Minister proposes relaxation of Estonia's foreign worker hiring rules

Woman using a computer.
Woman using a computer. Source: Vinzent Weinbeer / Pixabay

Plans to lower the required salary for top specialists and to allow short-term workers to obtain residence permits are being proposed by the Minister of Enterprise and Information Technology Andres Sutt (Reform) to help solve Estonia's labor shortage.

Sutt is proposing changes for the hiring policies of foreign workers, both short and long-term. The bill should reach the government before the end of 2021.

The minister said the primary concern of all sectors of the economy is the shortage of skilled labor.

"If we look five years ahead, we will have 31,000 fewer people in the 20-64 age group. In the short term, we need to be more flexible in recruiting skilled and highly qualified experts," he said.

Marko Udras, head of the Legal Department of the Chamber of Commerce and Industry, agrees. In recent years, new restrictions have been added which hinder the process of hiring foreign workers, he said.

"Entrepreneurs have been waiting for years for some benefits or relief to take effect," Udras added.

IT and foreign trade minister Andres Sutt speaking at this September's Tallinn Digital Summit. Source: Aron Urb

Sutt said there are three proposals but it is not yet known if they will all make it onto the draft bill. He is optimistic a good agreement can be reached.

He said the most important thing is that more top specialists can be brought to Estonia.

Currently, the rules only allow workers being paid twice the average Estonian salary can be given a residence permit as a top specialist - approximately €3,000. Sutt believes this salary requirement could be lowered.

"If we talk about 1.5 times the average salary requirement, it means a gross monthly salary of €2,200-2,300," Sutt explained.

The salary requirement has been highlighted as a hindrance to hiring by the Chamber of Commerce and Industry several times in the past. Udras believes if it were lowered by a quarter more people would be hired.

"We are probably talking about hundreds, maybe a few thousand top specialists a year. And when you think about this additional tax revenue, it is still in the millions of euros," he said.

Extending short term workers' residency permits

Construction workers on a building site. Source: Priit Mürk/ERR

The second proposal is to make it easier for short-term workers to apply for longer-term residency permits. Currently, permits only last for a year but workers can then return three months later.

Roomet Sõrmus, head of the Chamber of Agriculture and Commerce, said this is a costly and time-consuming process. "Every 12 months, sending a person home again and traveling here again adds complexity and bureaucracy and is very cumbersome," he said.

Sutt's proposal would allow a worker to apply for a two-year residency permit after their 12-month visa expires. "I think it will alleviate the job market problem to a very significant extent," Sutt said.

The heads of both chambers believe this would be a good policy.

In the first ten months of this year, more than 27,000 short-term jobs were registered with the police in Estonia. These were mostly in agriculture, construction and manufacturing.

Changes to Startup company permits

Ärifestival sTARTUp Day. Source: Maido Parv

Changes are also planned for Estonia's Startup hiring policy. The current rules state a company stops being a startup after a decade, so companies cannot hire within this framework after 10 years. In total, 315 permits were issued this way in 2019.

Sutt said this time period could be abolished so companies can continue to recruit more easily. "And it's not just about current start-ups, it's also about fast-growing companies," he said.

The Chamber of Commerce and Industry's Marko Udras said questions can be asked about the definition of a startup. He said the main indicator should be the rapid growth of a company.

"Unfortunately, not all of these employees can be found on the domestic market, therefore they must also be sought from outside," Udras said.

While Sutt has put forward three proposals, employers would like to see more changes. For example, the Chamber of Agriculture and Commerce thinks wage requirements are still too high for the sector and could be lowered.


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Editor: Helen Wright

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