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Explainer | What's making news in Estonia as 2023 draws to a close

Minister of Education and Research Kristina Kallas and Prime Minister Kaja Kallas at a government press conference.
Minister of Education and Research Kristina Kallas and Prime Minister Kaja Kallas at a government press conference. Source: Priit Mürk/ERR

ERR News gives an overview of some of the issues in Estonia in the final months and weeks of 2023 most of which will not be resolved before the new year.

Teachers' strike

Teachers in Estonia are demanding the government stick to its promise of hiking the minimum wage of teachers in 2024 by more than what has been suggested is possible by the ministry and government. As the sides have not reached a compromise, a nationwide teachers' strike is scheduled to start on January 22 and last for an unspecified period.

Teachers requested an 11 percent pay rise in 2024. The Ministry of Education suggested a compromise of 8 percent but the coalition said funding can only stretch to 1.77 percent – €31 per month. This offer was later revised to 3.1 percent.

The minimum wage of a full-time Estonian teacher is €1,749 in 2023, the net salary is €1,400.

Students in a hallway at Kiili High School during the nationwide teachers' warning strike on Friday morning. November 10, 2023. Source: Ken Mürk/ERR

A warning strike was held last month. Head of the Estonian Education Personnel Union (EHL) Reemo Voltri said 75 percent of all schools and kindergartens participated.

The coalition agreement of the Reform Party, Social Democratic Party and Eesti 200, signed in April of this year, prescribes hiking the salary of teachers to 120 percent of the national average.

Car tax

The government is set on introducing a car tax in Estonia for the first time in the country's history. The planned tax would be made up of two components – a registration fee and an annual fee, both consisting of a base amount, the vehicle's CO2 emissions and weight. The plan is to only collect the registration fee when a new or second-hand vehicle is first registered in Estonia.

Initial calculations suggest the registration fee would be quite hefty for more powerful new and second-hand vehicles. This and the new tax plan in general has drawn some protest in society.

Cars in Tallinn. Autor/allikas: Siim Lõvi /ERR

Tax collection would start in 2025, and Estonia wants to generate €230 million in tax revenue during its first full year.

However, the ruling coalition seems split on the details of the tax as 2023 draws to a close, especially in terms of whether exceptions should be introduced for rural area residents, people with disabilities and other groups.

The economy

The Estonian economy has been ailing for several consecutive quarters, while the Bank of Estonia's recent forecast gives little reason for optimism. In light of the latter, Minister of Finance Mart Võrklaev has suggested the government will cancel plans for further tax hikes to the tune of €400 million, which the Reform Party's coalition partners have interpreted as an invitation to open up the entire state budget strategy, including what to do about teachers salaries and other taxes. Canceling the unspecified tax hikes probably means Estonia will have to borrow the missing money as tax receipt is forecast to fall short of expectations.

The government has taken flak from the opposition and economic experts over what is perceived as lack of an active economic policy in a situation of continued industrial downturn, falling exports and a recession, now forecast to continue into 2024.

The coalition has hiked taxes, while failing to find ways to meaningfully cut public spending and its goal of avoiding the fiscal deficit growing beyond the Maastricht criteria of 3 percent of GDP is in jeopardy.

Outdated power grid

Remote areas in Southeast Estonia and elsewhere have been forced to go without power for weeks this December as the power grid is outdated and distribution system operator Elektilevi lacks the manpower to carry out repairs quickly enough.

Outages have been caused by trees breaking under the weight of snow and falling on uninsulated power lines. Elektrilevi has found itself in hot water before over similar problems, for example, dealing with the aftermath of the October storm.

This has sparked a debate on whether the DSO could be allowed to raise more money from transmission fees paid by consumers in order to invest in a more robust grid.

Power lines covered in snow. Source: Margus Muld/ERR

The 'hate speech law'

Estonia is in the middle of European Commission infringement proceedings and looking at a possible fine because the Commission finds that the country's Penal Code does not go far enough in regulating hate speech.

Amendments to several pieces of legislation, often dubbed simply the "hate speech law," landed in the parliament in June. The bill prescribes punishments for those who openly incite hatred, violence or discrimination in a matter that might pose a threat to public order. It is the latter part of this phrasing, which has been criticized the most as it is perceived to be too open to interpretation and pose a threat to free speech and freedom of expression.

Still, the parliament seems to be in no particular hurry to pass the law as its second reading has been postponed until spring of 2024.

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Editor: Marcus Turovski

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