There have been several positive changes in Estonian exports this year says Deputy Governor Ülo Kaasik
Speaking at a conference for industry on Tuesday, Ülo Kaasik said that there have been a series of positive changes in exports in the first half of the year. External markets are growing, albeit slowly, but industrialists are under constant pressure from wages.
“Despite slow economic growth, there have been a whole set of positive changes in the first half of the year. Estonian exports have done well and exporters consider themselves more competitive. The payment behaviour of companies has improved and businesses have been borrowing more actively and investment activity has also increased. There is still pressure from rising labour costs though. Future development will not be easily achieved, and the question is how much advantage can be taken of the current favourable investment environment, and how well investment can be developed in future”, he said.
“The industrial sector in Estonia uses a little over 70% of its capacity, which is below the European Union average. This means that as well as increasing investment, we need to start using resources more efficiently. The average employee in Estonia currently creates half as much value added as the average employee in the European Union and if wage pressures remain in the years ahead, productivity will be a key issue for many companies”.
He explained that branches of industry with lower productivity are already experiencing labour shortages, which means that as the economies develops, business models based on cheap labour will inevitably disappear. The rise in wage levels has already brought the share of people active in the labour market to a historic high. Labour shortages can be eased to some degree by bringing those people who have not yet looked for a job for one reason or another into the labour market. “It should be remembered though that the minimum wage should not rise more than the economy can bear, and should not be allowed to cause unemployment to rise”, he noted.