant loan subsector – sometimes seen as predatory. The law says that a loan agreement is null and void if the cost of the credit comes to more than three times the six-month average annual interest rate on consumer loans, as posted by the central bank.

As of this August, that triple rate is 102.17 percent.

Agreements would be automatically considered void if the rate is higher, and the consumer pays only the principal back by the original loan payment date.

Source: ERR News

Labour force is declining

In the second quarter of 2014, employment declined by 1.2%, compared with the second quarter last year. The number of employed shrank by 8,000 persons in a year as a result of negative net migration and increased number of economically inactive (i.e. persons aged 15-74 not working or looking for a job).

In 2013, Estonia’s population declined by 2600 persons due to negative net migration, and additional 1700 persons as the number of deaths exceeded the number of births. In addition to quite large number of emigrants, around 25 000 persons are working outside Estonia (around 4% of the total employed).

The unemployment rate decreased to 6.9% as the number of unemployed declined but also because the number of economically inactive rose. The number of economically inactive grew mostly because the number of people not working due to health reasons increased.

Employment decreased the most in small service sectors as well as in agriculture and finance. The number of employed increased in construction, transportation and health sectors. Most of the construction workers are employed in the construction of buildings, where construction volumes are increasing, while the construction of civil engineering objects (and overall construction volumes) are declining. The same goes for transportation, where more labour-intensive branches of the sector are doing relatively better.

Estonian enterprises face strong wage growth pressure. In the first quarter of this year, personnel expenses of enterprises increased by 7.7%, when turnover decreased by 2.3%. Personnel expenses grew in most of the sectors, although sales performance was mixed. Preliminary figures show that labour market imbalances have somewhat eased in the second quarter as wage growth has slowed and GDP growth accelerated.

In the second half of the year, we expect employment to decrease compared with last year. Official employment figures will probably improve due to the new employee registration obligation since July this year.

Source: Swedbank

The labour market is adjusting to the weak economic environment

Data from Statistics Estonia show that the number of employed fell by 1.2% year on year in the second quarter of 2014. A low rate of participation in the labour force meant that the unemployment rate fell at the same time to 6.9%, which indicates there is a shortage of labour.

The adjustment of companies to the consistently weak economic environment is evident in the labour market. Annual growth in employment was negative for the second consecutive quarter, and wage growth has slowed. The adjustment had been expected, as it is not sustainable over the long term for labour costs to grow significantly faster than GDP. Increased productivity will help reduce the imbalance alongside slower growth in labour costs, and according to the preliminary economic growth estimate from Statistics Estonia, productivity growth was faster than expected in the second quarter.

Looking forward, the labour market will be affected more than previously by the crisis in Ukraine and the increased uncertainty caused by Russian economic sanctions. The confidence surveys of the Estonian Institute of Economic Research show that the employment expectations of manufacturing companies have become more pessimistic and companies will probably be more careful than before when making decisions on recruitment. The sanctions should not significantly reduce employment in the near term as the shortage of qualified labour means that it is costly for companies to vary the number of employees they have. Labour market statistics are likely to be affected from the third quarter by the new law on the registration of employees. Data from the Tax and Customs Board show that some 7000 employees who had not received any wage in the previous 12 months were added in July after the employment register was brought in. In addition to the newly employed, they probably include people who had earlier been working unofficially.

 Source: Bank of Estonia

Author: Orsolya Soosaar, Economist at Eesti Pank

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