Economist: Labor market gaps between Estonia's natives, immigrant population widening

TALLINN - Raul Eamets, chief economist at the Estonian bank Bigbank, has published a flash analysis of the data on the labor market situation of residents deemed as natives of Estonia and immigrant populations released by Statistics Estonia on Thursday, noting that labor market gaps between the two groups have widened during the crises.

In the labor force survey, natives are defined as all Estonian residents who have at least one parent born in Estonia. If a person was born abroad or their parents were born abroad, they are counted as part of the immigrant population for the purposes of this survey.

The sample of the labor force survey excludes people under 16 and those over 74 years of age. In 2024, in the age group of 16 to 74, natives numbered 784,800 and the immigrant population 228,900. Compared to 2018, the number of natives in the working-age population had increased by 2.4 percent and the share of the immigrant population had increased by 8.7 percent, according to the survey.

"Growth as such should not be surprising, as Estonia's migration balance has been positive since 2015. Among those who have come to Estonia, there has been a considerable number of returnees, that is, people with Estonian backgrounds who have returned to their homeland. The effect of Ukrainian refugees is clearly visible in the change in the number of first-generation immigrants. In 2012, there were 112,100 such people, while in 2024 there were 143,700, marking an increase of 32,000," Eamets said.

The employment of the first-generation immigrant population has increased by 44 percent compared to 2021, from 62,800 to 88,400, which clearly shows that the vast majority of Ukrainian refugees who have remained here have been integrated into the labor market. The number of employed people among natives increased by 3.9 percent over the same period. However, local non-Estonians have not fared as well -- if we look at the change in employment of the second-generation immigrant population, it decreased by 19.6 percent in the years 2021-2024, Eamets said.

The chief economist of Bigbank also compared the unemployment rates of natives and the immigrant population with pre-pandemic levels to assess how crises have affected different groups.

"Unemployment has increased in both groups. In 2019, the number of unemployed among the native population was 23,000, while unemployment among the immigrant population stood at 8,300. By 2024, unemployment in the immigrant population had more than doubled, rising by 107 percent, while unemployment among natives had increased by 73.5 percent," said Eamets.

"Unemployment grew the most among women of the immigrant population and the least among native women. Unfortunately, separate unemployment data for first- and second-generation immigrants has not been published, so we cannot determine how unemployment differed between the immigrants already settled here and their descendants compared to recent arrivals," Eamets added.

"If we look at the ratios, meaning the employment rate and the unemployment rate, the gap between natives and the immigrant population has increased. Where in 2019, the employment rate of natives was 3.9 percentage points higher than the employment rate of immigrants, in 2024 the gap was 6.4 percentage points. In unemployment, the gap had widened from 1.5 percentage points to 3.8 percentage points, with the unemployment rate for the immigrant population in 2024 being 10.5 percent and 6.7 percent for natives," the economist added.