Consumer price inflation Estonia 2017 OECD economic survey overview

ASSESSMENT AND RECOMMENDATIONS OECD ECONOMIC SURVEYS: ESTONIA © OECD 2017 19 rehabilitation measures aiming at improving their employability. Because some of them did not find a job, the unemployment rate has increased. Nevertheless, participation and employment rates stand above OECD average, and labour shortages have emerged in some sectors e.g. ICT, and health care. Wages have increased fast Figure 6, Panel A. While strong wage growth is to be expected in a catch-up economy, it seems out of line with its peers and disconnected from flattening productivity growth IMF, 2017 and Figure 6. Public-sector wage increases and rises in the minimum wage have played a significant part IMF, 2017. Also, emigration of skilled labour puts upwards pressure on wages, though Estonia has been less affected by brain drain than its Baltic peers, and the net emigration trend has reversed in recent years IMF, 2016. The rise in Figure 5. Labour market conditions have tightened Source: OECD Economic Outlook 101 Database updated with information available on 18 July 2017. 1 2 http:dx.doi.org10.1787888933581068 3 5 7 9 11 13 15 17 19 21 2005 2007 2009 2011 2013 2015 2017

A. Unemployment rate

of labour force Estonia OECD 2005 2007 2009 2011 2013 2015 2017 90 95 100 105 110 115

B. Working age population

Aged 15-74, index 2005 =100 Estonia OECD Figure 6. Unit labour costs have increased fast 1. Deflated by the consumer price index. 2. An increase in the index indicates a real appreciation and a corresponding deterioration of the competitive position. 3. Simple average of Czech Republic, Hungary, Latvia, Lithuania, Poland, Slovak Republic, and Slovenia. Source: OECD Economic Outlook 101 Database updated with information available on 1 September 2017. 1 2 http:dx.doi.org10.1787888933581448 90 100 110 120 130 140 150 160 2005 2007 2009 2011 2013 2015 2017 2005 = 100

A. Real wage rate¹

Estonia OECD CEE average³ 80 100 120 140 160 2005 2007 2009 2011 2013 2015 2017 2005 = 100

B. Competitiveness indicator²

Based on relative unit labour costs Estonia EA16 CEE average³