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'Esimene stuudio' sees politicians do battle over teacher wage rises and the economy

Panelists on 'Esimene stuudio,' Wednesday, January 31, 2024.
Panelists on 'Esimene stuudio,' Wednesday, January 31, 2024. Source: ERR

Leading politicians from all six parties represented at the Riigikogu appeared on Wednesday night's edition of "Esimene stuudio," to talk about additional funding for teacher wage rises, and also the options for attempting to improve the overall, current economic situation.

Appearing were: Health Minister Riina Sikkut (SDE), MP Marek Reinaas (Eesti 200), Reform Party MP and former finance minister Annely Akkermann, Isamaa leader and former foreign minister Urmas Reinsalu, Conservative People's Party of Estonia (EKRE) leader and former finance minister Martin Helme, and Center Party chief whip Andrei Korobeinik.

Riina Sikkut said that the additional €5.5 million (sometimes reported as €5.7 million – ed.) pledged to teachers, a move which ended the strike earlier this week, will be found found from ministries' management and operational costs.

Marek Reinaas said this proposal, which came from his party-mate, Education Minister Kristina Kallas, comes as a lesson on balanced budgets, i.e. halting activities that are not wholly necessary, and making savings there. "In fact, the minister of education did not find this money, but reviewed her activities," Reinaas said.

Marek Reinaas (Eesti 200). Source: Siim Lõvi /ERR

Annely Akkermann, a member of the Reform Party, also explained that money is not sought or found in the ministries, but it is decided what will not be done.

According to the chairman of Isamaa, Urmas Reinsalu, the government has been clumsy in solving the issue of teachers' salary increases, and he is not convinced that the government has the political will to actually give the extra money to teachers this week. "Because in the budget strategy of the state, which has essentially become an invalid document, zero euros are still written for the salary increase of teachers in the following years. This is the reality from which we are currently proceeding," he added.

Reinsalu characterized the government's recent actions as a bankruptcy of management.

Urmas Reinsalu (Isamaa) and Martin Helme (EKRE). Source: Priit Mürk/ERR

"This agreement should have been reached already in the fall. You are destroying the trust of the society and you are tearing the society apart. You do not understand what is the most central problem right now besides the security crisis – the deepening and accelerating decline of the Estonian economy. What you are saying now with a sense of pride that the government instead of dealing with the state of the economic environment and state finances, he dealt with it for weeks and was looking for five million euros, it's just a complete management bankruptcy," he said.

Martin Helme said that the €5.5 million found by the government to increase teachers' salaries was a ridiculous amount compared with the size of the state budget. "This talk that someone did or achieved something major here; the only big thing was that for the first time in Estonia, they really tried to strike and put pressure on the government. I would say that everything from this government has failed," he said.

Helme said that there is a lot of waste in the ministries, and teachers can find the necessary money if there is a will for it. "At the moment, a band-aid was applied to the fracture," he added.

Andrei Korobeinik said he thought teachers are likely not very satisfied with the current solution. Korobeinik called it "alarming" that the government spent weeks finding money for a teacher's wage hike, and only now has to start looking for hundreds of millions to cover a hole in the state budget, in the coming years.

Andrei Korobeinik. Source: Siim Lõvi /ERR

Korobeinik said: "These people have been looking for several weeks for €10 million (the original figure cited – ed.) for a teacher's wage rise, yet now the latest statistics show that our economy contracted by 3 percent, and next year will also be in the red."

"These people are planning to look for hundreds of millions. They couldn't find €10 million, but now they are searhing for €400. As to whether they will be able to, I would not venture to be so naive. I say this as the only pledge they made is that they won't impose a tax on banks' profits. The remainder relate to tax hikes, but the only ones left out of this are the banks. Estonia has a tough year ahead of it, and there are probably no teachers satisfied with this solution, so I wouldn't be singing [the government's] praises," he went on.

Sikkut conceded that it would have been best to have pre-empted the teachers' strike, to ensure that children would not have had the interruption to their education. She agreed with the opposition MP that €5.5 million in additional funds alone will not solve the issues facing teachers, adding that educational reforms are needed.

Reinaas averred that the rationale behind the teachers' strike was a desire for a long-term solution to the continued functioning of the education system, and not short injections of money into a system which is not working.

Martin Helme found that education reform must not only direct additional money, but more effective action. "Educational reform is not something which you just throw money at, but must be such that more is done with this money. The funding must be directed towards pupils and teachers. But they (the current government - ed.) can't handle it, so we can drink the kool-aid."

How can the state budget picture be improved?

All the "Esimene stuudio" guests found that obtaining over €400 million for the state budget for the next year may be a necessity.

Opposition members appearing found that to do so, savings must be found from the government's expenses.

Urmas Reinsalu said that: "In 2023, when the supplementary budget was at the Riigikogu, an additional austerity budget should have been drawn up. The state's expenses in relation to the government should be cut. The government should limit the funds being transferred from 2023 to 2024. /.../ We must be ready for a negative state budget in relation to government expenses, and this already in January, and make the reductions to government expenses."

Korobeinik concurred, saying: "I would like to point out that while there was talk of a balanced budget, it is now a budget of minus €400 million . The only area, the only sector, which grew during the crisis – and we have been in economic crisis for two years now – in addition to banks, was the public sector, which grew. The number of jobs in the public sector has risen by four percent in two years. I agree with Reinsalu that this is a place where the Estonian state could obtain funds."

Sikkut said however that his would worsen the recession. "The recommendations to cut the public sector now, when the economy is falling, are the opposite of those made by experts. If the economy is declining, and now the state also goes on to withdraw money from that economy, we will deepen the recession," she said.

Riina Sikkut. Source: ERR

According to Korobeinik, the government could also find funds from taxation on the banks. "The money can come from the bank tax, which is half a billion a year, or from the cancellation of the tax hump removal, which comes to €480 million. The billion can be found. There's no need for a long plan on this. That billion is there. Take it. You don't have to thank me," he said.

Helme said that it would be viable for the government to regulate the amount received from the bank tax, as needed. "This hinges on how you do it, for how long, and for how much. According to the bill we submitted, this would have brought in €150 million; the Center Party would like to make much more brutal cuts. It is possible to find this sum anyway."

Riina Sikkut said SDE would support both the abolition of the tax hump, also known as bracket creep and a pre-election Reform Party pledge, and the banking tax, but added that doing so would only bring a one-off sum.

"These proposals may be in good faith, but they do not resolve the long-term need to increase the state's fixed incomes. They would be extraordinary, across one or two state budgets. Instead, we need to finally reach a tax on the wealthy, meaning those earning over €5,000 [per month]."

On this, while the topic had been discussed with the coalition, no compromise had been met, Sikkut said.

Neither Reform nor Eesti 200's representatives on "Esimene stuudio" said they found the banking tax a good idea.

Annely Akkermann said: "The bank tax was collected due to the higher interest rates, the Euribor, but on the other hand, banks have offered higher interest rates to depositors, whose money had also melted away under inflation. At this point in time, both the loan interest and the deposit interest balance out. I there are temporary larger amounts, these will equalize over time."

Annely Akkermann. Source: Kairit Leibold/ERR

Reinaas said: "In our opinion, the bank tax is not a good idea, because there is no reason to start taxing one economic sector differently from other economic sectors."

Urmas Reinsalu said one way the Estonian economy could be helped would be if the current government were to fall.

Additionally, EU funding should be utilized, a negative budget should be in place, and dialogue with entrepreneurs should be restored, he said.

The government must start acting to improve the state of the economy and the state budget immediately, rather than waiting until the fall, when the process for assembling the 2025 state budget begins, the Isamaa leader continued.

Helme held the same view. "The economy is spiraling. We are back in the economy of 2010, when the previous crisis bottomed out. Yet you say that there is time, we can thinkg about things, discuss them, throw ideas around until suddenly in August we can offer something. This year's budget, which was adopted at the end of last year, will not pull a rabbit out of a hat. Nothing you've planned will work out in fact."

Sikkut said that the government's plan to improve the economic situation revolves around investing in education, cheap renewable energy sources and an environment where it is possible to set up a business quickly and easily.

"The government is taking steps in all these directions," Sikkut said.

"Some may call it a personalized state (an Eesti 200 watchword – ed.) some may call it slashing bureaucracy, but this is what has also been the recommendation from experts. It is not viable for us to pull ourselves out of the swamp by our bootstraps via some major support packages. We have to take the long view: Education, cheap renewable energy, local energy and simple, convenient businesses running within the e-state framework," the minister went on.

"Esimene stuudio" was hosted by Liisu Lass and Andres Kuusk.

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Editor: Andrew Whyte, Merili Nael

Source: 'Esimene stuudio.'

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