Labour Market Review 1/2023
The crisis of energy prices and Russia’s invasion of Ukraine pushed the Estonian economy into recession in the second half of 2022. Changes in economic activity reach the labour market with something of a lag, and employment continued to increase throughout the first half of the year and only stopped doing so in the second half. Given the quite steep downturn in the economy in the final three quarters of the year, the employment rate held very high. The need to cut labour costs by eliminating jobs was reduced by companies managing to maintain their profits, as they were able to raise product prices by more than the rise in wages. It is expected that the rise in the cost of living last year will push wage growth higher. This will put pressure on the competitiveness of companies and probably deliver a delayed blow to employment, which has so far held at a high level.