According to Tea Vassiljeva, the labor market showed no signs of sharp changes in either direction in the first quarter.

"There were 52,200 unemployed people in the first quarter, which was 5,100 more than in the final quarter of last year. At the same time, this figure remains well below the very high level recorded in the first quarter of last year," Vassiljeva said.

The unemployment rate shows what share of the labor force is unemployed. The first-quarter unemployment rate of 7.1 percent was 0.7 percentage points higher than in the final quarter of last year, but 1.5 percentage points lower than in the first quarter of 2025.

Employment down in services

There were 686,300 employed people in the first quarter, 2,300 fewer than in the final quarter of last year but 4,700 more than at the same time a year earlier.

"The employment rate (68 percent), which shows the share of people in employment, was likewise lower than in the final quarter of last year but higher compared with the first quarter of 2025," the analyst noted.

The number of employed people, including salaried employees, continued to decline in the services sector due to weak domestic demand, both year on year and compared with the previous quarter. Employment increased, however, in the industrial and construction sectors.

Regionally, employment increased both year on year and quarter on quarter in Harju County and Tallinn, while it declined in Ida-Viru County and the counties of South Estonia. In Central Estonia, employment fell compared with the first quarter of last year but rose compared with the previous quarter, while the situation in West Estonia was the opposite.

The unemployment rate was lowest in Harju County excluding Tallinn and in South Estonia (5.7 percent in both). In Central Estonia, the unemployment rate matched the national average at 7.1 percent, while it stood at 7.7 percent in Tallinn and 11.6 percent in Ida-Viru County.

Youth employment drops to 15-year low

"While the number of working-age people generally declined in 2026 compared with 2025, the 15–24 age group was one of the few in which the population increased, by 3,700," the analyst noted. There were 146,700 young people in total in the first quarter, of whom 41,900 were employed and 12,400 unemployed.

The youth employment rate was 28.6 percent and declined compared with both the first and final quarters of last year, while the youth unemployment rate stood at 22.8 percent in the first quarter of this year.

"The youth employment rate in the first quarter was last this low in 2011 and the unemployment rate was also above the long-term average," Vassiljeva said, explaining that this was linked to young people working mainly in the services sector where employment overall declined.

At the same time, young people's economic activity has also fallen in recent quarters. "Their labor force participation rate, which has typically exceeded 40 percent, has now remained below that level for a second consecutive quarter and stood at 37 percent in the first quarter of this year," the analyst commented.

"The number of economically inactive people across all age groups declined in the first quarter compared with the final quarter of last year, but this was mainly due to the overall decline in the working-age population," Vassiljeva explained.

The labor force participation rate was 73.2 percent and shows the share of the population that belongs to the labor force, meaning people who are employed or who want to work and are actively seeking employment.

Compared with the fourth quarter of last year, the labor force participation rate was 0.5 percentage points higher, but it was 0.5 percentage points lower than in the first quarter of last year.

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