A study commissioned by the Estonian Ministry of Finance and carried out by the Praxis think thank on ways how the economy and the labor market in Estonia's Ida-Viru County can be adapted to a contraction in the local oil shale industry recommends supporting the development of industry and information and communication technology (ICT) to facilitate the process.
"The focus in Ida-Viru County is on the reorganization of industry and the new opportunities presented by it to ensure there will be more highly paid positions in the region in the future and that a modern and decent living environment is guaranteed for people," Minister of Public Administration Anneli Ott said.
The future of oil shale companies and the entire Ida-Viru region will significantly be affected by both European Union and Estonian regulations and decisions on meeting the climate neutrality target, according to Praxis.
The study results show the region's adaptation would be facilitated by support to manufacturing through both the creation of new businesses and development of existing ones and by a boost to the ICT sector.
Analyst at Praxis Aleksandr Michelson said for this purpose, long-term sustainable programs are needed, and businesses' knowledge and competencies need to be improved in terms of managing changes.
Michelson noted that an analysis of practices abroad showed that when it comes to the restructuring of regions similar to Ida-Viru County, rapid diversification of the local economy is paramount.
"It may reduce risks from the perspective of economic development, but there is no one easy solution for this transition," he said.
The results of the study also showed that in order for Ida-Viru County to successfully adapt to the oil shale industry contracting, broad-based sustainable development has to be guaranteed in the area for instance with green technologies and renewable energy production. Branches of the circular enemy and tourism likewise require attention, as do culture and the creative industry.
"In addition to the economy, social, health and environmental problems must not be forgotten, either," Michelson said.
The closure of the oil shale sector would entail changes in the income of at least 8,000 people and some 2,800 people would need retraining and refresher courses.
As part of the study, Praxis mapped out the current situation in Ida-Viru County's oil shale industry and the socioeconomic impact of its reduction. The think tank also made proposals on how to support the adaptation of the local economy and labor market to the changes ahead.
The study commissioned by the Ministry of Finance will be used in cooperation with other ministries and partners in the planning and implementation of a fair transition process, including the instruments of the EU Just Transition Fund and other related resources.
The study was funded by the Estonian Research Council from the resources of the European Regional Development Fund, and by the Ministry of Finance and Ministry of Economic Affairs and Communications from the state budget.
Editor: Roberta Vaino