Employers' Confederation chief: State has no plan for how to move forward

Arto Aas.
Arto Aas. Source: Ken Mürk/ERR

Arto Aas, head of the Estonian Employers' Confederation, said on ETV show "Esimene stuudio" that expectations for the government had been much higher, and that the state does not seem to have a clear vision or plan of how to move forward.

According to Aas, there is hope that the economic situation will improve next year. "If you look at the macro indicators, the statistical indicators - GDP is down, investment is falling, industrial production is down, export indicators are falling, productivity is falling and unemployment is rising - all these black and white indicators are unfortunately quite negative," he said.

"Every crisis is different, and the current one will not hit the average person or entrepreneur as hard as the last crisis or the transition of the 90s," said Aas.

"In the meantime, we have become much wealthier, entrepreneurs have created buffers and individuals have created certain buffers. Our standard of living is so much higher now that even if we come down 10 percent from here temporarily, this crisis is certainly not comparable to what happened in the 1990s," Aas said.

Estonia is a small and very open country, which is generally a trump card. However, that has a strong impact on the economy, and Estonia is heavily dependent on its neighbors. According to Aas, the main reason for the current crisis is weak external demand.

According to Aas, expectations for the current government had been much higher, while now there only seems to be bad news about tax increases and the quality of lawmaking has also fallen. "The country seems to have no vision and no plan of how to move forward. The main focus is to move towards a balanced budget - which in itself is understandable. Business also understands that this party that lasted for several years had to end. We are all getting the bill for that now - but to focus only on the budget, on tax increases and on tax revenues, is not enough," he said.

Aas added that employers say they could accept the tax decisions that have been made and return to regular lawmaking, whereby tax increases are not decided overnight and more than two days are provided for consultations.

Formally, Estonia has an industrial policy, however, according to Aas, the reality does not live up to the promises.

The productivity of Estonian industry remains below the European average, though Aas says things are moving in a positive direction. "The problem for industry as a whole has been that they have been invisible to national leaders. They have not received attention despite the fact that Estonian industry makes up 15 percent of GDP, 20 percent of the workforce and has large, stable employers," Aas explained.

The difficulties being faced by the Finnish and Swedish construction industries are having a very direct impact on Estonian companies in certain sectors, such as those producing wooden houses and building materials. "Now, people are really looking for new markets, in America and in Asia. In five to ten years' time, they will be stronger again."

Aas said he would like to believe that the green turnaround will be a great opportunity for Estonian companies, as there are no other alternatives. "A sustainable and environmentally conscious approach is expected from us by our customers, by banks, financiers, investors, and also, increasingly by consumers. In the short term, of course, this can also mean a lot of difficulties, unnecessary bureaucracy or restrictions. In Estonia in general, there has been a recent tendency to regulate, restrict and prohibit, and this is still the case."

In this respect, Scandinavian companies are leading the way, while Estonian companies are already lagging a little behind. The green turn is forcing innovation, Aas said. "We need more research-intensive work, as well as cooperation with universities and research institutions," he said.

According to Aas, employers don't like politicians interfering in negotiations on the minimum wage. He said it is understandable that a raise is needed, however, as inflation has been rapid. "The direct impact of the minimum wage on the labor market is actually quite small - it is paid to two or three percent of the workforce. It doesn't really harm our export industry, but it has been a point of concern for us," he said.


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Editor: Michael Cole

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