The labour market remains favourable for employees
Economist at Eesti Pank
- The share of employers who cite labour shortages as the main factor limiting production is on the increase
- Companies’ employment expectations are increasing only in the industrial sector
- The share of white-collar jobs requiring higher qualifications is growing
The Estonian labour force survey shows that the number of people in employment was 2% higher in the second quarter of 2018 than a year earlier and the unemployment rate was 5.1%. Both labour market participation and the employment rate remain close to their historical peaks. Several other sources of data agree that the labour market remains favourable for employees. Data from the Tax and Customs Board show the number of waged employees rose by more than 2% in the first half of 2018, while the number of vacancies remains high, and the rise in the number of people registered as unemployed can be explained by the Work Ability Reform.
Labour shortages are restricting the expansion of production at an increasing share of employers and optimism about further growth in employment is showing signs of fading. The share of service and industrial companies that consider labour shortages to be the main factor impeding increases in production increased again in the second quarter of this year. The share of such companies did not increase in construction but remained at the same high level as last year. Companies have become more pessimistic about future increases in employment, with expectations growing only in the industrial sector. Statistics for vacancies showed a slight fall in the vacancy rate in the first quarter of the year. A smaller number of unfilled jobs indicates that companies are finding it hard to keep offering wages at the high levels they have climbed to.
The share of the employed working in jobs that require higher qualifications has increased. A notable contribution to this has been made by the increase in the number of professionals working in information and communications and in business and administration. The fastest growth in the past year jobs advertised at Töötukassa has been in those that require higher qualifications. Data from European Union countries show a positive connection between the share of white-collar employment and the standard of living of a country.
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