Commerce chamber: Bill restricting foreign labor will harm economy

The new visa would allow people whose work is web-based to work in Estonia.
The new visa would allow people whose work is web-based to work in Estonia. Source: Reuters/Scanpix

A government bill changing the basis on which foreign nationals can be employed in Estonia will ultimately have a negative impact on the Estonian economy, the Estonian Chamber of Commerce and Industry (Eesti Kaubandus-Tööstuskoda) says, even as it agrees with some aspects of the rationale for the reforms.

After seeking the opinion on the bill of the Riigikogu's constitutional committee, the chamber says it finds that, among other issues, the changes reduce Estonia's attractiveness as an attractive country of residence and work for foreign talent.

In short, the chamber says that the bill conflates employment in sectors as varied as strawberry picking, construction, and high-level IT jobs and treats them largely as the same thing, then proceeds to make restrictions on that basis.

Third-country nationals in these sectors are likely to come from a variety of different countries of origin, ranging from Ukraine and Russia, to India and various other locations worldwide.

Harder to re-employ earlier lay-offs

The bill seeks to restrict the options for employers to hire foreign nationals if an employee has been laid off from a job over the past year.

If a company laid off 50 employees in April at the peak of the coronavirus pandemic and its restrictions, only for that business to have recovered since then, meaning the company will re-hire or employ the same figure, or more, they will not be able to do so with non-EU foreign nationals until a year has elapsed since the lay-off, i.e. until next April.

This would be the case even if the company could not find sufficient staff from among Estonian citizens.

The chamber says Estonian companies' strength is flexibility, but this legal amendment limits that, and severely damaging the competitiveness of Estonian companies globally in the process.

Bill unclear in its purpose

Marko Udras, head of the chamber's policy formation and legal department, said that it remains unclear what the purpose of the bill amending the existing Aliens Act is.

Udras said: "According to the [bill's] explanatory memorandum, the aim is to avoid replacing local labor with foreign labor, but there are already a number of measures in the Aliens Act that mitigate this risk in particular."

Udras gave an example of a local worker being able to obtain a minimum wage of €584 per month from an employer, whereas a third-country (i.e. non-EU) worker must be paid at least €1,407 a month under the existing law, adding that companies always hire locals as much as possible, partly for this reason.

The new amendments would remove this safeguard while at the same time enabling firms to hire third country nationals on a temporary basis, and for less money.

Udras said: "The bill is also poor legislation, as it allows a malicious employer to easily circumvent the restriction to be imposed. For example, instead of hiring a foreign worker, it is possible for a company to use the services of a foreign temporary worker, in which case confirmation from the employer that the position has not been made redundant over the last year is not required."

Seasonal work amendments not clear or helpful either

Udras also said regulations on seasonal work will change, but the basis for this is unclear.

Under the bill, registration of short-term employment as seasonal work would be permitted for 183 days during a 365-day period, down from the 270 days under the current law.

The chamber added it remains unclear to businesses why such a change is needed, and can also hinder companies, particularly those with longer seasons.

"The amendment severely hinders the activities of entrepreneurs and does not benefit the state in any way. Nor will the amendment help to protect the local labor market, as this year's experience clearly shows that even with higher unemployment, it will not be possible for companies to find enough workers in the local labor market. In addition, in some areas the seasonal work is longer than six months, for example in fisheries, the length of the season is up to eight months, which forces the company to change employees in the middle of a season," the chamber says.

During summer, many seasonal employees, in particular strawberry and other crop producers, found a labor shortage led to unharvested or unsold stock, and rising prices.

Can scare off or hamper the employment of skilled workers too

However, the chamber also highlights how the bill harms the options for employing highly-skilled third country nationals, which might include Estonia's IT sector, one which up to now has enjoyed a very good reputation internationally.

Under the terms of the bill, in future a third-country national could be allowed to work in Estonia only on a full-time basis, the rationale being creating clarity on salary fulfilment and other employment issues.

While the chamber says it supports this in principle, in practice the bill amendments unreasonably restrict the scope for both employer and employee to agree on working hours which are satisfactory to both parties, the chamber claims.

For example, if a highly qualified foreign national wanted to work in Estonia eight hours per day from Monday to Thursday, to which the employer agreed, and the salary was €3,000 on a part-time basis, the bill as it stands would not allow the parties to enter into an agreement, the chamber says, a restriction which it finds unreasonable.

In the opinion of the chamber, it is also unclear from the bill whether a foreign national who has received a temporary residence permit for work may, or may not, work for more than one employer. The chamber considers it reasonable to allow individuals to work for two or more employers at the one time if they so desire.

Additionally, the chamber says, the prohibition of part-time work does not resolve disputes related to the salary criteria in any case, if a foreign national were for instance employed full-time, but in using unpaid leave frequently, monthly income were to fall below the salary threshold.

Chamber: Third-country employee family members restrictions unnecessary

The bill also tightens up the restrictions on third-country workers bringing family members to Estonia.

A foreign, non-EU citizen who was a single parent of a minor and was staying in Estonia for the purpose of short-term employment on a temporary residence may in some cases be issued a visa under the same conditions as any other foreign citizen, but in other cases, the foreign national's family members will not be issued a visa under the same conditions, the chamber says.

This amendment in fact divided the chamber of commerce, with about a half of members polled opposing the change and over a third supporting it.

Entrepreneurs pointed out that the biggest problem here arises in recruiting top specialists, as they will be getting a signal from the Estonian state that they are not welcome here, since their families are seemingly not welcome.

"It is furthermore not necessary to restrict the bringing along of family in the case of short-term employees because such a practise comes at a high cost and few people in reality use this opportunity today. This means there is no point in restricting the bringing in family members just to prevent individual cases of misuse," the chamber said.

The bill amending the Aliens Act has seen a difficult birth, complicated by issues arising from the coronavirus pandemic and its accompanying travel restrictions, a petition from foreign students in Estonia and, most recently, the departure from office of interior minister Mart Helme (EKRE), whose replacement has yet to be named.

The interior ministry has issued this information, which it says dispels may myths surrounding the right of stay both for work and study in Estonia.


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Editor: Andrew Whyte

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