Finding new employees is becoming harder
Economist at Eesti Pank
The labour market is on the track of recovery from the crisis. The unemployment rate fell from 5.7% in the third quarter of 2021 to 5.2% in the fourth quarter. An indication of the recovery of the labour market from the crisis is that both labour shortages and the number of wage recipients are back to where they were before the pandemic.
The results of the Estonian labour force survey, which Statistics Estonia published today, show a weaker recovery from the crisis than is shown by the data from the Tax and Customs Board. Employment is lower than before the pandemic mainly for the young and for those beyond retirement age, and their labour force participation rates are also lower. The difference may be because employment is less stable and for shorter periods in those age groups, which is reflected in the tax declarations but not entirely in the labour force survey.
Although the labour market is not yet entirely back to where it was before the pandemic, the amount of labour available is diminishing rapidly. It is becoming harder and harder for businesses to expand their production by hiring new employees. This is shown in corporate estimates of labour shortages, which are back to where they were before the pandemic. Further growth in employment may be restrained by rising energy prices, which have hampered the competitiveness of some manufacturers, and by the increased uncertainty surrounding the tension between Russia and Ukraine.
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