Employment reaches a record high Estonia

Text Mark Taylor
Photo Andrei Chertkov

In the second quarter of 2024 (April-June), Estonia experienced a modest but positive shift in its labour market dynamics. According to the latest data from Statistics Estonia, the unemployment rate fell to 7.6 percent, marking a slight decrease from the previous quarter. Meanwhile, the employment rate climbed to 69.7 per cent, with the labour force participation rate reaching a historic high of 75.4 per cent.

Unemployment Sees Marginal Decline Amidst Broader Concerns

Tea Vassiljeva, an analyst at Statistics Estonia, highlighted that the number of unemployed individuals decreased by 1,100 from the previous quarter. “The 7.6 percent unemployment rate reflects a 0.2 percentage point drop from the first quarter of 2024”. Despite this quarterly improvement, the year-on-year comparison reveals a more concerning trend: unemployment has increased by 7,600 compared to the same period in 2023.

One of the most striking changes occurred among the youth population (aged 15-24), where unemployment has surged. The number of young unemployed individuals rose by 5,500 compared to the first quarter of this year and by 4,800 compared to the second quarter of 2023. Additionally, the number of long-term unemployed (those out of work for a year or more) has seen a noticeable increase.

Conversely, in the 25-49 age group, unemployment decreased by 4,200 from the first quarter, though it remained higher by 6,100 compared to last year. Among the older age group (50-74), unemployment dropped both quarter-on-quarter and year-on-year. The gender gap in unemployment rates was minimal, with 7.6 per cent for men and 7.5 per cent for women.

Employment Growth Across All Sectors

The number of employed persons in Estonia increased by 13,200 compared to the first quarter of 2024 and by 11,700 compared to the second quarter of 2023. The employment rate, representing the proportion of employed individuals within the 15-74 age group, rose to 69.7 percent, which is 1.3 percentage points higher than in the first quarter.

Employment growth was observed across all sectors, with industry and construction seeing an increase of 6,900 employed persons, services rising by 5,200, and agriculture, forestry, and fishing adding 1,000 new jobs. Vassiljeva pointed out a slight reduction in the number of employees in the industry and construction sectors compared to the first quarter. However, year-on-year, employment in these sectors declined by 5,800, while other sectors saw an increase.

Regionally, employment indicators improved in Harjumaa (excluding Tallinn), Ida-Virumaa, and Southern Estonia, but decreased in Tallinn and Western Estonia. The rise in employment was primarily driven by self-employment, which accounted for 13.4 per cent of all employed persons in the second quarter, up from 10.6 per cent in the same period last year.

Labour Force Participation Reaches Record High

The labour force participation rate, which measures the percentage of economically active individuals (either employed or actively seeking employment) among the 15-74 age group, increased for the third consecutive quarter, surpassing 75 per cent for the first time in Estonia’s history.

“The participation rate was 1.2 percentage points higher than in both the previous quarter and the second quarter of last year when it stood at 74.2 percent,” Vassiljeva explained. The number of economically inactive persons dropped significantly, with 12,100 fewer inactive individuals compared to the first quarter, and 9,600 fewer than in the second quarter of 2023.

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Economic inactivity Estonia Employment growth Estonia Estonia Labour market 2024 Estonian employment rate Labour Force Participation Estonia Self-employment Estonia Unemployment in Estonia