Estonia’s IT sector faces rising unemployment and layoffs
TALLINN, ESTONIA — The information and communications technology (ICT) sector in Estonia is witnessing a gradual increase in unemployment, indicating a broader economic shift.
Recent layoffs and a slowdown in wage growth suggest that the sector, once booming, is now aligning more closely with the rest of the economy.
Significant layoffs across major firms
Swedish telecommunications company Telia announced plans to lay off 3,000 of its global workforce, including 160 positions in Estonia. The company aims to complete these changes by December 1.
According to Telia Eesti CEO Holger Haljand, the layoffs will affect various divisions due to the interconnected nature of the company’s operations.
“There aren’t any isolated units where we can make cuts in one place without affecting others,” Haljand explained.
In addition to Telia, other companies in the ICT sector are also planning significant layoffs. Gaming company Studioworks is set to cut 168 jobs, while fintech startup Monese has already laid off 36 employees.
Rising unemployment and increased competition
Katrin Liivamets, head of employer services at the Estonian Unemployment Insurance Fund (Töötukassa), noted a concerning trend: the number of unemployed individuals with an ICT background has steadily increased over the past five years.
In 2019, the figure was between 200 and 300, but it has now risen to over a thousand. Despite this increase, ICT job vacancies have remained static at pre-pandemic levels, leading to heightened competition for available positions.
Margus Eha, CEO of software development firm Opus, confirmed this trend, stating that the number of applications per vacancy has increased significantly.
“Previously, we had to actively headhunt people, as we got almost no applications for developer positions. Now, we are getting 10 to 20 CVs [per vacancy] for sure,” he said.
However, Eha noted that the quality of applications has not improved, with good talent remaining scarce.
Wage growth slows amid economic normalization
The IT sector, once known for salary growth, is now experiencing more modest increases.
Eha remarked, “A few years ago, asking for a 20 percent pay rise was commonplace, but now wage growth is more modest.”
Liivamets added that experienced and higher-paid workers are finding it increasingly difficult to secure new positions, as companies facing economic challenges tend to favor less experienced, lower-cost employees.
“It has been harder to find work that matches previous experience in a market where there are more job seekers but fewer job offers,” she explained.
The end of the startup boom has further contributed to the normalization of the ICT job market, aligning it more closely with other industries. As Estonia’s IT sector adjusts to these changes, the focus will likely shift towards balancing talent acquisition with economic realities.
