The restrictions laid down this spring did not step up unemployment
Economist at Eesti Pank
Unemployment went down from the first quarter’s 7.1% to 6.9% in the second. Employment increased by 1.7% year-on-year, but at that time, it had already declined because of the crisis. The measures in place until mid-May this year to prevent the virus from spreading did not lead to a fall in employment. Nevertheless, employment growth in early summer was lower than expected.
The data of Töötukassa show that the number of registered unemployed people is also decreasing. This is due to both a lower number of new unemployed that has been similar to pre-crisis indicators in recent months and because of the more active exit from unemployment, mainly due to the unemployed finding a new job. This showcases an increase in labour demand, which is also indicated by the large share of companies expecting employment growth according to the confidence survey of the Estonian Institute of Economic Research, and the record addition of job advertisements to the database of Töötukassa.
Though the unemployment rate is declining and employment is on the rise, the latter has not recovered very strongly. The share of companies that see labour shortage as an obstacle to expanding production has increased rapidly, especially in the manufacturing and in the services sector. This indicates difficulties in recruiting new employees. This may be, in part, because of the lower motivation of those who have become unemployed during the crisis to take up a new job while receiving unemployment benefits, especially in combination with the chance of earning a small amount of extra income. The trend is particularly obvious in the services sector, where employment is considered less secure than before.
Larger labour shortage is bringing along upward wage pressures. Data from the Tax and Customs Board show that the average declared salary has grown quite fast, both year-on-year and month-on-month.