Labour Market Review 1/2019
The labour market review by experts from Eesti Pank covers developments in the supply, demand and prices of labour in Estonia. The central bank observes the labour market for two reasons. Firstly, labour is an important production input, as a change in the supply or activity of labour can directly affect potential growth. Secondly, events in the labour market can have a major impact on inflation. Given the orientation of the euro area monetary policy towards price stability, and the openness of the Estonian economy, the economy can adjust to changes principally through the prices and volumes of production inputs. For this reason it is important for the labour market to be flexible and for wage rises to correspond to productivity growth, as otherwise the increase in production costs could lead to excessive inflation.
This review compares developments in Estonia with those in other European countries. There are two sorts of graphics for international comparison. In the long-term view, countries are grouped by region and an unweighted average is taken. The exception is the EU15, which is a weighted average as published by Eurostat. Newer European Union member states among the southern European countries are Croatia, Romania, Bulgaria, Malta, Cyprus and Slovenia. The southern European countries Italy, Greece, Spain and Portugal are in the EU15. The CEE4 are Hungary, the Czech Republic, Poland and Slovakia. Figures covering one year colour the countries by the group they are a member of.