No. 43




Changes on Labour Market Accelerated

09 June 2021


RiTo No. 43, 2021

While the spread of the COVID-19 virus in Estonia in 2020 was not so extensive as in most European Union Member States and the economic restrictions were milder, the labour market reacted to the crisis rather strongly. After the first wave of the coronavirus crisis, mainly the young people were hit the hardest on the labour market. If the virus crisis lasts longer and influences most sectors of economy, the labour market position of older workers may also suffer.

In the late autumn and early winter of 2020, the employment problems in the sectors connected with tourism deepened. Other sectors, like clothing industry, oil industry, engineering industry, installation of machinery and equipment, were also in a complicated state. It is expected that in most sectors the situation will improve in 2021 due to vaccination. However, in tourism the difficulties will probably cont­inue for some time. In some industries, like construction, certain branches of processing industry, the crisis may arrive with a delay. On the whole, unemployment may increase in 2021, because the return of economic growth will be reflected with a delay in labour market processes.

The representatives of our businesses see digitalisation and automation as by far the largest lever that fosters the long-term development of Estonian economy. Estonia could be a model country for testing of new smart solutions based on digitalisation and artificial intelligence in effective and efficient public and private partnership. During the virus crisis, green transition, increasing role of teleworking, changes in global supply chains and growth of the importance of physical and mental health of workers have strongly accelerated employment and demand for skills. Although developing the sustainability of economy might have remained somewhat to the background due to the crisis, there is a need for a national strategy for implementing the green transition.

More assistance from the state is expected in supporting of export. Due to the restrictions on cross-border mobility, many companies in the industrial, ICT and other sectors are facing the issue of developing the export of their products and services. One opportunity is to make greater use of the network of embassies. In the sectors that depend on foreign labour and seasonal workers, like industry and agriculture, it is expected that the govern­ment would understand that restricting the use of foreign labour may in its turn increase labour shortage and bring about salary boom.

Distance learning and lifelong learning need more systemic and extensive support. The state should set priority spheres of competence and establish funds for supporting improving of knowledge and skills. Retraining courses in social, health care and real estate services may be suitable for workers of the sectors that suffered the most due to the crisis. Pedagogical activities relating to their speciality could suit the creative persons of the culture sector. According to the employers, the second wave of the virus crisis has deepened the mental health problems of the people, therefore support­ing of mental health also required more attention in society.