There are signs within the strong labour market that the economy is cooling
- The labour market remains favourable for employees
- The unemployment rate was 5.1% in the second quarter
- The number of short-term workers from abroad rose noticeably
- Employers in industry have become more pessimistic about continued growth in employment
Unemployment was 5.1% in Estonia in the second quarter of 2019, which was a little higher than in the previous quarter but still below its historical average. The Labour Force Survey by Statistics Estonia found employment to be at practically the same level as a year earlier.
Data from the Police and Border Guard Board indicate that companies hired even more staff from abroad alongside locals, as demand for workers remained strong. There were 18,000 foreigners registered as short-term workers in the second quarter, which is more than twice as many as in the second quarter of last year.
Changes happen more slowly in the labour market than in the rest of the economy, and so the weakness of recent months in the industrial sector is not yet reflected in the main labour market figures. The expectations of industrial companies and data from Töötukassa indicate some cooling in the labour market though. There are more employers in the industrial sector who expect the number of employees to fall in the next three months than employers who expect the number to rise. Data from Töötukassa show there were 731 more people newly registered as unemployed in July than a year earlier, which is 10% more, and they included some who had been laid off from oil shale companies.
So although the labour market statistics for the second quarter are still strong, the weak results of the industrial sector in recent months may worsen the labour market in the second half of the year. This will make support and training ever more important as they can help people move into areas that are growing.