OREANDA-NEWS. February 12, 2014. In a presentation at the annual conference of the Estonian Economic Association, Ardo Hansson, Governor of Eesti Pank, explained how investment in new technology will let Estonia maintain competitiveness and increase output even though the working age population is shrinking and labour costs are rising rapidly.

Speaking in Parnu on Friday, Mr Hansson said that the profitability of companies has improved since the crisis, but that this was mainly due to savings being made on investments. Like elsewhere in Europe, Estonian companies are wary about their current circumstances and are being careful about their investments. Increased use of resources will inevitably lead to a certain growth in the need for investment.

“The long-term prospects for growth in the Estonian economy can only be ensured by an increase in investment. As confidence and demand pick up we can expect to see investments grow, because access to bank lending is good,” said Hansson.

He further detailed how emigration and a reduction in available labour resources have improved the position of employees in wage negotiations, and this has led to strong growth in average wages. “Increased production capital and an improved supply of capital to labour will allow competitiveness to be maintained and will raise production levels even as the working age population is shrinking and labour costs are rising rapidly”.

The conference was the ninth annual conference of the Estonian Economic Association and was held on Friday and Saturday in Parnu. For more about the conference in Estonian see http://uus.emselts.ee/joomla/index.php/aastakonverentsid/konv2014.