Economic Overview

Number of Companies by Primary Activity

The number of companies is an important indicator in the context of economic analysis, as it reflects the level of business activity, employment opportunities, and growth potential in the county. This figure shows the representation and diversity of different sectors in the economy.

Manufacturing Sector in Saare County

In Saare County's manufacturing sector, the largest number of companies is in Wood Processing. This is followed by Food Production, Metal Product Manufacturing, Clothing Production, and Textile Manufacturing. Overall, the number of companies in the manufacturing sector has remained stable from 2020 to 2022.

Number of Employees

Trends in Employee Numbers in Saare County

The number of employees reflects the distribution of workforce resources in Saare County, the economic significance of each sector, and the attractiveness of companies for workers. From 2020 to 2022, the total number of employees in the county has been generally stable. The manufacturing sector lost 300 jobs, while there was an increase in Construction as well as in Accommodation and Food Services. This change aligns with the overall population decline.

Employees in the Manufacturing Sector in Saare County

A more detailed analysis of the decline in employee numbers within the Manufacturing sector reveals that almost half of the decrease originates from the Food Production sector. Despite this significant decline, Food Production remains the manufacturing activity with the highest number of employees in Saare County, followed by Rubber and Plastic Products Manufacturing and Computers, Electronics, and Optical Equipment Manufacturing.

Sales Revenue

Contribution of Major Sectors to Sales Revenue Growth

Sales turnover reflects the performance and market position of the business sector. Between 2020 and 2022, the sales revenue of companies in Saare County grew by 28%. The sectors contributing most to this overall growth were Construction (49.3%) and Accommodation and Food Services (61.6%). However, it should be noted that the reference value for Accommodation and Food Services in 2020 was relatively low due to the COVID-19 pandemic, and much of the growth can be attributed to the sharp rise in input costs.

Dynamics of Sector Sales Revenue in 2020-2022

The main reason for the decline in the Wood Processing sector is that, by the time of preparing this economic analysis, two of the sector's largest companies had not yet submitted their 2022 financial statements. In 2022, sales revenue in the Computers, Electronics, and Optical Equipment Manufacturing sector grew significantly (41%). According to company estimates, the increase in sales turnover is largely due to rising input costs, particularly the price of raw materials and electricity.

Operating Profit

Growth of Operating Profit and Profitability Trends in Saare County

Operating profit is an indicator of a company’s financial health and sustainability, showing how well companies can cover their costs and generate profit. In 2022, profitability in the Manufacturing sector saw the most significant decline (-22%), primarily due to rising input costs that could not be fully passed on to clients to maintain margins.

Added Value

Growth of Added Value and Sector Contributions in Saare County

Added value reflects the value created by a company, indicating its contribution to the economy beyond wage and production costs. The formula used to calculate added value is: Operating Profit + Depreciation of Fixed Assets + Labor Costs. The added value created has consistently grown, reaching over 280 million euros by 2022. The Manufacturing sector contributes 28% of the total added value.

Added Value per Employee in Companies in Saare County

Added value per employee measures employee productivity and company efficiency. A higher figure indicates better resource utilization and a higher value created by each employee. Among the larger sectors, significant growth has been demonstrated by Retail and Wholesale Trade, Manufacturing, Agriculture, Forestry and Fishing, Construction, as well as Accommodation and Food Services.

Sectors with the Highest Added Value in 2020-2022

In Saare County's manufacturing sector, the highest added value per employee is found in the production of Other Transport Equipment, followed by the Manufacturing of Chemicals and Chemical Products and Beverage Production. In sectors with a larger workforce, added value has generally remained stable, except in Food Production, where the main reason for the decline is a drop in profitability.

Export

Export and Target Market Dynamics in Saare County

In 2022, companies in Saare County exported products and services worth a total of 222.9 million euros, which is 1% more than in 2021. Since the total sales revenue of county businesses grew at a significantly faster pace (13.2%), it can be inferred that the economic growth in Saare County in 2022 was largely based on an increase in domestic consumption. Altogether, exports accounted for 24.1% of the total sales revenue of companies in Saare County.

Food Production

The year 2022 was challenging for the sector across Estonia. Although sales revenue increased by 24.3% compared to 2021, this growth was mainly driven by the significant rise in input costs, which led to a decrease in operating profit by as much as 69.4%. The number of employees in the sector declined, yet labor costs increased due to wage pressure.

Manufacturing of Other Transport Equipment

The key companies in this sector focus on producing work vessels, yachts, and boats. Similar to the overall trend in Estonia, all major economic indicators in the sector increased during the observed period, except for the number of employees, which has remained stable. Across Estonia, the sector’s sales revenue grew by approximately 20%, with the largest contribution to this growth coming from companies located in Saare County.

Manufacturing of Computers, Electronics, and Optical Equipment

In 2022, companies in Saare County within this sector achieved sales revenue exceeding 59 million euros, representing over 60% growth compared to 2020. Most of the sector's production is exported, with Finland, Sweden, and Norway as key target countries. Across Estonia, the number of employees in this sector grew by 14% over the period, reaching a total of 6,816 employees. Labor costs increased by 22%, sales revenue by 20.7%, while operating profit declined by 61.8% nationwide.

Wood Processing

Across Estonia, the sales revenue in the Wood Processing sector grew by 23.3%. The number of employees remained stable, but labor costs increased by 10.9% due to wage pressure, while operating profit fell by 11.5%. Key companies in the sector noted that, due to rising input costs and a general market slowdown, both sales revenue and profitability declined in 2022.

Manufacturing of Rubber, Plastic Products, and Minerals

The year 2022 was rather challenging for this sector across Estonia — sales revenue did not grow, the number of employees declined by 4%, and operating profit dropped by as much as 35.5%. However, the economic performance of companies in this sector operating in Saare County was significantly more positive. Sales revenue continued steady growth, reaching over 31 million euros by 2022.

Manufacturing of Metal Products

In 2022, the sales revenue and operating profit in the metal products manufacturing sector grew by 21.8% and 28.2%, respectively, while the number of employees decreased by 8.6%. Economic indicators for companies operating in Saare County were somewhat weaker. Compared to 2021, all key economic indicators declined in 2022, except for a slight increase in the average salary. Companies cited rising costs of outsourced materials as the main reason for the challenging situation. To improve profitability, the sector is actively seeking new export markets.

Retail and Wholesale Trade

In 2022, the sales revenue in Estonia's Retail and Wholesale Trade sector grew by 28.8%, and labor costs increased by 13.2%. Since the number of employees remained nearly unchanged, the rise in labor costs reflects a significant increase in the sector's average wage. The primary driver of sales revenue growth was the rise in food prices. In Saare County, the sector trends were generally similar—sales revenue and average wage increased, and the number of employees remained stable. The only difference was the profitability growth among retail and wholesale companies in Saare County. Compared to 2021, companies in this sector managed to double their operating profit in 2022.

Construction

The year 2022 was highly successful for the construction sector. Across Estonia, sales revenue in the sector increased by 18.6%, operating profit by 29.7%, and labor costs by 15.3%. Even greater growth figures were observed in Saare County. The sector's profitability, both in Saare County and Estonia as a whole, is somewhat surprising, as construction companies have openly expressed concerns about the detrimental impact of rising input costs on project profitability and the overall sustainability of the sector.

Agriculture, Forestry, and Fishing

Agriculture, forestry, and fishing have traditionally been sectors with very stable economic indicators, but 2022 was an exception. In Estonia, the sector's sales revenue increased by 29.3%, with operating profit soaring by 183.6%. Companies within this sector in Saare County also registered significant growth in sales revenue, though profitability was more modest. The sector's added value per employee remains one of the highest in Saare County. The largest companies in the county by turnover are engaged in dairy farming.

Transportation and Storage

The year 2022 was stable for the transportation and storage sector in Estonia. In an inflationary environment, sales revenue increased by 14.5%, and labor costs grew by 11.9%, while other indicators remained stable. A similar situation was observed in Saare County, where the most notable trend was a 16.8% increase in the average gross monthly wage. Companies attributed the modest growth in other indicators to the sharp rise in energy prices and other costs due to the Ukraine-Russia conflict. The decline in sales turnover is partly explained by Saaremaa Piimaühistu’s shift in primary business activity to food production starting in 2022, with its economic indicators now reflected in the manufacturing sector.

Accommodation and Food Service

The year 2022 marked a strong recovery for the accommodation and food service sector compared to the restrictions brought on by the COVID-19 pandemic in 2020 and 2021. Across Estonia, all key economic indicators saw growth: the number of employees increased by 18%, labor costs by 42.6%, sales revenue by 53.9%, and operating profit by 131.5%. The growth figures for companies in Saare County were almost identical in 2022. The only notable difference was in operating profit, which improved compared to the losses of 2020 but fell short of the profit made in 2021. Companies in Saare County cited COVID-19 restrictions in early 2022 (e.g., vaccine passport requirements) as a primary factor. Additionally, rapid inflation and rising energy prices due to the Ukraine war significantly affected consumer behavior. The conflict also led to a wave of booking cancellations by foreign tourists.