Fall in unemployment in Estonia on rise
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.