Jobs slowly returning to Estonia

  • 2010-11-25
  • From wire reports

TALLINN - Estonia’s unemployment rate dropped to the lowest level this year in the third quarter as a seasonal improvement in construction and demand for the country’s exports created jobs, reports Bloomberg. Unemployment fell to 15.5 percent, matching the level in the fourth quarter of last year, from 18.6 percent in the April- June period, the statistics office in Tallinn said on Nov. 12 on its Web site. The rate rose to a record 19.8 percent in the first quarter as Estonia suffered the European Union’s second-deepest recession.

Recovery in demand for Estonian goods from the Baltic nation’s key Nordic trading partners boosted hiring at companies, including the local units of Zurich-based ABB, which makes wind generators, and Zurich-based Enics AG, an electronics maker. The Finance Ministry and Hardo Pajula, an economist with SEB, said the decline in the jobless rate was bigger than expected. “The much faster-than-expected decline in unemployment was a positive surprise,” Pajula said in an e-mailed comment. SEB may revise its forecast for average unemployment rate this year to “about” 17 percent from 18 percent forecast last month, he said.

The Finance Ministry said it expects a “stable” decline in the jobless rate over the next 12 months. In August, it had forecast a drop in average unemployment to 15.4 percent next year and 13.6 percent in 2012.
Jobs were created mainly in construction, where employment increased by 14,000, and in manufacturing and trade, which added 12,000 and 8,000 more workers, respectively, the statistics office said. The share of long-term unemployed rose to 53 percent of the total, or 56,000 persons, while the number of those having given up the job search remained unchanged at 9,000.

Merko Ehitus, the largest listed Baltic builder, increased personnel by 16 percent annually in the third quarter to 891, compared with 847 at the end of second quarter, the Tallinn- based company said this week.
On the inflation front, the chapter on Estonia in the OECD’s most recent economic outlook, the organization urges Estonia to stay particularly vigilant against price growth upon the adoption of the euro, reports Aripaev Online. The OECD finds that the inflation rate that has accelerated in Estonia lately which cannot be fully explained with growing prices of raw materials and tax increases.

“The recent inflation surprise ought to be viewed as a warning signal - extra caution must be exercised in order to avoid undesirable price growth upon the adoption of the euro,” states the organization’s economic outlook.
 The OECD also cautions Estonia against the high structural unemployment rate taking root and recommends keeping active labor market measures as efficient as possible in order to avoid such developments.
The organization predicts that Estonia’s GDP will this year grow by 2.4 percent and by 3.4 percent and 4.1 percent in 2011 and 2012, respectively.