Decelerating economic growth slowed employment growth

Natalja Viilmann
Natalja Viilmann
Economist at Eesti Pank 

Data from the Statistics Estonia labour force survey show that employment rate increased in the first quarter of 2013 to 60.8%, meaning that in the first quarter of 2013 the number of people employed was 1.4% higher than a year earlier. However the Statistics Estonia survey is based on population figures that are not adjusted for migration, meaning they may overstate the figures for the employed and the unemployed, though the ratios of the employment and unemployment rate are not significantly affected.

The growth in employment started to slow in the second half of 2012, and this continued in the first half of this year as economic growth decelerated. Weak external demand has, for example, suppressed employment in manufacturing. The long winter delayed the start of building projects, which was reflected in a fall in employment in the construction sector. The shrinking of the working age population puts ever more limits on ways for employment to grow, and in that sense it is a very positive thing that the labour force participation rate remains high, standing at 67.7% in the first quarter of 2013.

The unemployment rate fell from 11.5% in the first quarter of 2012 to 10.2% in the first quarter of 2013. Although the number of the unemployed increased compared to the previous quarter, this was due to seasonal factors and underlying unemployment continued to decline. Long-term unemployment fell more sharply, and the share of the long-term unemployed decreased to 46.5% of the total. Data from Eesti Töötukassa, the Estonian unemployment insurance fund, show that the number of registered unemployed has fallen steadily throughout the year, albeit at a slowing rate. The number of the discouraged has also declined over the year.

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