Interview: There's no shortage of work in Estonia, says furniture producer

Jaak Nigul.
Jaak Nigul. Source: Siim Lõvi/ERR

In an interview with ERR, Jaak Nigul, board chair at furniture producer Tarmeko, said that there is no shortage of work in Estonia. He believes a public sector cutback could immediately free up labor, and noted that right now, people can survive on unemployment benefits alone, which isn't motivating them to find work.

The employment rate in Estonia is more than 70 percent, and we're seeing a glaring shortage of workers in some sectors. How is Tarmeko faring right now?

For some reason there is talk of a shortage of work here, but there's no shortage whatsoever of work in Estonia! There is only a labor shortage in Estonia. Everyone who wants to work is working. Anyone who doesn't want to work is not working either.

The situation at Tarmeko is difficult. And I am thankful for the Russian-speaking Estonian residents that currently make up more than half of Tarmeko's staff already. Estonians seriously aren't coming to work in manufacturing anymore.

But the people who are registered with the Estonian Unemployment Insurance Fund (EUIF), and some of them are very long-term unemployed? What's their problem?

I believe it's currently possible for someone to survive in the Republic of Estonia without doing work. If this weren't at all possible, I'd bet they'd come to work after all. There are jobs everywhere. Ergo, they're surviving somehow — how, exactly, I don't know. They're probably doing work gigs under the table, and some receive unemployment benefits for some time. The benefits thing has gotten out of hand. Benefits shouldn't be long term and should still be motivating people to go to work. But right now it seems like these unemployment benefits, on the contrary, are motivating not going to work.

We have a choice — whether to bring additional labor in from abroad or to make the state as well as businesses more effective. Where should these necessary people come from, in your opinion?

I don't see them [coming] from anywhere but the government sector. In 2013, there were a total of 130,000 people in full-time equivalents in the government sector; in 2021, there were 120,000. Seems as though 10,000 have vanished. At the same time, the number of employed persons in the government sector has dropped from 162,000 to 157,000. Seems as though some 5,000 have vanished here as well. Within the same period, nearly 16,000 jobs have been cut from government sector companies. In fact, all of these savings have been at the expense of public sector companies! In other words, bureaucracy and the government sector have only actually grown. But it's precisely that which should be scaled down!

It's a very simple calculation: the total wage costs of 10,000 people in the government sector is approximately €300 million a year. At the same time, there's talk here about how higher education is short €100 million a year, that medium range air defense costs €350 million and so on. Let's reduce those numbers!

If there are 120,000 [people] in full-time equivalents and 157,000 are employed, then it follows that 74,000 people in the government sector are working part time. That's nearly half of the total number of people employed in the government sector. Ergo, so many of these jobs simply aren't needed.

An example from my hometown — where there were 12 people in Tartu city government's Department of Public Relations in 2016. Now there are 15. What essential work are 15 people doing there?

Do you believe that those people currently working in the public sector — such as those Tartu city government PR employees — would come work for you?

If they had no other choice and if the government sector didn't keep creating new pseudopositions, hunger would eventually drive them to. There is no lack of work in Estonia, but we're supporting thousands of unemployed people. Quite a lot of people are actually working under the table and earning "envelope wages." And one significant reason for that is the high number of small debtors in Estonia — apparently around 80,000 people.

Maybe these people don't want to work on the books, as enforcement agents will take their wages away. There is a very large reserve there. If interest rates on all small loans were capped, say, at 15 percent, that would likely bring down the number of people in debt, and maybe some of them would start working on the books.

More than 50,000 people have fled from Russian aggression in Ukraine to Estonia, the majority of them children and women. Should we be more demanding of refugees, that they find work more quickly?

I believe it's unethical to be harsh on war refugees. Rather, we should be helping them find work. Right now, seven war refugees from Ukraine are working at Tarmeko.

Estonia is currently in the throes of inflation, and prices are going up. Are you feeling wage pressure as a result too?

Businesses' money actually comes from clients. If clients are willing to pay higher prices, then we can increase people's wages. Another possibility is increasing efficiency, automation and digitalization. We've cut our staff by nearly 100 people over the past ten years, and much of that is the result of automation.

Wage pressure on businesses is high. Energy and raw materials prices are going up. But electricity is cheaper in Sweden and Finland, for example, than in Estonia. What is our competitiveness going to look like in the coming years?

Electricity prices are an utter catastrophe. It seems like soon we'll only be working in order to pay the power bill. I think we may end up losing some businesses as a result as well. The price of district heating has remained at a reasonable level for now due to local firewood, but that price is on the rise due to artificial logging restrictions as well.


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Editor: Aili Vahtla

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