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International Internet Magazine. Baltic States news & analytics Tuesday, 23.07.2019, 06:18

Ministry of Finance: Estonia may have run out of unemployed workforce

BC, Tallinn, 14.11.2018.Print version
Shortage of labor is not expected to end soon as Estonia has most likely run out of unemployed workforce, and businesses will need to get by with a smaller number of people in the future, the Ministry of Finance said.

"No swift mitigation can be expected for the shortage of labor as unemployment is relatively low as it is, and the decrease of working age population will further enhance it. That means that businesses will need to take into consideration the fact that in the future they have to get by with fewer people if they intend to expand or reorganize their activity," Erki Lohmuste, analyst at the Ministry of Finance, said commenting on latest employment statistics.

The labor force survey published by Statistics Estonia on Tuesday indicated that the number of employed persons in the third quarter of 2018 did not change compared to the same quarter of 2017, remaining at 666,600. There were no changes in the number of unemployed people, either, and the rate of unemployment stayed at 5.2%. 

Lohmuste highlighted that the number of newly unemployed people, who have not been working for up to six months, has grown. Among employed people, the number of individual entrepreneurs has increased, whereas compared to a year ago, the number of salaried employees has dropped by 3,200.

As to the structure of employment, the rate of salaried employees has decreased and that of non-salaried workers, including entrepreneurs, has grown in the years following the economic crisis. If prior the crisis, the rate of salaried employees was 91-92% of all employed people, then today, it has declined to 89%.

The number of people working full time has also diminished as working part time has gained footing and underemployment has also risen, the analyst said, indicating that these are clear signs of decline in the work load. "The situation varies by area of activity, but it is most likely better than average in the fields of information, communication and construction, where the demand remains high," Lohmuste said.

Hence, the end of increase in employment under conditions of moderate economic growth could be a sign of depletion of the stock of unemployed workforce, the analyst added.

"Among working age people, employment is at a historical high of 68% which is one of the highest in the European Union. We still have some way to go to become one of those with the lowest unemployment, but the shortage of workforce, which is being voiced by entrepreneurs increasingly loudly, indicates that finding additional employees in no longer possible on the same conditions as earlier," Lohmuste added

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