The aim of this work is to forecast the labor demand in Ida-Viru County in order to support both decisions related to the just transition and, more broadly, regional labor market policy. The analysis was carried out within the framework of the Just Transition Fund research grant topic “Monitoring and Analysis of Transition Processes in Ida-Viru County.” The report covers the current employment structure, future scenarios related to the just transition and their potential impact on the labor market, growth and decline of jobs in various sectors, labor supply by educational level, and the main challenges the county labor market is already facing. The analysis combines quantitative and qualitative data: the quantitative part uses labor market and education statistics as well as the OSKA forecasting model, while the qualitative part is based on interviews and focus group discussions with employers, educational institutions, local governments, and other key stakeholders.
Ida-Viru County is one of Estonia’s most important industrial regions, with an economy historically strongly linked to the oil shale industry and energy sector. For this reason, the region has been designated as strategically important at the national level, and its development is guided by special action plans, most recently the just transition plan, which aims to shift an economy dependent on fossil raw materials toward a more environmentally sustainable and innovative model. Consequently, Ida-Viru County is under significant structural transformation pressure: restructuring the oil shale industry, planning new industrial investments, and demographic changes require a more precise understanding of long-term labor and skills needs trends.
According to TÖR data, the employment situation in Ida-Viru County in 2024 was as follows: 44,000 employed, representing approximately 7% of all employed people in Estonia. At the same time, the county has the lowest employment rate in the country (57.5%) and the highest unemployment rate (14.4%), with the unemployed predominantly having low education and limited Estonian language skills. About one fifth of employed persons work in manufacturing, around 9,000 people, followed by trade, education, and healthcare, which together account for over half of regional employment.
The employment structure reflects the profile of a traditional industrial region. Two-thirds of those employed in manufacturing are men, while the majority of employees in healthcare and education are women. The education profile of the Ida-Viru labor force is clearly vocationally oriented: compared to the Estonian average, Northeast Estonia has relatively more workers with vocational education and fewer with general secondary or basic education. The age pyramid of employed persons confirms an older workforce structure – one in three employees will retire within ten years, and only 16% of employees are under 35.
The industrial structure is diverse. Four major industrial sectors employ over half of those in manufacturing. The textile and clothing industry is notable, accounting for 15% of manufacturing employment, followed roughly equally by oil production, machinery and equipment repair, and metal products manufacturing (each with 13% of manufacturing employment). The oil shale sector includes mining, energy, and oil production jobs, where 4,160 people were employed in 2024, one-third of whom were chemical industry operators, miners, and mining machinery operators.
To describe future developments, development scenarios for the just transition of Ida-Viru County were prepared jointly by Tallinn University of Technology, University of Tartu, and the Estonian Qualifications Authority (Kutsekoda), ranging from balanced diversification to unmanaged decline. The scenarios were used to interpret potential development paths and map trends. The region’s development is influenced by several general trends (population aging, technological development, geopolitical uncertainty), but also significantly shaped by the green transition and associated policy interventions within the framework of the just transition, giving the region a unique developmental context. Although the EU and national efforts aim to create a comprehensive just transition support model, research results and scenario validation with local experts highlighted that the impact of just transition measures may push regional development toward either enclave formation (scenario 1) or balanced diversification (scenario 2), depending on the effectiveness of interventions and the realization of business risks. Given the considerable uncertainty in development paths, the forecast assumes a rather conservative positive scenario (scenario 1), while policy recommendations also address measures required to achieve the desired results of scenario 2 from a labor market perspective.
In scenario 1 – the development of enclaves and selective decline of Ida-Viru County – regional development is fragmented: a narrowly focused, project-based just transition policy creates some successful economic enclaves but cannot prevent a broader socio-economic decline or population decrease. This may deepen disparities between people working in successful enclaves and the rest of the population living in stagnating areas.
Investments from the Just Transition Fund (JTF) play a central role in scenario 1. The forecast considers opportunities for a more diversified economy thanks to new investments, while still following the decline trends described in scenario 1. According to the forecast, the number of employed in Ida-Viru County could decrease by about 1,200 (approximately 3%) over the next decade.
At the same time, around 14,400 people will retire, creating a need for approximately 13,200 new employees over ten years, including roughly 3,300 top specialists and 6,700 skilled workers (technicians, craftsmen, office and service employees).
Sectoral changes are expected to vary. The highest employment growth is anticipated in metal products manufacturing, supported by JTF funding decisions, including the planned expansion of NPM Narva’s magnetite plant. Moderate growth is expected in construction materials manufacturing, machinery and equipment repair, and chemical production, where new investments may create new factories or expand existing ones, although new factories will be significantly more automated. Percentage-wise, the highest growth is in wood processing, which in absolute numbers means about 80 additional jobs, mainly from new wood processing factories (e.g., Layerwood plywood plant). Growth potential is also expected in defense-related activities.
Employment is expected to decline primarily in the clothing industry, which is uncompetitive globally due to input costs, and to a lesser extent in furniture and several other manufacturing branches. Automation and digitalization may also reduce employment in oil production, food processing, machinery, and plastics manufacturing. Overall, the oil shale sector has already seen a significant reduction in employment. Existing regulations do not require mining and oil production to cease by 2035, but stricter requirements and the shift toward carbon-neutral production and greater chemical processing are likely to reduce jobs in mining and energy production.
Replacement demand thus exceeds the effect of employment decline. Over the next decade, Ida-Viru County will need over 13,000 new employees, primarily to replace retiring workers.
When assessing labor supply, it is acknowledged that regional education offerings are inevitably limited. Therefore, the analysis relies on employment patterns of graduates from all Estonian vocational and higher education institutions: between 2019–2024, 4,100 graduates with vocational or higher education started working in Ida-Viru County, representing 6% of all such graduates employed in Estonia in 2024, consistent with the county accounting for about 7% of Estonia’s employed population. Local vocational education is provided by Ida-Viru Vocational Education Centre, TalTech Virumaa College, University of Tartu Narva College, and Tallinn Health Care College Kohtla-Järve unit, complemented by a regional continuing education provider in Jõhvi, but their capacity is insufficient to cover the projected labor shortage.
In the technical and manufacturing sectors, a critical bottleneck is projected: the expected supply of vocational graduates will not meet demand over the next ten years, resulting in a shortage of about 500 top specialists and 1,000 skilled workers. In healthcare and education, the education supply only partially meets demand; additional risk arises for teachers due to the transition to Estonian-language instruction, requiring replacement of non-Estonian-speaking teachers. In healthcare, labor shortages in Ida-Viru County are similar to the rest of Estonia – adequately qualified personnel are lacking.
To alleviate labor shortages, several labor sources can be used in addition to vocational education: unemployed and inactive people; local residents working in other counties or countries; people from other Estonian counties; foreign labor; and technological solutions. The latter – automation, robotics, and digitalization – is highlighted as having high potential to cover labor demand, as there is still considerable scope for development in Estonian industry, energy, and logistics.
However, several constraints limit the ability to meet labor demand. The county labor market is simultaneously affected by four interrelated factors: an aging workforce, a shortage of young people and outmigration, difficulties filling top specialist and highly skilled positions, and a large proportion of unemployed and inactive people. A central issue is often a mismatch between skills and changing employer needs, as well as insufficient Estonian and English language skills, which limits retraining and mobility to higher-qualified positions.
In conclusion, the forecast indicates that the total employment in Ida-Viru County will decline, but not sharply. The same trend applies to the oil shale sector – a significant decline has already occurred, and further reduction during the forecast period is expected to be moderate. However, the labor structure and skill requirements in the county are changing, and one of the main challenges will be meeting replacement demand. This labor forecast shows that scenario 1 represents an inertial trajectory, occurring if the current labor market structure persists, existing demographic and migration trends continue, already decided investments (including JTF projects) are implemented, but no new systemic policy measures (for education, labor market, living environment, etc.) are specifically introduced to alter Ida-Viru County’s development trajectory. Moving toward scenario 2 – the revival of Ida-Viru County through balanced diversification – requires continuation of existing measures and additional interventions. It is essential that just transition policies and other interventions (e.g., education and industrial policy) form a comprehensive policy package integrating education, labor market, language learning, and regional development, laying the foundation for long-term balanced economic growth in Ida-Viru County.
OSKA study: Labor Demand in Ida-Viru County Until 2035 in Estonian
