Unions to table proposals for combating cash-in-hand wages

The European Trade Union Confederation (ETUC) annual congress in Tallinn. Oct. 11, 2019.
The European Trade Union Confederation (ETUC) annual congress in Tallinn. Oct. 11, 2019. Source: Siim Lõvi/ERR

The board of the Estonian Trade Union Confederation (EAKL) will suggest proposals aimed at creating order in sectors of the economy affected by the payment of cash-in-hand wages.

The chairman of EAKL, Peep Peterson, said unfair tax practices pose a problem to honest employers, the government and employees, leaving the latter without sickness pay, unemployment benefits and pension.

"None of the parties can solve this problem alone, therefore we will put forward a package in the coming few weeks that will change the bases of taxation of labor in such way that the competitiveness of the best employers, social protection of employees and the financial situation of the government will improve," Peterson said.

Specifically, the proposals would facilitating sector-level pay negotiations and the application of agreed minimum wage levels as bases of taxation.

The unions are to introduce their plan to the prime minister and relevant ministers during a three-way meeting of employers, unions and the government at the government seat of Stenbock House on January 28.

"We can see the Latvian construction sector take powerful steps today towards internal cleansing, we witnessed the Estonian road haulage sector's unanimity in cleansing the domestic market and we know that tens of AAA-rated employers in other sectors also have similar needs. We are calling on employers and government institutions to engage in patriotic cooperation in each damaged or damage-prone sector," the union leader said, adding that on its part, EAKL promises to ensure constructiveness and the best will to protect the common interests of the parties.

Universally valid pay agreements are widespread in Finland and have helped put the market in order for decades, the union confederation said. In Estonia, the Transport Union has the longest record of concluding such agreements.

The chairman of the Transport Union, Üllar Kallas, said a mandatory pay agreement for a whole sector can serve as a basis for taxation just like the national minimum wage and an arrangement like that is in the interest of all sides. 

Kallas said the change would have a significant effect when it comes to the aim of reducing the payment of untaxed wages also in the transport sector.

"It isn't possible to find a truck driver for less than €1,200, but if we look at the data of the tax board, labor taxes are paid mostly on an amount about half of that," Kallas said.

On the topic of strikes and bargaining rights, the board of EAKL found at its meeting on Monday that the legislation concerning striking in Estonia must be brought into accordance with the rules of the European Social Charter, which means permitting socio-economic strikes outside the framework of a classical labor dispute between the employee and the employer.

This, according to the association, will help to achieve faster results in meeting pension objectives, modernization of unemployment insurance, as well as other issues that need to be resolved. Besides, it must be possible for a union to defend employee-elected representatives at workplace with a strike. 


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Editor: Helen Wright

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