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Hiking Estonia's foreign labor quota to alleviate labor shortage mulled

Traveler. Source: Siim Lõvi /ERR

Estonia's Minister of Economic Affairs Tiit Riisalo (Eesti 200) is willing to consider hiking Estonia's immigration quota by several times in order to alleviate what is becoming an acute labor shortage in the country. Minister of the Interior Lauri Läänemets (SDE) remains skeptical.

Estonian businesses have been saying for years that the country's immigration rules are too rigid, which makes it difficult for companies to utilize foreign labor. Arto Aas, chairman of the Estonian Employers Confederation, described the rules as among the toughest in Europe.

"Estonia's aging population and low birthrate mean that our labor pool is shrinking by thousands of people every year. It will be impossible to even keep the current level of prosperity without involving foreign labor, not to mention rapid growth," Aas remarked.

The employers' representative said that while Estonia has been short on IT specialists for years, labor shortage now concerns all fields, from drivers and construction workers to education personnel.

Estonia's immigration quota, introduced back in 1990 and concerning so-called third-country nationals, is 0.1 percent of the population or roughly 1,300 people annually. The Estonian Employers Confederation feels the limit should be if not abolished then at least increased by many times. Employers also find insensible the current obligation to pay foreign workers at least the national average salary, at least not in all sectors and regions.

"Sectoral or regional exceptions could be considered. We have them in place for the IT sector, while they would also be needed in engineering," Aas said, adding that the confederation has also proposed allowing labor exceptions for trustworthy employers.

Tiit Riisalo. Source: Siim Lõvi /ERR

Riisalo believes foreign labor debate in order

Minister of Economic Affairs Tiit Riisalo (Eesti 200) said that Estonia needs a broader debate over the use of foreign labor as the current immigration ceiling of 0.1 percent of population does not meet the country's needs.

Employers find the immigration quota should be three or four times what it is now, which Riisalo agrees could be the ballpark figure. The minister said that a working group meant to tackle labor issues was created at the recent round of fiscal strategy deliberations.

"Our goal is to ensure the availability of qualified labor. We will be looking for the optimal solution. Whether it will be liberating the quota or other measures, such as sectoral exemptions or putting together a list of trusted employers for whom more liberal rules could be put in place."

Interior minister feels the quota should remain unchanged

Riisalo also met with Minister of the Interior Lauri Läänemets (SDE) last week to seek a balance between labor market needs and internal security. Läänemets believes the quota does not need changing, while exemptions and revising recent rules could be considered.

Läänemets said that Estonia should introduce a system where decisions concerning foreign labor are made in three-way talks between the government, employers and unions. He said that such a format would allow for more flexibility in constantly changing economic conditions.

"This would ensure better protection of the interests of Estonian workers. Having union representatives present can help avoid Estonia bringing in foreign labor that might jeopardize local jobs and levels of income. On the other hand, employers could tell us exactly where the need for labor is more acute," Läänemets suggested.

Employers split on Läänemets' idea

Marko Udras, head of the policymaking and legal department of the Estonian Chamber of Commerce and Industry, said that three-way negotiations would not change much as there is a host of conditions both employers and prospective foreign workers must meet, in addition to salary.

"One is that the Unemployment Insurance Fund needs to confirm that a given position cannot be filled with an Estonian resident and only then is the company allowed to hire a foreigner," Udras said, adding that he believes this alone makes it impossible for companies to prefer foreigners and the fund is already performing the task of the three-way format.

But Arto Aas was supportive of the idea of three-way negotiations and said the idea has been proposed in the past.

Arto Aas. Source: Ken Mürk/ERR

"The matter should not be as politicized as it is today. It would add flexibility and expedience compared to the current system where the process is quite complicated," Aas said.

Jaak-Hendrik Toomel, policy secretary for the Estonian Employers Confederation, said that three-way talks would be a brilliant solution for foreign labor.

"That is how the best result will be achieved, with all market participants –workers, employers and the government – coming together to see where the problems and dangers are as well as where the quota could be increased right away. It would help alleviate workers' fears and solve employers' problems. I understand why these decisions have not been made for such a long time, because it is extremely complicated to make decisions for everyone involved," Toomel said.

Most temporary residence permit requests from Ukraine

The immigration quota for 2024 stands at 1,303 as per a recent government decision. Two hundred temporary residence permits are available in transport and warehousing, 35 for journalists with Foreign Ministry accreditation, 34 for athletes, coaches, umpires or other sports-related professions, 15 for performing arts and five permits for work based on international agreements. The remaining 1,014 permits have no restrictions.

Information from the Police and Border Guard Board (PPA) suggests 1,001 residence permit requests that fall under the immigration quota have been filed between December 2023 and February 2024. Most applications have come from Ukrainian nationals at 595, followed by Uzbekistan (81), India (65), Azerbaijan (49), Moldova (49), Philippines (35) and Georgia (26).

The immigration quota does not apply to ITC and startup workers. Family and study migration, lecturing jobs, major investors and top specialists are also exempt from the quota. A foreigner is considered a top specialist if they are paid at least 1.5 times the national average salary. EU, U.S. and Japanese citizens and their family members also do not fall under the quota. Neither do those who request asylum.


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Editor: Urmet Kook, Marcus Turovski

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