Skilled worker shortages are driving wage pressure in Estonia

Unemployment in Estonia has fallen to its pre-pandemic level, but employers are struggling to find skilled workers, creating pressure for wage increases this year and next, ERR reports.

Statistics Estonia data show that unemployment rose over the past year in only 12 of the country’s 78 administrative units. In September, it was 13% lower than in the same month last year. The rate was last this low in early 2020.

“Year on year, we are seeing one of the lowest unemployment rates on record,” said Raul Eamets, chief economist at Bigbank.

Demand for workers is increasing as the economy returns to growth, said Kirsti Melesk, head of the employment department at the Ministry of Economic Affairs. Current forecasts suggest unemployment will remain around its present level and gradually decline, she said.

There are three registered jobseekers for every vacancy in skilled occupations, compared with 255 per vacancy in financial activities. The shortage of qualified workers is prompting companies to compete for staff, Eamets said, adding that forecasts point to wage growth of 6% to 7% this year and a similar increase next year.

Hotels are again attracting job applicants, with some positions drawing many candidates, said Ain Käpp, a board member of the Estonian Hotels and Restaurants Association. The hospitality sector has traditionally offered young people a first work experience, but its prolonged difficulties have limited employers’ ability to hire them. Restaurants have faced particular challenges, and some have closed.

Youth unemployment has fallen somewhat but remains high, Melesk said. The unemployment fund has introduced new measures to focus more on youth unemployment, she added.