The Central Bank of Estonia published an assessment of Estonia’s labour market, concluding that it remained broadly stable in 2024 despite the recession. Labour force survey data show employment did not fall, suggesting firms that reduced output may be able to raise it again as demand recovers by drawing on internal labour reserves; the note also highlights productivity growth as key to competitiveness and limiting wage-driven inflation pressures, while flagging the trade war and related uncertainty as the main risk to labour demand. Register data nonetheless show employment fell over 2024, with the decline in private-sector wage earners easing and the earlier rise in public-sector employment slowing. Manufacturing, the sector hit fastest and hardest by the recession, saw slight employment growth at the end of the year as activity and exports recovered, but overall employment in the sector fell by around 7%; construction and retail continued to see falling employment, while demand for labour increased further in healthcare. Unemployment rose mainly because more people actively sought work rather than because jobs disappeared, leaving Estonia among Europe’s higher-unemployment countries alongside trading partners including Finland, Sweden, Lithuania and Latvia. Average wage growth slowed at first compared with 2023 but picked up again late in 2024, partly linked to wages being paid out before an income tax rise; real wage purchasing power increased strongly and is now above its pre-recession peak. The central bank forecasts household purchasing-power growth will be temporarily slowed in 2025 by higher taxes and inflation, with a substantial improvement expected in 2026 as the “tax hump” is eliminated.

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