To reduce unemployment in the long term, Estonian employers want the minimum wage requirement for foreign workers to be reduced to the employment sector's average and the immigration quota to be raised.
"Labor shortage is not a problem for employers alone,” said Toomas Tamsar, CEO of the Estonian Employers’ Confederation. “It is a longer-term issue when it comes to the development of Estonia — when the numbers of working people and taxpayers continue to decrease, who will pay pensions 25 years from now? Who will maintain the education and health care systems, and the entire state?"
In a letter to Prime Minister Taavi Rõivas, employers introduced two proposals: to use the employment sector's average wage as the required minimum that an employer must pay to a person hired from another country, and to increase the number of people that can immigrate to Estonia per year.
The employers described as positive the amendment planned to be made to the Aliens Act to lower the minimum wage requirement for people hired from abroad from the present 1.24 times the Estonian average wage to the Estonian average wage.
This, however, would not enough, as it would fail to help sectors where wages are lower than the national average wage, such as construction and service. Only some 35 percent of workers in Estonia earn more than the national average wage, the confederation pointed out, arguing that if there is an explicit desire to peg the pay of foreign workers to average national wages, then it should be pegged to the average pay of each individual sector.
"Fears that employers will start to prefer cheaper foreign labor to Estonian labor on a large scale are ungrounded,” explained Tamsar. “The filter in the form of the Estonian Unemployment Insurance Fund would remain, which permits Estonian companies to hire a person from outside of the European Union only if there are no specialists of the corresponding field available on the Estonian labor market.”
Alongside easing the pay-related requirements, the Employers’ Confederation considered it essential to raise the country’s annual immigration quota. According to the proposal, the quota should be established based on the actual shortfall of workers — i.e. the reduction in size of the working-age population during a given, specific period, such as the past calendar year.
“As a result of forecast demographic developments through 2040, the Estonian labor market will fall an average of 5,000 people short per year, which will make up a total of more than 100,000 people,” noted Tamsar. “Linking the immigration quota to the size of Estonia’s permanent population puts us in a situation where, as the need for employees increases, the immigration quota may paradoxically become even smaller as a result of the reduction in the number of permanent residents.”
According to employers, the primary issue for Estonia was not how to protect itself against immigrants, but rather how to lure people here to begin creating additional value. This, according to the confederation, is where Estonia’s performance was among the weakest in the World Economic Forum’s Global Competitiveness Report 2015-2016.
Editor: Editor: Aili Sarapik