Estonian cbank: People changing jobs at record levels

TALLINN - Approximately 7 percent of workers in Estonia in each quarter of 2018 have terminated their contract with their employer on their own accord and started working for someone else, Bank of Estonia said.

"Broadly speaking, it means that in a year, every fourth employee leaves to seek better opportunities," central bank economist Rasmus Kattai said in a press release, adding that this is the largest state-wide turnover of staff during the last 27 years of Estonia's independence.

The economic environment is the most favorable it has been in recent years, demand for products and services is growing on both domestic and external markets and, in order to be part of it and increase sales, businesses generally need to hire more people. "As there are nearly no unemployed people at the moment, businesses have to attract those who are already employed by offering better wages. For that reason, staff turnover in Estonia is bigger than ever right now," the economist said.

Even during the previous boom, when rumors were circling that builders were headhunted while queuing in construction stores, people did not change jobs as often as they do now, Kattai said. "One can only imagine how bad the situation would be if shortage of workforce was not mitigated by labor immigration, which has increased considerably, compared to that time," he added.

Kattai noted that it is clear that in a situation like this, the businesses who can offer better working conditions, notably higher wages, are the ones to remain afloat. "Thus, it is no surprise that based on a survey, it is first and foremost the businesses which have lower production figures and offer lower wages that complain about the lack of workforce. For several of them, the situation will become unbearable, because there is a merciless struggle for existence in business," he said.

The reason why the average wages are growing so quickly, is that people are switching to higher-paying jobs, Kattai added.

"Even the new income tax system, which was expected to offset the increase in labor cost, has not slowed down the wage growth. In short, the battle for employees continues at full throttle," he said.