Unemployment was at the same level in the fourth quarter as a year earlier

Orsolya Soosaar
Economist at Eesti Pank
  • In the fourth quarter of last year the employment rate rose 1.4% and unemployment stood at 6.4%
  • The number of registered unemployed increased and there were more redundancies in the fourth quarter than a year earlier
  • The number of registered unemployed who found themselves a job was 6% up on a year ago
  • Large-scale job losses announced in the last quarter will start to affect the labour market in the second quarter of this year

Data from Statistics Estonia show that the employment rate rose 1.4% in the fourth quarter of 2015 and unemployment was 6.4%. Seasonally adjusted employment was lower than in the third quarter and the unemployment rate rose. Though it appears from the published statistics that the labour market situation took a turn for the worse, other data sources indicate that the estimate of employment and unemployment for the third quarter was too optimistic.

Data from Eesti Töötukassa, the Estonian unemployment insurance fund, show that the number of registered unemployed increased in the last quarter of 2015. There was an increase in the second half of the year in the number of unemployed who had signed on because they had lost their job. The number of redundancies was about 30% higher than in the same period of 2014. A positive point that can be noted is that 6% more of the registered unemployed found work in the fourth quarter than in the fourth quarter of the previous year.

In spite of the increase, the number registering as unemployed after being made redundant was not significantly more than in the last quarter of last year, and in 2011–2013 the number was higher in every quarter. Large-scale redundancies in the oil industry will start to raise unemployment from the second quarter of 2016, as the notice period for redundancies is one to three months. There will probably be fewer people moving into unemployment than there are redundancies, because companies have announced their planned redundancies well in advance and so people will have had time to look for new jobs. Some of those laid off will be of retirement age, and so if they do not find a new job they will probably leave the labour force.

As labour productivity has increased slowly and has even declined in some quarters, while wages have climbed steeply at the same time, corporate profits fell throughout 2015. This trend continued in the last quarter of the year, and the flash estimate for GDP growth shows that productivity growth was slower than the growth in the average wage paid out given by data from the Tax and Customs Board. Rapid growth in wages indicates that there is a shortage of labour in the labour market. Such a situation in the labour market does not favour production companies that are labour intensive but have low productivity. Although the disappearance of such companies from the market is an inevitable fact of economic development over the long term, it may lead to a temporary rise in unemployment.


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