DEVELOPMENT

Table 4.4.5
The productivity level of Estonia’s service branches (value added per worker), in comparison to other states in 2010 (%
of the corresponding state’s level)
Branches of the service sector
Ireland
Denmark
Switzerland
Netherlands
Finland
Austria
EU 27
Slovenia
Czech
Republic
Hungary
Slovakia
Water transport 15 7 23 31 41 16 50 187 254 79
Warehousing, ancillary transport activities 68 53 42 49 86 48 79 62 145 150 348
Book and periodical publishing 22 17 30 18 24 21 26 50 66 72 93
Audio recording and music publishing 30 15 29 28 24 34 19 46 69 83 95
Programming, consultations and other similar
activities
26 25 29 38 39 44 41 75 72 122 85
Programming 39 32 44 52 47 88 141 117
Information-related activities 17 32 20 21 25 44 38 83 47
Legal activities 32 24 28 40 33 46 47 88 95 136 111
Research and development activities 28 11 46 32 38 48 43 63 83 141 110
Advertising and market research 32 26 30 37 35 39 40 62 71 91 67
Designers’ activities 34 18 28 39 42 31 94 89 218 94
Leasing and operational leasing 70 57 56 47 63 28 59 216 124 93 159
Temporary employment agency activities 49 28 41 107 54 43 63 93 145 181 133
Source: Eurostat
between 2000 and 2004. Starting in 2005, the increase
in productivity has also significantly accelerated. The
growth of the unit labour costs has also been low, only
7.6%, in the European Union as a whole. This alludes to
a well-developed and stable economic system where big
changes do not occur.
In the states that have backgrounds similar to Estonia,
like the Czech Republic, Slovakia and Hungary, the growth
of unit labour costs have been significantly slower than in
Estonia. During the entire period under observation, it has
been between 10% and 17% in all these states. This again
Table 4.4.6
Nominal unit labour costs in the reference countries
(2005=100)
2000 2004 2009 2010 2011
Ireland 82.1 95.6 110.6 103.4 100.1
South Korea 86.0 97.7 103.8 102.3 104.9
EU 27 93.8 98.6 105.9 106.7 107.6
Czech Republic 85.2 100.8 108.9 108.9 110.1
Slovakia 84.3 96.2 112.8 111.8 111.4
Netherlands 88.8 100.4 110.9 110.1 111.5
Austria 96.7 98.8 111.3 111.3 112.3
Hungary 73.3 97.3 116.3 115.3 117.3
Finland 93.0 97.9 117.3 115.4 117.5
Denmark 88.4 97.8 120.3 118.9 118.9
Slovenia 78.9 98.6 119.7 120.1 119.4
Estonia 80.5 96.3 148.7 139.6 137.6
New Zealand 84.2 95.7 118.6 ... ...
Switzerland 94.3 98.9 109.9 107.7 ...
Source: Eurostat
reflects the singularity of Estonia’s situation between 2005
and 2008, and the risk to the competitiveness of Estonia’s
economy that developed during this period.
The computation of the unit labour costs ratio is
illustrated by its division into components – into the
change in labour costs and the change in productivity.
The average annual pace of growth for unit labour
costs and productivity from 2000 to 2011 is shown in
Figure 4.4.1.
From the diagram, we can see that, in Finland, for
example, the average growth of unit labour costs also
exceeded the increase in productivity, but this occurred
at a significantly slower pace. Therefore, if we leave out
the period from 2005 to 2008, the increase in Estonia’s
labour costs has been comparable to the other states, and
compatible with the model of a rapidly developing economy,
because it was also accompanied by an increase in
productivity.
4.4.7
How to increase the productivity of
Estonia’s economy?
What causes the low level of our labour productivity?
This cannot be explained simply by the low work performance
of Estonian workers. Also important is the kind
of work they do; how complicated the produced goods
and services are; and what price they can be sold for. The
management of the production operations is also important
along with the structure of the organisation and the
position of our business enterprises in the global value
chain. Since the company level is most important when it
comes to increasing productivity, the following example
is informative. If a subsidiary of a Danish furniture company,
located in Estonia, produces furniture parts that are
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Estonian Human Development Report 2012/2013