Integrated Employment and Population Projection: Challenges for Estonia until 2100
This article presents the main results if an integrated long-term employment and population projection for Estonia until the end of the 21st century.
The integrated projection was prepared in the framework of a recent study commissioned by the Foresight Centre at Riigikogu; it also relates to a larger programme of applied research (RITA-RÄNNE). The cohort-component population projection used in the study was originally developed for the Estonian Human Development Report (EHDR) 2016/2017 “Estonia at the Age of Migration”. Several features, such as the long-term view, a variety of scenarios related to the future course of demographic processes, and the distinction between native and migrant-origin population, made the EHDR projection the most suitable for the task.
In the study, an employment projection was prepared and added to population projection. Employment projection considered four factors that may influence age- and gender-specific employment rates in Estonia in the future: increase in the educational attainment of the population, postponement of retirement, integration of immigrants and their descendants, and the implementation of best practices of active labour market policy. Compared to existing projections, the new integrated projection considers a broader scope of factors and supports a more nuanced account of possible medium- and long-term changes in the size of workforce and the proportion of employed among the population in Estonia.
Three major findings emerged from the study. First, although the number of working-age population (20–64) will likely decrease until the 2050s, over the next two decades the number of the employed is not necessarily decreasing. Until the 2030s, the increase in employment rates may effectively compensate the shrinking of working-age population. Second, over a longer run the dynamics of the number of the employed will be shaped by the course of demographic processes. In order to stop the decrease in the number of the employed in the second half of the century, either the fertility rates should be brought closer to replacement level (2.08 children per woman) or a large number of immigrants (at least 200,000) should be invited to the country and integrated. Which of these two alternatives should be given a priority in policy development, needs to be debated in the society and decided by Riigikogu. Third, the results showed that in the case the factors increasing employment rates (increase in the educational attainment of population, increase of retirement age, integration of immigrants, and the implementation of active labour market policies) are operational, there will be no substantial deterioration in the proportion of the employed among the total population, regardless of which demographic scenario is going to materialise.