2010/2011

Figure 3.3.5. Unemployment rates (annual averages).
25
20
15
10
5
0
1990
1991
1992
1993
1994
Latvia
Lithuania
1995
1996
1997
1998
1999
Estonia
Finland
Source: ILO database, national statistical offices, data for the first three
quarters of 2010
2000
2001
2002
2003
2004
Norway
Denmark
2005
2006
2007
2008
2009
Sweden
Figure 3.3.6. Percentage of part-time employees of total
employed individuals (% of entire labour force)
30
25
20
15
10
5
1998
1999
2000
EU27
Denmark
2001
2002
Estonia
Latvia
2003
2004
unemployment in mid-1990s, while unemployment in
Estonia grew rapidly during the 1999 economic crisis (Figure
3.3.5). What was the reason behind Estonia’s relative
success during the 1990s compared to Latvia and Lithuania?
One of the breaking points in the economic development
of the Baltic states was currency reform. Estonia was
the first to carry out currency reform (1992) and, unlike
Latvia and Lithuania, it immediately introduced its own
convertible currency. The fact that both Lithuania and
Latvia initially used transition currencies that were not
convertible was a factor that restricted rather than contributed
to their economic development. The currency
reform set off the economic reform, which brought about
structural changes in the economy, directly affecting people’s
employment and unemployment levels.
The time period from the beginning of the 1990s until
2000 can be described as an era of structural changes that
resulted from the reforms. Employment levels fell and the
2005
2006
Lithuania
Finland
2007
2008
Sweden
Norway
2010
2009
unemployment rate grew regardless of the economic developments.
In 1997, the Baltic states experienced a stock
market bubble and 1999 was a time of economic standstill,
which changed little in the overall unemployment
and employment trends. It is only from 2000 onwards
that we can see signs of a certain stabilization process
occurring. The period of rapid economic growth brought
about a stable increase in employment and a decrease in
the unemployment rate. The economic downturn of 2009
showed that the labour markets of the Baltic states react
to economic crises in ways that are characteristic of market
economies: unemployment rates quickly grew and the
level of employment dropped in all three countries.
Will the unemployment rate subside to a level equal to
the pre-crisis situation and when will this happen? If we compare
our situation to the economic crisis in Finland and Sweden
at the beginning of the 1990s, we can assume that high
unemployment levels may persist in the Baltic states for a further
6–7 years. It is also quite possible that we will be unable
to reach the pre-crisis level of employment at all. Longterm
high unemployment rates can be caused by structural
changes in the economy. In Estonia, for example, there are
several sectors of the economy that became unprofitable for
entrepreneurs as the labour force became more expensive. As
a result, these industries have no future in Estonia in their
previous form. The sectors of the economy that have become
unprofitable include the textile industry, clothing, the plastics
industry, etc. Industries that have suffered also include
the construction, the construction materials industry and the
transportation industry (Eamets et al 2009). In certain fields,
the increase of exports or the recovery of domestic demand
may result in an increase in the number of jobs, but there are
also industries where the jobs have been reallocated to countries
with cheaper labour.
Working time
In addition to the level of employment, the amount of work
done in a society also depends on working time. Working
time is divided into full time work and part-time work.
The option of using part-time work increases the flexibility
of the labour market: for example, in the context of the
crisis, costs per employee are lower in the case of part-time
work and people will not have to be laid off.
Working part-time is a clearly growing trend in
Europe (Figure 3.3.6). In Norway, almost 30% of employees
are engaged in part-time work – the highest level in
the Nordic countries. The popularity of part-time work
has also increased steadily in Sweden and Denmark as
well as in Finland where, just a decade ago, the percentage
of employees engaged in part-time work used to be similar
to that of the Baltic states. Compared to the Nordic
countries, where the percentage of part-time employees
is increasing, the situation in the Baltic states is relatively
stable and the number of part-time employees showed
signs of declining during the crisis. The fact that the percentage
of part-time employees in the Baltic states is comparatively
low is not surprising, since the general income
level is not high enough for people to be able to ensure
their livelihood through part-time work.
Part-time work makes it easier for people to combine
work with family life, which is why part-time work is more
popular among women in many countries. Compared to
the average percentage of employees who perform part-time
work, the percentage of women engaged in part-time work
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