No. 31




Labour Shortage in Estonia: Where should We Look for Solutions?

10 June 2015


RiTo No. 31, 2015

Laura Kirss, Miko Kupts, Reelika Leetmaa, Märt Masso, Liina Osila, Magnus Piirits, Mari Rell, Pirjo Turk.

The Estonian population is decreasing, and consequently so is the number of people of working age. This is mostly caused by the negative natural increase rate as well as emigration. Between 2015 and 2040, Estonia’s population will decrease by 130,000, which equals a third of the total population of Tallinn, or that of Tartu, Rakvere and Viimsi combined. The share of people of working age in the total population will decrease even more sharply – while in 2015 Estonia has about 800,000 people of working age (aged 20–64), by 2040 the number will fall by 160,000. At the same time, the number of retired people is increasing, and the estimates say that by 2040 we will have only two people of working age for every retired person, instead of the current three. The productivity of Estonian labour force is also very low (61% of the European Union average) and in the past 10 years we have not improved our position much compared to other EU Member States. It is therefore vital to ask ourselves how we could alleviate the already threatening shortage of available workforce. After analysing the issue, this article reaches the conclusion that in a situation where it is not possible to affect the birth rate in short term, we need to make a commitment to bring those who are not in the labour force (back) to the labour market, increase our productivity, and improve the quality of our current (and future) labour force, as well as take advantage of migration – and all this in the same time. This article is an abridged version of a policy brief that Praxis Center for Policy Studies created before the 2015 parliamentary elections in Estonia, in order to improve the election debates by highlighting topical long-term problems and asking important questions from the candidates.

Full article in Estonian