Estonia's employment, labor force participation rates reach highest level in 20 yrs

TALLINN – In 2017 Estonia's unemployment rate fell 1 percentage point to 6.8 percent, while employment rate grew by 1.9 percentage points to 67.5 percent and the labor force participation rate by 1.2 percentage points to 71.6 percent, the latter two reaching the highest levels in 20 years.

In the second quarter, unemployment increased temporarily, primarily due to an increased number of previously inactive persons entering the labor market. Employment and labor force participation remained high throughout 2017, reaching the highest levels in 20 years. In the fourth quarter, the youth (15–24-year-olds) unemployment rate was very low – 6.2 percent, Statistics Estonia said on Wednesday.

Labor market indicators improved throughout the most of 2017 and, in quarterly comparison, were mostly more positive than the respective indicators of the previous year. Although in Estonia the total number of working-age persons (15–74-year-olds) is falling, the number of persons active on the labor market (the sum of employed and unemployed persons) increased by 7,000 persons, and was estimated at 699,000.

The labor force participation rate increased by 1.2 and the employment rate by 1.9 percentage points. The unemployment rate decreased by 1 percentage point. The number of inactive persons continued to decline. The annual average number of inactive persons was 277,000, which is 13,500 persons less than in 2016. The number of employed persons has increased due to a fall in unemployment as well as an increase in the number of previously inactive persons entering the labor market.

In 2017, the estimated annual average number of unemployed persons was 40,000. The unemployment rate was 5.8 percent, which is 1 percentage point lower than in 2016. The number of unemployed persons decreased by 6,400, while 13,500 previously inactive persons entered the labor market. The unemployment rate in the fourth quarter was 5.3 percent and the estimated number of unemployed persons totaled 37,000. This is respectively 1.3 percentage points and 8,000 unemployed persons less than in the fourth quarter of 2016. Based on the indicator for 2017, Estonia ranks among the European Union countries with lower unemployment.

The unemployed at the greatest risk of poverty are the long-term unemployed – those who have been seeking work for more than 12 months. In 2017, there were 1,300 fewer persons who had been unemployed for a long time. Also the number of persons who had been unemployed for a short time and the number of discouraged persons were smaller.

In 2017, the number of inactive persons on the labor market (students, pensioners, homemakers, etc.) among the 15–74-year-olds amounted to 28 percent. The number of inactive persons decreased primarily due to an increase in the number of those who were inactive due to ongoing studies, pregnancy, maternity or parental leave, or retirement age. There were on average 1,000 fewer persons inactive due to illness or injury than in 2016. The labor force participation rate for older persons (50–74-year-olds) in 2017 was 60.5 percent, the employment rate 57 percent and the unemployment rate 5.2 percent.

The biggest change in the number of inactive persons occurred in the second quarter of 2017, when the number of inactive persons fell by 17,000 persons compared to the preceding quarter. The number of inactive students on the labor market decreased by 7,200 persons and the number of persons inactive due to illness or injury by 5,700 persons. As a result, the unemployment rate increased temporarily by 1.4 percentage points.

Significant differences in labor market indicators by place of residence, sex and ethnic nationality still exist. In 2017, the highest employment rate was recorded in Harju County -- 74.2 percent. The difference with East-Viru County, where the lowest employment rate was recorded, 53.9 percent, was over 20 percentage points. In addition to better job opportunities, different age structure also had an impact on the results.

In 2017, compared to 2016, the employment rate for both men and women increased, but the rate for men remained 8 percentage points higher than that for women -- 71.6 percent and 63.6 percent, respectively. The unemployment rate for men, 6.2 percent, exceeds the unemployment rate for women by 0.9 percentage points. In 2017, the unemployment rate for Estonians was 4.4 percent and for non-Estonians 8.8 percent.

The average number of young people (15–24-year-olds) seeking work in 2017 amounted to 7,000. The annual average labor force participation rate for the young was 45.2 percent and the unemployment rate 12.1 percent, while in 2016, the respective figures were 42.4 percent and 13.4 percent. The unemployment rate is the share of the unemployed in the persons active on the labor market. Compared to the fourth quarter of 2016, the number of unemployed young people and that of inactive persons fell at the end of the year.  

The decrease in the number of inactive persons is partly due to a decrease in the total number of young people. The youth unemployment rate dropped to 6.2 percent, which is an extremely low level for that age group -- in the fourth quarter of 2016, it stood at 12.7 percent. This is the lowest youth unemployment rate in 20 years and is even lower than in the fourth quarter of 2007.

The labor force participation rate for 20–64-year-olds – one of the indicators in the Europe 2020 strategy, according to which Estonia's goal is 76 percent – was 78.5% in 2017. The target level for Estonia was reached already in 2015.