OREANDA-NEWS. November 18, 2011. Robust employment growth continued in the third quarter, being further propped up by optimistic future expectations and more seasonal jobs in the summer. According to Statistics Estonia, the number of the employed increased by 8.6% (that is, by 49,600), year-on-year. Employment growth was broad-based, whereas strong employment recovery has been taking place in manufacturing and construction - the sectors which shrank the most in the crisis, reported the press-centre of Eesti Pank.

The unemployment rate contracted from 13.3% in the second quarter to 10.9% in the third quarter, that is, by some 5pp year-on-year. Compared to a year ago, the number of the long-term unemployed decreased as well. The labour participation rate continued its growth path - 68.5% of the working-age population was either employed or looking for a job, and this is the highest indicator over the past decade.

After nearly two years, labour costs are likely to surpass those of labour productivity. This was an expected development, since the labour market responds to economic growth with a lag and the strong results of the first half of the year motivated employers to hire and raise wages. When productivity growth declines, wage growth will start pressuring profits. This once again stresses the need for labour-market flexibility.

Uncertainty in the external environment and a slowdown in demand will pass through to Estonia's economic indicators in the fourth quarter - export growth and thus also industrial production growth will decrease. As a result, employment growth is also expected to abate.