Professor Calls for More Proactive Job Creation
Tallinn University of Technology professor Rainer Kattel said Estonia is not doing enough to create jobs, which he says should be priority number one in labor policy.
Bolstered by the 4.2 percent unemployment insurance premium - raised there from just 0.9 percent before the downturn - the money keeps flowing into the Unemployment Insurance Fund reserves, but unemployment remains high, Kattel told ETV.
Referring to charges from the opposition and trade unions who say the government wants to keep the reserves flush with cash as a hedge against the budget deficit, Kattel said the government is too obsessed with budget balance, as Estonia's government debt is extremely small. "It is not normal to make budgetary balance more important than job creation," he said.
Estonia, said Katel, wants a flexible job market but does not want to deal with the aspect of making hiring easier, not just firing. "The new employment contracts legislation radicalized the situation even more," he said.
The 2009 Employment Contracts Act made it easier for companies to sack employees and was supposed to be compensated by higher unemployment insurance payouts. But as the recession deepened, the government said there was no money.
Financial Minister Ligi said on the same ETV program that it is not just financial straits keeping unemployment compensation from increasing, but philosophy. "Some people always have the attitude that I'll wait until my benefits run out and not move a muscle until then. This was even seen during the crisis to a great extent," Ligi said.
The finance minister said it was "Soviet" to think that employer and employee interests were in opposition to each other. "The illusion of guarantees contained in past labor law actually did not work," he said. "They led to a bad situation by which, if the employer wanted to sneak past employees, they would think of ways of doing so that everything was formally legal."
Kattel cited the wage support measure as a good possibility for stimulating the job market. Companies are paid at a level of half of new recruit's wage for hiring them and up to one minimum monthly wage. But companies became eligible too late - last year - for it to make a difference so far, said Kattel.
Kristopher Rikken