International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

Baltic States Problem - Labour Market; Analysis Employment, Unemployment and Vacancies of Estonia; Improved Beveridge Curve
Lembo Tanning, Toivo Tanning

Before and after the economic crisis, the economic growths of Estonia, Latvia and Lithuania were one of the highest in the European Union (EU). Hence these countries were called Baltic Tigers. In addition, Estonian state budget is one of the most balanced and the government debt one of the smallest. After the crisis, the economic growth factors of Estonia have again been one of the biggest in the union. In 2011, the real GDP growth in Estonia was 7.6%. However, the employment rate and wages in Estonia are one of the lowest in the EU. A thorough analysis of the development of a small economy such as Estonia will also help make more general conclusions, at least on the European level. The problem is the large number of vacancies in the situation of high unemployment rate. One of the priorities of „Europe 2020 strategy“ is the EU economy with a high employment rate for the next decade. Therefore, the purpose of the current article is to analyse the labour market in Estonia general, its unemployment rate and vacancies, the problems within the labour market, and compare this data with Estonian key partner countries in the EU. The problem with the cyclical nature of economy is the large number of vacancies even in the situation of unemployment. This article presents a novel approach to the analysis of the relation of vacancies and unemployment (improved Beveridge curve), their mathematical models and suggestions for improving the situation in the labour market.

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