Erik Gamzejev: Starting a business in Ida-Virumaa as an act of patriotism (5)

Erik Gamzejev is the editor-in-chief of Põhjarannik, a paper based in Kohtla-Järve in Ida-Virumaa (Põhjarannik)
By Erik Gamzejev
3/9/2016 3:59 PM
Category: Opinion

It’s worth keeping one’s fingers crossed that the government’s attempt to fight unemployment in Ida-Virumaa will bear fruit. In case it succeeds, not only would the county win, but the same approach could breathe new life into entrepreneurship elsewhere outside Tallinn and Tartu.

The basic problem haunting the majority of the Estonian counties is the undeniable lack of jobs. Because of it, people start moving away, and neither exemplary local efforts nor love for one’s home can stop life from disappearing from the area.

The fact is very telling that with the exception of Harjumaa, not a single county’s average gross income reaches the national average of €1065. Tartu County comes close, all others are far behind - more or less even, at €800 to €900.

Prime Minister Taavi Rõivas stated in an interview with Põhjarannik last week that wide income gaps in a small country like Estonia weren’t logical, and that the salaries should be more even. The question is what the government has really done so far, and how it plans future measures.

What are the drivers that could bring well-paid jobs into the counties? The government isn't considering local tax incentives, fearing they’d be expensive and of questionable effect.

In the case of Ida-Virumaa, the government chosen direct support, at least temporarily. A company that creates at least 20 new jobs gets back half of its expenses on its employees for a year. Will it work? We’ll see.

In addition to that, a lot of hope has been put into the development of the Ida-Viru industrial park. Since 2009, different ministers have said that it would bring more than 4,000 jobs. In March 2016, the real number is just 265. But losing faith that things will get better soon would be wrong - starting a company in Ida-Viru County is shaping up to be an act of patriotism. Just like starting one in Võrumaa, Järvamaa and Saaremaa…

Ida-Viru County has had a lot of attention since Estonia’s re-independence: special delegates, special commissions, special action plans. Despite all of these endeavours, no matter how well-planned, 25 years later one of the biggest counties, with some of the country’s biggest industrial potential, has the highest unemployment rate and one of the the lowest average incomes in the country. In Ida-Virumaa, people earn up to 30% less than in Harjumaa.

At the same time, never mind that the Language Act has been in force for 27 years, schoolchildren in Narva, Sillamäe and Kohtla-Järve don’t speak Estonian after having studied it in primary school for nine years. Not to mention taxi drivers in Narva. Government-level deliberations of security risks connected with Ida-Viru County have developed along the same lines, where the fear has been that people within the reach of Kremlin-controlled media might not be sufficiently patriotic towards Estonia.

Another fact that has hindered attempts to find solutions more than it has helped is that parties have been in power both in Ida-Virumaa’s towns and in Estonia that have been waging a trench war against each other.

The story that there isn’t much Estonia in Ida-Virumaa is also part of the repertoire. When in 2009 another action plan for the county was put together, the most noteworthy part of it was the idea to move the Estonian Academy of Security Sciences here.

The plan was apparently so good that it was written into the Reform Party and IRL’s coalition agreement two years later. Naturally with a clause that it would be “evaluated.” Several government divisions began an analysis of the influences the move might have. The towns of Ida-Virumaa were put through the pain of finding plots where the academy would be built. As it is, nothing happened.

Why? Prime Minister Taavi Rõivas said to Põhjarannik in March 2016 that the matter was given up because plenty of EU money had been invested in the academy’s current buildings, and Estonia could face penalties by the EU if it moved the school.

That wasn’t clear when the idea of moving the academy came up? Why was it necessary to have a large number of departments and officials do pointless work, and stir up hopes as well as indignation?

The most important decision made in the government meeting in Narva was to lower the environmental taxes for the shale oil industry. An industry struggling with low oil and high electricity prices gets a bit of much-needed oxygen, and more layoffs in Ida-Virumaa are prevented or at least postponed. Good that this is done starting Jul. 1, though the damage wouldn’t have been as bad if the government had reacted at least a year earlier, when the problem was obvious and only getting worse.

Lowering environmental taxes doesn’t just take care of workers in Ida-Virumaa. 75% of the savings go to the state’s own Eesti Energia, which thanks to this measure will remain profitable, and hopefully pay the state dividends also next year, like it has done in the hundreds of millions over the last years.

Taking into account the labor taxes paid to the state by the shale oil industry, the government gets much more out of it this way than the €40m it’s going to miss out on by lowering environmental taxes.

Learning from earlier and less successful experiences, it would seem important that this time the government’s measures to improve the situation in Ida-Viru County don’t depend on campaigns and aren’t just temporary, but consistent and well thought through. Doubtlessly all Estonia stands to win a lot, but also the parties in power.


Erik Gamzejev is the editor-in-chief of Põhjarannik.

Editor: Dario Cavegn

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