OREANDA-NEWS. November 24, 2014. At a conference on economics in Tallinn, Governor of Eesti Pank Ardo Hansson explained that increasingly scarce labour resources in Estonia will in future boost wage growth, making survival more difficult for companies with low productivity.

In only five years there will be 30,000 fewer working-age people in Estonia than there are today. Companies need ever more-highly qualified employees, but the skills of people looking for work often do not match those required for the vacant jobs, said Mr Hansson.

The governor of the central bank finds that it would be better for Estonia to focus on securing long-term economic growth, which means making good use of the ever-decreasing labour resources and investing in raising the efficiency of production. “It is inevitable that in the coming years, inefficient companies and those with low productivity will find it harder to survive.”

Mr Hansson gave the conference a review of the state of the economy, saying that the ability of the Estonian economy to face up to risks has improved of late. He noted that corporate and household debt levels have fallen and the real estate market has calmed down, but the small size of Estonia means that dangers could arise in some narrower segments of the economy, as was seen recently with the Russian sanctions.

The global economy and the economic climate in Europe are gradually improving and the revival of external demand will encourage the Estonian economy to grow steadily faster. Looking forward however, Mr Hansson considers that the risks to the economy are very large both for us and elsewhere.