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Businessman: Government intervention will only make things worse for the economy

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

The timber sector is among the hardest-hit in the current economic crisis. Jaak Nigul, CEO and one of the owners of Estonian furniture maker Tarmeko, has plenty of criticism for politicians and officials in an interview with ETV's "Impulss" program.

"Impulss" met with Nigul in one of Tarmeko's production facilities in Tartu County. The company runs three major furniture and timber products factories in the village of Lohkva. Tarmeko employs a little under 200 people.

Nigul is worried because the timber sector has become a fading industry, which will negatively impact the whole of Estonian economy, he believes.

"People seem unable to understand that society is supported by the economy, and that Estonia is a small country. The Estonian state should be like a protected area for the Estonian people aimed at making sure we can survive here. Right now, environmental requirements based on strange principles are used to turn Estonia into a protected zone for other countries. This means the locals will not be able to cope economically," Nigul said.

The businessman said that a lot of foolish decisions are being made in Estonia as concerns energy, industry, the service sector and indeed the public domain. "We cannot be just an IT country. While it is a great thing that can help render processes more effective and improve them, IT will never generate electricity, produce food or build homes."

"If we sink it all in the name of green daydreams, we will disappear," he remarked.

Nigul suggested that people forget that industry remains Estonia's largest economic sector and that wood products have been among the country's chief exports.

Estonian timber sector companies have been experiencing great difficulties on foreign markets recently.

Nigul said that Estonia has meddled heavily in the timber market, saying that if the price of end products falls that of raw material should too, which has not happened in Estonia. "That is what is leaving our companies in the lurch on export markets. Estonian companies can no longer compete. We are being told that we're too expensive."

It is true that raw material prices differ greatly from one country to the next. While a stacked cubic meter of birch cost over €300 in Estonia last year, this was just €80 in Finland.

Estonia has lost another one of its competitive edges – lower salaries. "We do not really have any (competitive advantages) left by today as we pay more for energy than our neighbors and are located in the European periphery where logistics, either for importing materials or exporting products, is more expensive."

Nigul finds that politicians and officials in Estonia share the blame by dialing back logging volumes.

The furniture maker said that logging volumes should not depend on political decisions, inclusion or NGOs, and that once trees reach the optimal age, they should be cut down.

"The government should not meddle in the economy in this way. Unfortunately, this intervention will only make things worse for the economy," Nigul said, adding that worse than politicians is pressure from officials over a long time.

As concerns workers, Tarmeko has rather done well. Unlike other timber sector companies, Nigul only had to lay off a handful of people. Unemployment is on the rise in Estonia, with nearly 55,000 people out of work in early 2024. Unexpectedly, Nigul is rather optimistic here.

"I believe that everyone who wants to work is employed in Estonia. I don't think people are having trouble finding work in this country. It might be the case in rural areas where there are very few employers, but not in or around cities," he said.

But Nigul also believes that unemployment will eventually head up should companies' troubles continue to deepen, which is when people will start having trouble coping and will likely take a different view of use of natural resources.

"My message to politicians and officials is that perhaps we do not have to let things get that bad. Perhaps we could make smarter and better decisions sooner. In the end, politicians and officials are there to make life better. We are not paying them to realize utopian ideas."

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Editor: Mirjam Mäekivi, Marcus Turovski

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