Unemployment decreased further

In the third quarter of 2014, employment increased by 1.1%, year-on-year, and unemployment decreased to 7.5% (7.8% one year ago).

Employment increased in several service sectors (tourism, public sector, logistics and construction). The number of employed was affected by the new employee registration requirement since July this year. According to the Ministry of Finance, more than 5000 employees with no official labour income within the past year were added to public registries in July and August. Most employees were added in the sectors of construction, retail trade and hotels-restaurants, were unofficial work is most common. Employment in manufacturing, one of the sectors most exposed to relatively weak export demand, decreased.

The number of economically inactive declined because the number of people either retired, studying or on parental leave shrank compared with one year ago. The average age of employees in Estonia increases due to demographic trends but also because of the gradual rise in retirement age.

Tensions on the labour market will continue. The supply of labour will decrease, as working-age population and unemployment rate will decline, making it even more difficult for companies to hire new people. That will push up wages even when general macroeconomic environment and export order books are still relatively weak. In the first half of 2014, labour costs increased by around 8%, while overall costs as well as sales decreased by 1%, year-on-year.

Source: Swedbank


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