LABOUR MARKET FLEXIBILITY IN ESTONIA: WHAT MORE CAN BE DONE?

Zuzana Brixiová Schwidrowski

No wp964, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: In mid-2008, high employment and low unemployment rates characterised the Estonian labour market in comparison with the average of the EU15 countries. While aggregate outcomes improved during 2000 07, large inequalities persisted across regions, ethnic groups, and workers with different skill levels. As Estonia entered recession in 2008, the unemployment rate almost doubled between the 2nd and the 4th quarter, and is expected to rise further in 2009 and 2010. More flexible labour markets will be a key adjustment mechanism during the recession as well as in the medium term if Estonia is to become a knowledge based economy. Given the currency board arrangement and low synchronisation with the euro area, flexibility is also needed to cushion asymmetric shocks. In December 2008, parliament adopted the new Employment Contract Act, deregulating employment protection while increasing income security of the unemployed. This paper discusses options for removing the remaining barriers that impede worker reallocation across jobs, sectors, and regions into more productive activities.

Keywords: Labour market policies; flexibility; Estonia. (search for similar items in EconPapers)
JEL-codes: E24 J08 J64 (search for similar items in EconPapers)
Pages: pages
Date: 2009-07-01
New Economics Papers: this item is included in nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Labour Market Flexibility in Estonia: What more Can be Done? (2009)
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