Labour market is recovering slowly
Natalja Viilmann, Eesti Pank, economist
According to the data published today by Statistics Estonia, the dynamics of labour market indicators have been following economic developments with a lag. The decrease in the number of the employed slowed to 5.7% year-on-year in the second quarter of 2010. As a result of seasonal factors, the number of the employed grew by 5,200 on the first quarter.
Since economic growth has so far been the result of an increase in the workload of the existing employees, there is currently no pressing need to hire new people. According to preliminary estimates, productivity growth accelerated to 9.8% year-on-year in the second quarter, and employment is not expected to pick up for as long as enterprises still have underutilised production capacity to make use of.
Economic resumption has been faster than expected in several countries, but this has not markedly contributed to job creation. Researches and surveys of several countries allow concluding that labour market recovery may turn out to be not only slower than economic resumption, but also less extensive. This means unemployment will be higher than the pre-crisis level for several years to come.
According to Eesti Pank's forecast, value added will initially increase more on account of profits and less on account of wages. However, as time goes by, wages and productivity will achieve larger consistency than in the boom years.
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