Estonian Businesses Made Biggest Recession-Era Cuts in the EU, Says Researcher
During the recession, Estonian employers cut wages and staff more than any other EU country, according to a dissertation by Kerly Espenberg.
The thesis, which is due to be presented to an examination committee at the University of Tartu today, shows that, during the recession, less than 2 percent of the EU's workforce saw its salaries reduced, compared with one-third of Estonia's workforce, ERR radio reported.
Every fourth company in Estonia resorted to firing staff due to the recession, with only employees in the Czech Republic being more at risk.
The dissertation shows that while businesses in other EU nations opted to cut investments and other non-employee-related expenditure, Estonian companies preferred cutting wages and layoffs.
“[...] for example, in countries with a rich history of collective work agreements, [cutting wages or laying off staff] would not be possible, as trade unions would not agree. Estonia was more flexible because our trade unions are somewhat more low-key,” said Espenberg.
She said that a young male living in Estonia who does not speak Estonian and has a low level of education would have been the most affected, especially if he worked in construction or manufacturing.
An economist for LHV Bank, Heido Vitsur, said that Estonian businesses had little alternative to the severe cuts.
“Purely in economic terms, this kind of action may be beneficial to both the state and business, but in a longer perspective everything depends on what kind of workforce we have and what it decides,” said Vitsur, adding that cuts could be counterproductive in the long run, as businesses might not find anyone to employ soon.