Economic and labor market conditions in Estonia showing signs of gradual improvement, according to Swedbank.
Estonia's Economy and Labor Market Showing Positive Trends
Estonia's economy is on an upturn, as reflected in an increase in borrowing among individuals and companies, according to Liis Elmik, senior economist at Swedbank Estonia. This economic growth is supported by an upward trend in exports and growing investments.
The labor market is also showing positive signs, with registered unemployment at its lowest level in the past five years. In 2022, the unemployment rate stood at approximately 5.6%, down from 6.2% in 2021. This downward trend is expected to continue, with Swedbank forecasting an unemployment rate of 6.9 percent for next year.
The improvement in the labor market situation is a result of the accelerating economic growth. Over the past year, the largest increases in jobs have been in healthcare, tourism, and education. Conversely, employment in trade, transport, and construction continues to decline.
Among the unemployed, the largest share are people with secondary or basic education who have previously worked either in trade or in construction. The growth in investments is due to lower interest rates, which has contributed to the robust growth in average gross salary. In 2024, Estonia saw an 8.1% increase in average wages compared to the previous year.
The employment register shows more employees than a year ago, and the number of redundancies is lower than before. The construction sector plans to hire more workers in the coming months, indicating a continued positive trend in employment.
The labor force survey published by Statistics Estonia shows a drop in the number of unemployed, further evidence of the improving labor market. East-Viru County and Valga County have the highest registered unemployment, while Hiiu County and Pärnu County have the lowest.
Swedbank forecasts an unemployment rate of 7.7 percent for Estonia for this year. Despite some fluctuations in recent years, the overall trend is one of improvement in both the economy and the labor market.
- In the improving economy, the growth in investments is partly due to lower finance rates, which has led to a strong increase in average gross salary in the business sector.
- The positive signs in Estonia's labor market have resulted in significant job growth in sectors such as healthcare, education, and tourism, offsetting declining employment in trade, transport, and construction.
- As the unemployment rate steadily decreases due to the upturn in the economy, those with secondary or basic education, who have previously worked in trade or construction, represent the largest share of the unemployed.
