The number of job vacancies reached a record high of 11,000

According to Statistics Estonia, there were about 11,000 job vacancies in the enterprises, institutions and organisations of Estonia in the 3rd quarter of 2016. The number of job vacancies reached a 7-year high, having increased by 16% compared to the previous quarter and by 25% compared to the 3rd quarter of 2015.

The rate of job vacancies, i.e. the share of job vacancies in the total number of jobs, was 2.0% in the 3rd quarter of 2016, being 0.3 percentage points higher than in the 2nd quarter of 2016 and 0.4 percentage points higher than in the 3rd quarter of 2015.

In the 3rd quarter, the rate of job vacancies was the highest in administrative and support service activities (4.3%), other service activities (3.1%), information and communication (3.0%) and financial and insurance activities (3.0%). The rate of job vacancies was the lowest in real estate activities, mining and quarrying, construction, and agriculture, forestry and fishing.

The total number of posts and vacant posts continued to be the highest in manufacturing and wholesale and retail trade. Both the total number of posts and the number of vacant posts were the lowest in water supply; sewerage, waste management and remediation activities, in mining and quarrying and electricity, gas, steam and air conditioning supply.

Compared to the 3rd quarter of 2015, the number of job vacancies grew the most in administrative and support service activities. An above-average year-over-year increase was recorded also in education, accommodation and food service activities and manufacturing. Compared to the period a year ago, the number of job vacancies fell the most in professional, scientific and technical activities.

More than a half of the vacant posts were available in Harju County (68%) (including 59% in Tallinn), followed by Tartu County (9%) and Ida-Viru County (6%). The rate of job vacancies was the highest in Harju County and the lowest in Saare and Viljandi counties.

The private sector accounted for around 7,800 job vacancies (70%). In the 3rd quarter of 2016, the rate of job vacancies continued to be the highest in foreign private-sector institutions (2.6%) and state organisations (2.4%). The rate of job vacancies was the lowest in Estonian private sector organisations.Diagram: Rate of job vacancies by economic activity, 3rd quarter, 2015–2016

The movement of labour is characterised by labour turnover (the total number of engaged employees and those who have left), which amounted to 94,000 in the 2nd quarter of 2016, meaning there was a 29% increase compared to the previous quarter and a 22% increase compared to the 2nd quarter of 2015. Compared to the 2nd quarter of 2015, the largest increase in labour turnover occurred in professional, scientific and technical activities and in agriculture, forestry and fishing. In the 2nd quarter, both the number of employees hired and the number of employees who left their job were the highest in wholesale and retail trade, manufacturing, and accommodation and food service activities.

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Wage growth slowed in the third quarter

  • The average wage stood at 1119 euros in the third quarter and its growth rate slowed
  • The latest data show labour costs continued to increase faster than productivity

Data from Statistics Estonia show that yearly growth in average gross monthly wages slowed in the third quarter of 2016 from 7.8% to 7.1%. The average wage stood at 1119 euros in the third quarter, which is around 45 euros less than in the second quarter unadjusted for seasonal factors. As more holiday pay is paid out in the second quarter, this drop is quite usual. Seasonally adjusted, the average wage was higher in the third quarter than in the second, though the rate of growth slowed.

The latest data show labour costs continued to increase faster than productivity, but the gap between the growth rates narrowed. The average wage in mining has fallen and wage growth in the electricity sector has been substantially smaller than the average for the whole economy and has been decelerating for some time, indicating that companies are able to postpone wage rises in the event of a negative economic shock. A part may be being played in the development of wages in mining and electricity by the location of companies in those industries in Ida-Virumaa, where there is more labour available than elsewhere in Estonia. Service sectors that are doing well and where companies are looking to expand are seeing wage pressure caused by labour shortages and the lacked of skilled labour.

Slower wage growth is also indicated by data from the Tax and Customs Board on the average declared wage paid out, which was up 6.2% in the second quarter but only 5.5% in the third. Tax and Customs Board data do not convert payments to part-time employees into full-time equivalents, as the calculation of the average wage does. The number of part-time workers probably rose faster than the number of full-time workers, which is why the average wage paid out has grown more slowly than the full-time equivalent monthly wage. The median wage1 paid out grew faster than the average in both government institutions and in companies listed in the commercial register, increasing by 6.7% over the year overall. This nudges the median wage steadily closer to the average wage.

1 The median wage is the wage which half of employees earn more than and half earn less than.

Source: Bank of Estonia

Author: Orsolya Soosaar, Economist at Eesti Pank

Estonia’s wage growth 7 pct in 3Q

• Wage growth remained rapid in the 3rd quarter at 7%, over the year.
• We expect average gross wage to slow to around 5% in 2017.

In the 3rd quarter of 2016, the average monthly gross wage was 1,119 euros in Estonia, up by 7.1% over the year. Net average wage grew also rapidly, by 6.8% in real terms. The growth of gross wages will probably remain around 7% in the remaining months of the year as labour market remains tight. There were about 9,500 job vacancies in Estonia in the 2nd quarter of 2016. The number of job vacancies exceeded 9,000 last time in 2008.

The rapid growth in the average wage is supported by a lack of suitable labour, a 10% increase in the minimum wage, a political agreement to raise the wages of teachers and healthcare workers, and strong domestic consumption that lifts the sales of enterprises selling their products and services in the domestic market. The average gross wage increased in all sectors, except mining, which has been hurt by low energy prices.

The growth of wages in real terms will slow dramatically in 2017, as nominal growth of wages will be somewhat slower and prices will rise. This, in turn, will limit households’ consumption. The substantially slower growth of wage-earners’ purchasing power will be smoothed by a higher employment rate and an increase in social transfers to pensioners and families.

SOurce: Swedbank

Estonian unemployment rate 7.5 pct in 3Q

• Employment decreased by 1.2%, over the year, in the third quarter.
• The unemployment rate jumped to 7.5% in the third quarter.
• Employment is expected to marginally decline and the unemployment rate to grow in 2017.

Changes in the third quarter’s labour market data were larger than expected. Employment decreased by 1.2%, over the year. Employment declined in the construction, energy, and manufacturing industries. The construction sector has been hit by lower volumes of infrastructure construction. The energy sector has had to reduce output due to low energy prices. In the second quarter, the decline in the employment in the secondary sector was offset by a strong growth in the employment in services. In the third quarter, the number of employees in the services’ sector was only marginally higher than one year before.

Employment is expected to marginally decline in 2017. Working-age population is shrinking and surging labour costs motivate organisations to increase the efficiency of their production processes. Employment in the construction sector should increase, though, as the volume of public construction projects is expected to grow substantially next year. The outlook of the energy sector should also improve as the price of oil is expected to gradually move higher.

The number of inactive decreased by 3.5%, over the year, in the third quarter. Major drivers of this decline, in addition to the tight labour market, were an increase in the retirement age and rearrangement of the social benefits system regarding people with disabilities; these people are now entitled to certain benefits only if they work or actively look for work. The unemployment rate increased to 7.5% in the third quarter (5.2% in the third quarter of 2015). 53,000 people were actively looking for a job; around half of them had been seeking employment for less than 6 months. At the end of October, there were 5,000 people with reduced working ability looking for a job through the Estonian Unemployment Insurance Fund. As many of them might find it hard to find a suitable job, the unemployment rate is expected to grow next year.

Source: Swedbank

Bus drivers’ minimum wage to rise 18 pct in 3 years

Following a year of negotiations, the Estonian Transport and Road Workers Trade Union (ETTA) and the Union of Estonian Automobile Enterprises arrived at a a sectoral agreement that will raise bus drivers’ minimum monthly income by 18 percent to 945 euros in three years.

Under the agreement concluded, bus drivers’ minimum monthly income and hourly wage, respectively, will increase to 835 and 3.50 euros next year, 895 and 3.75 euros in 2018, up to 945 and four euros in 2019.

ETTA’s initial demand was for bus drivers’ minimum monthly income to be increased from 800 to 900 euros immediately.

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Unemployment insurance premiums to remain unchanged until 2020

The government decided on Thursday to leave the rate of unemployment insurance premiums at the current level of 2.4% for the coming four years.

The premium of 2.4% is made up of a contribution of the insured person amounting to 1.6%, and a contribution of the employer, amounting to 0.8% of the employee’s gross pay.

According to an estimate of the Estonian Unemployment Insurance Fund, a combined rate of 2.4% means that premiums collected will total €166.8m next year, €178m in 2018, €189m in 2019, and €200m in 2020.

One of the reasons for the decision not to change the premiums is the Work Ability Allowance Act that entered into force this year. This law states that a person’s ability to work is to be assessed and the work ability allowance granted and paid by the Estonian Unemployment Insurance Fund using only unemployment insurance funds. This means that the availability of sufficient funds has to be guaranteed, otherwise the work of the Unemployment Insurance Fund to cover its targets wouldn’t be sustainable.

Unemployment insurance is compulsory in Estonia. The Unemployment Insurance Fund (Töötukassa) has the task to provide labor market services, pay labor market benefits, and pay unemployment insurance benefits to those looking for a new job.

The fund also has the task to help employees in the case of lay-offs, as well as to support employees’ claims upon the insolvency of their employer.

Source: ERR News

Head of Estonian tax authority to begin working in Nortal

Marek Helm, current director general of the Estonian Tax and Customs Board (MTA), will be joining the software and business consultancy company Nortal as director of the company’s public finance and change management team in mid-January 2017.

According to Nortal founder and CEO Priit Alamäe, Helm has carried out extensive reforms and necessary transformations in one of the most important public authorities in Estonia for which there is strong demand globally. “Effective tax collection and transparent public finance management is becoming more relevant globally,” said Alamäe in a press release. “By uniting Helm’s experience with our knowledge and references, we are creating an international center of competence and export capability while preserving a recognized leader for Estonia.”

Helm said that he has worked in the public sector for over 20 years and feels that the time has come to put himself to the test in the private sector. “Nortal is a company with growing ambition and international scope that exports Estonian e-government success stories,” said Helm. 2I’m glad that with my expertise and experience I can contribute to the company’s continuous expansion to export markets that are of great importance to Estonia.”

The MTA’s current director general noted that he would be handing over the management of the state authority to his successor with peace of mind. “This is a fantastic organization and a professional close-knit team that serves the Estonian society and is a great partner for taxpayers,” Helm said.

“During the past few years, Nortal has made significant investments to develop internationally recognized competence in the field of complex e-government reforms,” explained Nortal’s CEO. “Our aim is to address a client’s needs as a whole by offering holistic service concepts that include everything from legislative drafting, organization and process re-design to the implementation of new technologies and change management. Marek Helm’s long-term experience in public sector reforms and creating more effective processes, where knowledge-based and well thought through change management plays an important role, fits perfectly with Nortal’s plans and strategy.”

Helm has led the MTA as director general from December 2011. Prior to that position, he was deputy secretary general for public governance policy at the Ministry of Finance from 2009-2011, led the founding of the joint internal security office under the Ministry of the Interior from 2007-2009, deputy secretary general for internal security of the Ministry of the Interior from 2006-2007 and director of the Ministry of the Interior’s Internal Security Department in 2006. From 2004-2006, Helm held the position of deputy director general of the MTA and in 2003-2004, deputy director general of the Customs Board in the customs enforcement and pre-trial investigation fields.

Nortal is an international strategy consultancy and software solutions company focusing on e-governance, health care, telecommunications, production and logistics. It operates in nearly 20 countries and employs 530 specialists. Nortal posted sales revenue of 45 million euros in 2015.

Source: ERR News