Labour market is tightening

• Employment up by 2.9%, yoy, and unemployment down to 6.6% in Q1 2015
• Mounting wage pressures (+6%, yoy, in Q1, according to the Tax Board)

The labour market is expected to tighten in 2015; thus wage growth will remain strong. The working-age population is decreasing, the employment rate is already high, and the unemployment rate will drop further this year.

The working-age population decreased by 7500 persons or 0.8% in 2014. That was somewhat less than in previous years as the number of emigrants was smaller. In the first quarter of 2015, employment grew by 17 000 persons or 2.9%. One of the factors behind higher employment figures is the labour registration obligation, which will push up official employment statistics in the first half of the year.

Employment increased the most in the services’ sector. According to the Estonian Tax and Customs Board, the number of employed grew in domestic trade, tourism and timber industry. Employment rate in Estonia is already one of the highest in the European Union. Still, there is some room to lift the employment rate to reach the levels of some Scandinavian countries or Germany.

In the first quarter of 2015, the number of unemployed declined by 12 000 compared with one year before and the unemployment rate reached 6.6%. The number of unemployed amounted to 44 000. Around 70% of the unemployed had been looking for a job for more than a year. The unemployment rate in Estonia is well below the EU average, but there are big regional differences on the tiny market, ranging from 4.8% in Southern Estonia to 11.0% in the North East.

Source: Swedbank