Social affairs minister: No point propping up tourism wages for six months

Tanel Kiik.
Tanel Kiik. Source: Priit Mürk/ERR

Minister of Social Affairs Tanel Kiik (Center) does not agree with shipping line Tallink CEO Paavo Nõgene's proposal to provide wage compensation to people working in the tourism sector to the end of 2020, due to uncertainty when the sector might return to pre-pandemic levels.

On Wednesday, Tallink Grupp announced there are more than 2,000 jobs are at risk if salary compensation schemes are not extended in Estonia and Finland or travel restrictions lifted. The company is currently undergoing an "extensive reorganisation", it says.

Tallink CEO Paavo Nõgene told ETV's current affairs show "Riigivaade" on Wednesday evening that wage compensation for employees working in the tourism sector should run to the end of 2020.

He said: "That is what we are basing our plans on and is also a request for the government. The sector will recover, the question is when. It will not recover fully. About a third of the workforce must choose a different sector in the coming years. But the sector has potential to recover and increase Estonia's GDP even further than the current 8 percent."

Social minister Tanel Kiik told ERR that it is not known when tourists can return to Estonia, and the fact of the matter is that there will not be too many of them when they do.

Kiik noted: "Looking at this, we do not have many tourists, enough market and clients to service. It is also not reasonable to keep these employees on support measures for five or six months if there is no work to actually be done. And we also do not know if it will return in six months."

He added that there is no certainty that labor capacity recovers in the time. "In this situation, it might be most reasonable to offer short-term wage compensation along with providing active retraining opportunities for workers."

Nõgene also noted that a majority of the workforce should be kept on to allow for the sector to recover. "In our estimation, a third of people working in tourism must find another output next year. The sector will not recover, as won't Tallink. We must certainly lay off some amount of the workforce, whether aid comes or not," the shipping line CEO said.

Kiik said the Unemployment Insurance Fund (Töötukassa) can only pay out special solutions and wage reimbursements on the council's proposal by government decision. He added that special measures can not maintain all jobs in the sector.

The social minister said: "On Monday (September 7), when the Unemployment Insurance Fund's council holds its strategy meeting, it is one of the points in the agenda to listen to unions, employers and the state to decide if and which measures to implement."

Nõgene said Tallink ships will continue operating on the Finland route with state support from Finland. "Finland simply covers the costs for cargo to move. As of today (Wednesday - ed.), five to six large cruise ships will simply sit there until the second quarter of 2021," he said.

On Thursday morning, ERR news wrote that Estonia had been given permission by the European Commission to compensate labor costs affecting shipping companies which provide international passenger transport by sea. 

The permit allows for compensation measures to be used within the next four years if necessary. Preliminary forecasts see up to €3.7 million paid out in support this year to cover labor costs. The numbers for 2021 and 2022 are expected to be €7.7 million and €8 million respectively.

The proposed solution has been forwarded to companies operating in the tourism and travel sector.


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Editor: Kristjan Kallaste

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