Labour force participation rate at highest

According to Statistics Estonia, in the 2nd quarter of 2017, the unemployment rate was 7%, the employment rate 66.9% and the labour force participation rate 72%. Compared to the 2nd quarter of 2016, the employment rate remained on the same level and the labour force participation rate reached its highest level for 20 years.

Compared to the 2nd quarter of 2016, the number of working-age persons continued its slow decrease, but the number of persons active in the labour market (the sum of employed and unemployed persons) remained the same (702,000). The number of employed persons decreased by 3,500 persons and the number of inactive persons by 6,200 persons, amounting in the 2nd quarter of 2017 to 653,500 and 274,000, respectively.

The labour force participation rate increased in the 2nd quarter mainly due to an increase in the number of unemployed persons, one of the reasons for which is that persons who have thus far been inactive have become active. As a result of the Work Ability Reform, the number of people inactive due to illness or injury has decreased in the past couple of years. In the 2nd quarter, compared to the 1st quarter of 2017, the number of persons inactive due to illness or injury decreased by 5,700 persons. In the past 10 years, the number of persons inactive due to ongoing studies has shown a steady decline. This is rather due to an increasing wish to work during studies or study whilst working than a decline in the number of learners. The continued decline in the number of inactive older persons (50–74-year-olds) also plays a part in the highest labour force participation rate for 20 years. The labour force participation rate for older persons was 60.7% and the unemployment rate 5.1%.

Compared to the 1st quarter of 2017, when the number of unemployed persons was relatively small, in the 2nd quarter, the number of unemployed persons increased by 10,600 persons. Compared to the same period of the previous year, the change is smaller – the number of unemployed persons increased by 3,700 persons, reaching 49,000, which is less than, e.g., in the 3rd quarter of 2016. The unemployment rate was 5.6% in the 1st quarter of 2017, 7% in the 2nd quarter and 6.5% in the 2nd quarter of 2016. In the 2nd quarter of 2017, the unemployment rate for Estonians was 5% and for non-Estonians, 11%.

As expected, the employment rate was highest among the 25–49-year-old males (88%). This is one percentage point less than in the 2nd quarter of 2016. The increase in the employment rate of females of the same age was less than one percentage point and was 77.3% in the 2nd quarter of 2017.

The share of full-time and part-time employment in the main job and the share of underemployment has changed in a year by less than 0.5 percentage points. In the 2nd quarter of 2017, there were 5,000 persons in part-time employment who would have preferred to work more than they did (the underemployed).

In conclusion, there were minor fluctuations in the labour market indicators, but nothing unusual, and the 2nd quarter of 2017 did not bring about any major changes.

Labour force participation rate, employment rate, unemployment rate

The unemployment rate is the share of the unemployed in the labour force (the sum of employed and unemployed persons). The employment rate is the share of the employed in the working-age population (aged 15–74). The labour force participation rate shows the share of the labour force in the population aged 15–74. The estimates are based on the data of the Labour Force Survey.

Statistics Estonia has been conducting the Labour Force Survey since 1995 and every quarter, 5,000 persons participate in the survey. The Labour Force Survey is carried out by statistical organisations in all the European Union Member States on the basis of a harmonised methodology. In Estonia, the main representative of public interest is the Ministry of Social Affairs, commissioned by whom Statistics Estonia collects and analyses the data necessary for conducting the statistical activity.

Source: Statistics Estonia

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Lack of labour a growing concern

• The labour market remained tight.
• The unemployment rate increased due to a reform.

In the second quarter of 2017, the unemployment rate was 7.0%, the employment rate 66.9% and the labour force participation rate 72% in Estonia. The labour force participation rate reached its highest level in 20 years. The participation rate is on the rise due to the tight labour market and the work ability reform that motivates people with disabilities to look for a job.

The rate of job vacancies, i.e., the share of job vacancies in the total number of jobs, increased to 2.0% in the first quarter. A shortage of labour is the most important factor restricting business for a quarter of manufacturing and service companies and for a half of construction companies. Therefore, wage pressures will persist.

Employment remained around the same level as last year (-0.5%, over the year) in the second quarter. The number of employees decreased in the public sector and agriculture, while remained at last year’s level in the manufacturing industry. We expect employment to increase again in the second half of this year as demand has strengthened in the export and domestic markets.

The unemployment rate grew as expected (7.0% in the second quarter). The registered unemployment rate of 4.7% was also higher than last year. The work ability reform gradually moves the disabled from the inactive into the unemployed category in labour statistics. At the same time, the number of the unemployed not affected by the reform has decreased.

Source: Swedbank