Despite impressive economic growth rates (since 1994, GDP has doubled in real terms), and like many other transition economies, for many years Estonia has experienced jobless or even job loss growth. Employment declined between 1994 and 2005 from 675,000 to 602,000. This job loss partly reflects closure of many enterprises, as well as “defensive restructuring” by enterprises, a process in which redundant labour is shed in order to increase productivity, the gains from which are then translated into higher wages rather than higher employment.
*The views expressed in this article reflect the personal opinions of the author, and may not coincide with the official positions of the World Bank.
Senior labour economist, World Bank