New jobs could be created in Ida-Virumaa

Orsolya Soosaar
Economist at Eesti Pank

Labour market data published on Wednesday show that unemployment remains low and shortages of labour are biting. The share of people in work varies widely across regions however, and there is most space for creating new jobs in Ida-Virumaa.

Data from the Tax and Customs Board show the number of people declared as earning a wage has increased throughout 2018, which contradicts the assessment of the Labour Force Survey published today. There may be various reasons for this discrepancy. The Labour Force Survey may underestimate employment if the population increases in size throughout the year, because of migration for example, as is indicated by recent data from the Police and Border Guard Board on short-term registrations for work. A second reason could be a decline in undeclared work. This could have arisen because the rate of tax on labour fell this year for those earning below the average wage, which probably reduced the incentive to work unofficially.

Although the average employment rate is high nationally, the differences between regions in Estonia are large. In Harjumaa, 74% of those of working age were in work in the third quarter of 2018, while in Ida-Virumaa only 58% were. Only 4.6% of people active in the labour market were out of work in Harjumaa, but in Ida-Virumaa, 10.6% were. This means that labour shortages are not equal across Estonia. Furthermore, looking at only the unemployment rate may underestimate how many people in North-East Estonia could be added to the ranks of the employed. Reduced prospects of finding a job lower the motivation for people to participate in the labour market by actively looking for work. The labour force participation rate of people aged 15-74 is 78% in Harjumaa, but only 65% in Ida-Virumaa.


Additional information:
Hanna Jürgenson
Eesti Pank
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