Fall in un­em­ploy­ment in Es­to­nia on rise

The Pak Banker - - Front Page -

TALLINN

In the first half of 2012, the Es­to­nian labour mar­ket de­vel­op­ment was more favourable than the av­er­age for the euro area. The num­ber of the em­ployed con­tin­ued to rise, while un­em­ploy­ment fell.

The rate of job cre­ation slowed by half over the year as gen­eral eco­nomic growth slowed down, and our labour mar­ket is expected to continue in a sim­i­lar way in the near fu­ture, with em­ploy­ment in­creas­ing but at a slower rate.

The main risk to the labour mar­ket in the short term is a weaker-than-expected re­cov­ery in ex­ter­nal de­mand, while the short­age of labour force in some ar­eas could lead to stronger wage pres­sure.

The fall in un­em­ploy­ment in Es­to­nia has been the fastest in the Euro­pean Union in the last year. How­ever, the con­cern re­mains that the qual­i­fi­ca­tions and lo­ca­tion of the un­em­ployed do not suit the needs of the labour mar­ket.

It is im­por­tant that labour mar­ket pol­icy mea­sures be ef­fec­tive if they are to re­duce un­em­ploy­ment fur­ther and lessen the wage pres­sure caused by the short­age of labour.

At the same time, the ben­e­fits sys­tem should not dis­cour­age peo­ple from search­ing for jobs and want­ing to re­turn to em­ploy­ment. Es­to­nia's work­ing-age pop­u­la­tion is shrink­ing, partly through nat­u­ral de­mo­graphic ef­fects and partly be­cause net mi­gra­tion is neg­a­tive. Pre­lim­i­nary data from the cen­sus show that Es­to­nia's work­ing-age pop­u­la­tion is 3.5% lower com­pared to the of­fi­cial fig­ures cur­rently used.

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