Employment rate at all-time low

TALLINN - SEB Estonia economist Hardo Pajula says that new data on unemployment show that at this moment, the number of jobs in the country is the lowest it has been in the past 25 years, reports news agency LETA. The labor market statistics on the first quarter were grim reading - the unemployment rate grew by nearly four percentage points in comparison to the end of 2009 and reached nearly 20 per cent.  According to the ILO methodology, Estonia had 137,000 persons without work in the first quarter.

Over one third of the unemployed have been unemployed for a year or more.
Similarly to the beginning of last year, unemployment has increased rapidly this year. The unemployment rate rose from 15.5 percent in the 4th quarter of 2009 to 19.8 percent in the 1st quarter of 2010. In the 1st quarter of 2009 the unemployment rate was 11.4 percent.

Pajula stated that besides the absolute number of unemployed, its fast growth is also significant, as less than two years ago the number of unemployed persons was below 30,000. According to him, the number of employed persons is also low. In comparison to the same quarter last year, the employment rate fell by nearly another 10 percent. According to labor market monitoring, there were 554,000 jobs in Estonia in the first quarter of 2010, and that is the lowest employment level registered since the end of the 1980s.
The analyst noted that the outlook is much better - although the first-quarter unemployment rate was much higher than SEB predicted and will probably force the bank to review the 2010 outlook of 15 percent quite soon, the market outlook may not be as grim as the first quarter numbers might indicate.

Pajula also remarked that in April, nearly 3,400 new jobs were created and almost all of them were filled with people during the same month. The last time the labor market was as active was in May 2006, at the peak of the growth cycle.
The Ministry of Finance notes that although the unemployment rate in Estonia will remain high in the near future, it is rather certain that the peak was in the first quarter, writes Postimees Online. The ministry predicts that this year’s unemployment rate will be 15.5 percent and next year 13.9 percent. The decline in the unemployment rate and the fall in the employment rate are expected in further developments, as is confirmed by the monthly data on unemployment published by the Unemployment Insurance Fund.

In the 1st quarter of this year, 51,000 unemployed persons had been looking for a job for one year or more (long-term unemployed), of whom 18,000 had been looking for a job for two years or more (very long-term unemployed). The share of long-term unemployed persons among unemployed persons increased to 37 percent, the share of very long-term unemployed to 13 percent. The number of unemployed persons who have been seeking a job less than 6 months has slightly decreased during the last three quarters.

Unemployment was at a record high in the beginning of this year, but people’s expectations concerning possibilities to find a job have still improved. This is indicated by the decrease in the number of discouraged persons. In the second half of the previous year the number of discouraged persons increased to 11,000, but in the 1st quarter of the current year it decreased to the level of the beginning of the previous year, to 7,000.

In the 1st quarter the estimated number of employed persons was 554,000, which is the smallest during the period after the restoration of independence in Estonia. Compared to the previous quarter, the number of employed persons decreased by 4.6 percent, while compared to the same quarter of the previous year, it fell by 9.6 percent.

Employment has decreased more among men, whereas the share of women in employment is increasing. The number of employed men decreased by 40,000, and of employed women, by 18,000 in a year. Fifty-four percent of the employed persons were women in the 1st quarter of the current year, 52 percent in the 1st quarter of the previous year.
By economic activity, the decrease in employment most affected construction, where the number of employed persons decreased by 23,000 (36 percent) in the year. Manufacturing saw a drop of 17,000 persons over one year, while trade registered a drop of 10,000 persons in a year.

The unemployment rate is the share of the unemployed in the labor force (sum of employed and unemployed persons). The estimates are based on the data of the Labor Force Survey. Statistics Estonia has been conducting the Labor Force Survey since 1995, and every quarter 5,000 persons participate in it. The Labor Force Survey is carried out by statistical organizations in all European Union Member States on the basis of a harmonized methodology.