Survey: Less hiring due to war, labour market cooling down
Confidence among Estonian small and medium-sized enterprises (SMEs) has been understandably dampened by the war, and hiring plans are significantly more conservative, according to the Baltic Business Outlook (BBO) survey carried out by SEB. Compared to January, there are almost three times fewer companies planning to hire new staff.
While 16% of Estonian SMEs who participated in the January survey saw an increase in the number of employees this year, only 6% of companies forecast an increase in the number of employees, according to the May survey. The share of companies forecasting a reduction in the number of employees has also increased from 4% to 7% in five months. The picture is similar elsewhere in the Baltics.
‘A pause in hiring new employees could lead to some cooling in the labour market. This means fewer new jobs will be created, which in turn means less pressure on wage growth. At the same time, the survey does not show that SMEs are planning redundancies, so even in these turbulent times, the labour market is still favourable for employees. In the longer term, the labour market is affected by the outlook for the Baltic economies in the near future, which has taken on a somewhat darker tone. The fact that 22% of responding SMEs are unable to estimate the impact of the war on the number of employees indicates uncertainty about the direct and indirect effects of the war,’ SEB Member of the Management Board and Head of Retail Banking Ainar Leppänen commented.
Significant share intends to hire refugees
As many as half of Estonian SMEs planning to increase the number of employees in their company intend to do so with the help of Ukrainian refugees. In Lithuania, this share is 40% and in Latvia as much as two thirds, i.e., 66%. Overall, this means that 3% of Estonian SMEs intend to offer jobs to Ukrainian refugees.
‘Most of the companies offering jobs to Ukrainian refugees are active in the accommodation and catering, retail, manufacturing, and administrative sectors. There is a strong demand for Ukrainians of working age to help alleviate labour shortages in the market. At the same time, however, a large number of Ukrainians are probably ready to return home if the situation there improves, so companies need to bear in mind that the helping hand of Ukrainian refugees may not be a permanent feature of our labour market,’ Leppänen explained.
The SEB survey took place in May 2022. A total of 2072 companies in the Baltic countries responded, 811 of them in Estonia.
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