Analyst: To Keep Country Competitive, Government, Business Need More Trust, Communication

(PM/Scanpix)
5/19/2014 4:00 PM
Category: Economy

The state, local government, employers and people are not working as a well-oiled machine and this is eating into Estonia's competitiveness, panelists on an ETV program said.

One of the two guests, businessman Jaak Nigul, said on Terevisioon this morning that he felt competitiveness was in reverse and politicians and bureaucrats were responsible. 

"I understand very well that wages in Estonia aren't satisfactory to people and I try to pay more as a business person and it's constantly on my mind. But I can't do much because those goods have a market price out there in the world."

Tax costs on employees are over 80 percent of take-home pay, he noted. And even that is not enough;  in recent years 20 percent of the state budget comes in the form of EU assistance. Nigul went so far as to say the state was running a budget deficit.

Heido Vitsur, analyst with Estonian-owned LHV Bank, said the economic climate was not worse than it has been, but argued that companies felt that the state was out of touch with them.

"It's clear that the competitiveness situation in Estonia is a little different from that of Finland. We are open to people going to work in Finland, and that puts pressure on our wages. And if the right steps are taken to making the situation more transparent and honest - like scrapping VAT deductions on cars - then timing is important, too. The business community should be given time to adjust."

Vitsur said he believed that Estonia had ways of stimulating its economy and there was nothing structurally unsound about it. But he added that he didn't understand why the research and science potential that "has been talk about over 10 years" is still not integrated with enterprise.

"[Research] s the only point where we can increase our wages and well-being," he said.


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