Assessment Of The Estonian Labor Market Development

Abstract

Today s world is characterized by globalization and rapid technological change. Successful development of the European Union s economic system requires reforming labor market and social policies both at EU and national levels. The goal of these reforms has to be improving EU s economic performance and guaranteeing better social protection. It can be agreed that each national government has to devise and implement its own strategy for reforming national labor market and social policies. One of extremely important problems is market flexibility especially labor market flexibility. Only flexible markets allow the necessary transfer of resources across firms, sectors or regions. The Estonian labor market is quite flexible and it is characterized by a weak role of trade unions and modest regulation by the government. The objective of the paper is to review and analyze labor market developments in Estonia; to examine trends in aggregate employment and unemployment and to find appropriate employment policy responses in order to increase labor market flexibility. The paper will rely on the analysis of statistical data and labor force survey data over the period 1990-2006.