OREANDA-NEWS. May 18, 2012. The situation in the labour market improved in the first quarter of 2012 compared to the fourth quarter of 2011. According to Statistics Estonia, employment growth reached 3.9% year-on-year. Based on Eesti Pank’s estimates, seasonally adjusted employment picked up in the first quarter after a small decline, reported the press-centre of Eesti Pank.

The developments in employment reflect the short-term slowdown in economic growth at the end of 2011 and the recovery of growth at the beginning of this year. However, as shown by the modest growth figures, the rapid recovery of the labour market will be replaced by much more moderate dynamics.

Unemployment stood at 11.5% in the first quarter, having grown by a mere 0.1 percentage points from the fourth quarter of 2011. The unemployment rate usually increases more substantially in the first quarter due to seasonality, but this time the creation of new jobs in the services sector offset the seasonal decrease in jobs in the construction and manufacturing sectors. Persisting regional differences are still a concern: unemployment in Ida-Virumaa in eastern Estonia remains at 18.8%, which is more than 7 percentage points higher than Estonia’s average. This refers to the low mobility of the labour force.

Based on the flash estimate of economic growth in the first quarter, productivity grew slower than wages, which points to increased inflationary pressures.