The economic decline has reduced employment in individual sectors
Economist at Eesti Pank
Data from Statistics Estonia show that the Estonian labour market remained stable at the start of this year as there were no major changes in employment or in the unemployment rate. Register data show that the downturn in the economy reduced employment in manufacturing and construction.
Starting from this year, the population statistics for Estonia also show the Ukrainian refugees who have received temporary protection, and that is the main reason why the number of people of working age in the labour force survey of Statistics Estonia increased by 25,600 people. Including refugees did not raise the unemployment rate, as it was close to 5.3% both in the first quarter of this year and a year ago. This is probably because the refugees are a small share of the population, which makes estimating the impact of their arrival through surveys imprecise.
The register data give a more accurate picture of how refugees are faring in the Estonian labour market than surveys do. Their employment rate is lower than that of local residents and unemployment higher, as the flash data from Statistics Estonia show their employment rate in the first quarter was around 37%, and data from Töötukassa put their registered unemployment rate at 38%. Ukrainian refugees have integrated more successfully into the labour market than they have in some other countries, and they have fared well given how recently they arrived in Estonia and that they were not coming in order to work.
Like the labour force survey from Statistics Estonia, the data from the Tax and Customs Board do not show that the downturn had any substantial impact overall on the state of the labour market. There were around 1.4% more people receiving a declared wage in the first quarter than a year ago, and that number was no lower than in the final quarter of last year either. The number registered as unemployed is higher than it was a year ago, but more than half of that is due to refugees being added to the Töötukassa register. The situation is different for different sectors of the economy. The register data show that the downturn affected employment in manufacturing, where it was down around 3% over the year. The biggest drop was in production of wood, furniture and metal products. Employment in construction has also taken a downwards turn. Developments in employment in manufacturing will in future depend on how companies perform in export markets, meaning on the recovery in foreign demand and on competitiveness.