The challenges ahead are a declining population

Growth accelerated in Estonia in the second half of 2012 driven by domestic demand, and this was reflected in the labour market, as the share of the service sector in employment increased. Confidence indicators from our largest trading partners show that the outlook for the exporting sector has improved in recent months.

The unemployment rate also dropped in the second half of 2012, with the number and share of the long-term unemployed both falling. Unemployment is structural in nature and this is reflected in the continuing large differences in unemployment levels between regions and educational levels. A high level for natural unemployment is not inevitable. It is important for the state to use labour market and social policy levers to reduce obstacles to finding employment for the unemployed and those who have left the labour market.

The existence of sufficiently qualified labour resources is ever more important for the longer-term development of the economy. Preliminary estimates suggest that the working age population shrank during 2012 by almost one percent. Longer-term population forecasts are more pessimistic than earlier ones because of the high emigration by young people during the past decade. This means that even if the birth rate rises, the number of births will be lower, and there will be fewer young people reaching working age.

The decline in the population and labour force are processes that cannot easily be reversed. For this reason, more focus than ever needs to be put on developing the economy in a way that favours the creation of jobs with higher added value. This means encouraging life-long learning, effective cooperation between the education system and employers, and policy measures that favour the mobility of the labour force.

Source: Bank of Estonia

Authors: Orsolya Soosaar, Natalja Viilmann from Bank of Estonia

Põltsamaa Felix posts 1.1 MEUR profit

The South Estonia-based food industry company Põltsamaa Felix increased turnover by 5.6% to 21.3 million euros and made a profit of 1.1 million euros last year.

Põltsamaa Felix exported 38% of its output, with Finland, Latvia, Sweden and Lithuania as the main destinations, the company said. Export declined by 2.9% in annual comparison, but the drop was offset by strong growth of domestic sales. The turnover generated on the domestic market jumped 13% year-on-year.

The major investments were extension of the mayonnaise and dressings plant and relocation of the mustard production into a new, modern facility. Põltsamaa Felix gave work to an average 184 people, including seasonal workers, last year. Põltsamaa Felix is a holding of the international Orkla group.

The company’s goals this year are to continue growing on the domestic market and restore export growth, CEO Anti Orav said.

Source: Estonian Review