Underperformance of former agricultural areas in Estonia

Though Estonia is a small country there are still substantial differences in the economic outcome of different areas which also reflects in the situation in the labour market. Through a cluster analysis (Päll 2003) a group of counties with common agricultural production background emerged. The restructuring of the economy has taken more time in these counties bringing along more dependants, unemployment and low economic activity.

A brief look at the statistics (ESO) shows that the counties such as Võru and Põlva have very low labour market participation rate – in 2007 51.6% and 50.0% respectively compared to the Estonian average of 65.7%. This can be explained by their geographical position – both of these counties are peripheral areas as some of the farthest counties from the capital and economic centre of Estonia Tallinn which means that there are not enough working opportunities, the wages are not high enough (more than 20% lower than the Estonian average). That is why many young people leave the area and move for example to Tallinn or the second largest town Tartu. This in turn deepens the disparities – the few qualified workers leave leaving the companies with the lack of labour and lesser opportunities for development and innovation. So it’s kind of a closed circle.

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2 thoughts on “Underperformance of former agricultural areas in Estonia

  1. In Germany the agriculture is also no lucrative activity on their own. On the other side they receive a lote of subsidies from the State in particular cases. I think they often complain on a high level.

    Reply

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