Health minister: A progressive income tax will develop in Estonia
The wealthier in society should contribute more, Health Minister Riina Sikkut (SDE) said Friday. With the elimination of the income tax-free threshold, it will be possible to switch to a progressive income tax system in Estonia, the minister went on, in a lengthy interview given to Vikerraadio show "Reedene intervjuu," which follows in its entirety.
If we look at how the coalition parties have fared this year, according to the polls, your partners (Reform and Eesti 200 – ed.) have lost a significant amount of support from the public. However, SDE have performed a bit better. Why is that?
This year has indeed passed exceptionally quickly, and much has gone on. Right after the elections, after the first week, which I thought extraordinary, a lot of things happened. The refusal of one party (EKRE – ed.) to acknowledge the election results gave rise to concerns about what might happen next at the Riigikogu.
In previous years, during the Covid crisis, there had been particularly strong societal support for making exceptional expenditures to support businesses and individuals, for example, by facilitating the payment of sick leave to encourage those infected to stay home.
Then came the war in Ukraine, after which we instantly boosted our defense spending by more than one percent of GDP. That was not up for questioning, nor was it a matter of dispute.
However, by the spring of last year, the situation was such that there were no new, acute or surprising crises. Decisions on previous expenses had been made, while now the question was whether we really planned to fund current expenses via loans over the next four years. On this matter, there had been consensus among coalition partners that we would not fund them via loans.
But the three coalition partners are very different. Indeed, SDEhad written tax hikes into their pre-election manifesto: A progressive income tax, a national defense tax, and even on the traditional corporate income tax.
This is because we believe it's the right thing to do. We believe that a small, native-language country, which must protect itself against a significantly larger neighbor, cannot be maintained under the current tax burden.
This means the messages that came out after the formation of the coalition were perhaps not such a big surprise to our voters. Eesti 200 entered as a new force with a clean slate, intending to make major changes.
However, you can't start from a tabula rasa like that, because we've had 32 years of various governments already, and inevitably there are things which need to be continued, and which each minister must explain in their areas of governance, while ringing the changes is difficult.
As the leading party and that of the prime minister, the Reform Party always gets more attention, more criticism, and perhaps higher expectations placed upon. What has been happening in tax policy, in terms of changes, is also not something which automatically finds support from the traditionally Reform Party voter.
I think that this explains the change or the current stability in the ratings. It is also impossible to ignore the fact that politics has been exceptionally dynamic following last year's surprising election result, as, really, no party has ever received such a strong mandate at the Riigikogu before now (Reform has 37 seats at the 101-seat chamber – ed.).
The disintegration of the Center Party has meant for us in SDE that we have become the sole strong, center-left force, the only balance on the right-wing parties, while perhaps a change related to this significance is what is being reflected in the ratings.
Before the elections, SDE, like the Reform Party, were actually in government. You had, at least presumably, an image of the state's financial situation, and in fact a rather generous budget got compiled before the elections, taking into account expenses versus revenues. If you wanted to talk about taxes and tax hikes during the election campaign, why didn't the Reform Party want to do so?
I don't know. The question was itself posed at election debates, in my opinion. I took part in [ETV politics head-to-head show] "Esimene stuudio," and journalists there asked me repeatedly – a lot in fact - but this was never a central theme of the pre-election debate.
This wasn't a topic because politicians simply didn't want to talk about it. Talking about tax hikes, as Kaja Kallas said, is actually an unpopular thing.
Indeed, a major part of the decisions we have had to make are unpopular, but that doesn't mean they're not necessary. In my opinion, the central theme of the elections was that of security. SDE undoubtedly tried to also talk about coping.
In terms of security, there hasn't really been any disagreement between the parties, but actually also in terms of coping.
Luckily there isn't much divergence when it comes to security topics, but on election controversies, be it the dispute with the commander of the defense forces, or the question of how much ammunition and weaponry we are actually allowed to give to Ukraine, then disagreements did arise.
These things are not positive for Estonia, and in my opinion, this topic received the most traction ahead of the March 2023 elections. On the one hand, this is understandable, but on the other, I would also really like it if we were more united on our security policy and did not question supporting Ukraine in the current, or greater extent, as necessary.
When I look at the tax changes we've made over the year, they aren't overly after SDE's own heart, even the reductions to [large] family benefits. SDE was one of the parties which had raised family benefits during the previous government. If we consider the VAT hike, looking at this so-called tax hump or creating a tax exemption for the wealthier, this is also essentially an income tax increase. But this is not SDE policy. Are you content with these things?
In actual fact we looked at distributive effects on both tax changes and other changes agreed upon in the course of the coalition negotiations. For example, the minimum wage hike, which was vital to us as, contrary perhaps to widespread belief, SDE does not think that the country or the people should be propped up by benefits.
A person being able to live off their work income, their wage: This provides dignity, and is a kind of baseline that should be provided, but we haven't really had any kind of catching up of the minimum wage towards the average wage.
The natural development is not in this direction. So indeed, an important point for us in our coalition negotiations, knowing that we were at the table with two right-wing parties (economically speaking – ed.), was that if we were to hike taxes so that the state's permanent revenues would cover permanent expenses, then the tax burden hits also the low-income earners, other agreements must lead to their incomes being raised. Indeed, if we carry out a calculation in respect of the minimum wage earner, then their incomes will grow faster than the additional tax burden.
This minimum wage is still a type of hand-wringing because the minimum wage goes up anyway. In the Estonian way of doing things, it's more of an agreement between employers, trade unions, and the government.
That it is, but now the goal of reaching half of the average wage by 2027 is an extraordinary thing. It's also the minimum threshold recommended by the EU.
Then we can say that we really ensure the necessary income on which low-wage earners can cope. On the other hand, we've clearly grasped that elections have consequences; when one party gets historically the highest number of seats at the Riigikogu and their central election pledge has been the elimination of the tax hump (also known as bracket creep – ed.).
SDE did not consider this the right thing to do in the current economic climate. But the election's winner must be able to implement their program. On the other hand, areas like marriage equality and also those topics which were in our program and not in the Reform Party's, were similarly agreed upon and implemented. This was also important to us.
On the one hand, we understand that what unites us among the three parties is a liberal worldview, and there are a whole series of things we can do based on that. What the tax policy looks like: There we clearly have differences, and SDE stands for ensuring that low-wage earners do not bear any excessive burden. But this doesn't mean all tax policy decisions are made by us or derive from our election program, as elections clearly have consequences.
If we look, for example, at the comparison of Estonia's tax burden next to those of other countries, consumption taxes, including VAT, excise duties and others, are among the highest in Europe. Following the latest round of tax changes, there are no other states which tax consumption so highly, so this essentially constitutes the taxation of the poor. In contrast, there hasn't really been an equivalent rise in wealth taxes in Estonia.
Indeed. This means that, despite personally not considering the elimination of the tax hump to be right in the current situation, given the burden on the state budget, but as Lauri Läänemets has pointed out, as long as we have the tax hump, it will be impossible to introduce a progressive income tax.
Estonia, I believe, will reach the point of implementing a progressive income tax, as all other Nordic and Western European countries do tax income progressively. The contribution of the wealthy to society must be greater, then after the elimination of the tax hump, when we will have a uniform tax-free minimum and a uniform tax rate, it will actually possible to transition to a progressive tax system.
Looking at this year's state budget, it actually lacks €1.7 billion to cover both current expenses and other various things that haven't been classified as investments. The tax rises that have been agreed upon so far don't cover this shortfall. In recent weeks, we've been seeing various new news on taxation, such as the increase in land tax for municipalities. So, are there any new taxes in the offing?
Essentially all these tax news over the last few weeks aren't new in that respect, as they were all agreements made in the state budget strategy (known in Estonian as the RES – ed.). They were written in there, and now these drafts have been completed, so they are becoming public in order to be processed.
However I completely concur that additional decisions are needed, and therefore the government meets monthly, just so that we wouldn't have to agree on a budget within the space of a few days in the fall. So that we could do this preparatory work, to get a common understanding of the steps we need to agree on in the process of preparing the 2025 state budget.
Last year, we saw how the coalition left the state budget negotiations at Vihula mõis with €400 million in tax increases written into the RES, but €150 million in cuts were not detailed. It doesn't seem to me that these have been detailed in the meantime either.
Yes, but that's what we're discussing, how to detail what we agreed upon in the RES via specific decisions or actions. We are also waiting for the [spring] economic forecast, which could be worse than it was in the summer. This means that revenues might not be as expected, making our task larger still.
What will the government do in that case?
Ultimately, the question is whether it will be loans, taxes or cuts. Likely it will be a combination of the three, since the gap is so great and the need for change is so great that we can't cover it all at once.
This change can't be implemented by January 1, 2025, but the understanding that we need to reach a situation whereby permanent revenues cover permanent expenses and loans can be used for investments. One aspect is defense investments, but maybe also other types of investments. We need to reach this understanding.
It is easy and it is nice to say, but is it realistic? I don't see that agreement coming easily in the context of the current coalition.
No, but neither have the existing agreements been easy. It is difficult, very difficult. Unpopular decisions, decisions with a large societal and economic impact, need to be made, alongside the uncertainty over the pace of economic recovery. All of this affects us.
But if we look at it nominally, billions have been added to state budget revenues in recent years, and somewhere that money has evaporated, we've spent it, so that we've ended up in deficit.
In the state budget, the larger expenditure items or fields haven't changed over the years. Number one is pensions, the number of elderly is rising, pensions are indexed to high inflation and wage growth conditions. Pensions are growing, this year to a record level. €774 is the average pension now, after April 1. On the one hand, this is an unavoidable expense, but on the other, no one questions that it has been much needed, considering the livelihoods of the elderly in Estonia are one of the worst in Europe.
On the other hand, indeed, defense expenses and science funding are the two only expenditure items that have been agreed upon across parties in relation to GDP, and this always gets done. And that already makes up a large part of the budget.
Then there are health expenses 13 percent of social tax and the contribution for non-working pensioners, and similarly, we can say that despite expenses growing, this is far from enough.
From one side we have more people with chronic diseases, more elderly, and people are living longer. But at the same time, treatment options are improving and expectations are rising. And, in the end, we need to offer annual wage increases to all healthcare workers, as people with their skills are highly valued everywhere else.
Looking at state budget expenses, then your co-led ministry (Sikkut's Ministry of Social Affairs also includes Minister of Social Security Signe Riisalo – ed.) is one of the largest "expense items" in Estonia.
But the flip side of the coin is that Estonian society clearly hast hree priorities, and this does not change from year to year, be it during a crisis or when the budget conditions are easier or more difficult: Defense expenses, education expenses, and cultural sector expenses are those three where we invest more money than do other EU member states.
Significantly more, but no one disputes this because no one else creates or maintains or preserves Estonian culture, or our native language culture. Our children are not getting taught in Estonian, nor is higher education being provided in Estonian. Plus we've already talked about defense expenses.
Just as you noted, my and Signe Riisalo's ministry, as it were, carries the largest nominal expenses. But it is embarrassing that we invest, depending on the area, nearly a third less than other countries in healthcare and social welfare. This clearly reflects in the relative poverty rate, the extent to which we support children with special needs, and the regional availability of health services. So, what we do nominally and what these needs are, and how we measure up to other member states, are two very different pictures.
I understand that the Ministry of Social Affairs is one of those places where the government is currently looking at areas to cut costs, and, indeed, some cuts are already in progress. How much can be saved in total from the €7 billion, or whatever the budget of the Ministry of Social Affairs may be?
In government-speak, we are a zero-budget operation. In and of itself, I don't dispute that goal, whether it's in the health or social sectors. We have various types of health certificates, once on paper and stamped, but now we've digitized them, so the question is, do we need all of this.
Similarly, with permits, and supervising arrangements. At one time, it was necessary to tick boxes and perhaps visit in person. Now, we have much more data, and we've actually taken the direction towards advisory supervision. Both the regulatory obligations and the activities we undertake in the sector should be modernized and reviewed.
Plus I think that in other ministers' sectors, it is the case that these decisions and procedural processes that have accumulated over the past 32 years need to be reviewed once and for all.
There is the option to organize, reduce workload, likely reduce bureaucracy, and make things more convenient for people. These are primarily the decisions we make.
Furthermore, there are many types of benefits and supports, and the question is whether there is any duplication, for example, for people with reduced work capacity.
With sick leave compensation, for example, now we have EU funds – which are increasingly moving away from infrastructure and more towards supporting reforms, which is essentially correct – in my sector means dealing with the prevention of reduced work capacity.
We have a lot of people on long-term sick leave, home for six months, and we don't allow them to work. And then indeed, my colleagues from western Europe ask if we are then punishing these people [if they work]?
I say, yes, we take away their benefits. But now we are starting with the approach that a person who has been on sick leave for two months, who has recovered from surgery or whose health allows them to work according to the doctor's decision, can continue working with a part load, for example, a half-workload, either at a modified workplace or from home, then we pay them less in sick leave benefits, and this is compensated by the salary they earn while working.
So, for the individual, their income before falling ill is preserved, while for the Health Insurance Fund (Haigekassa), costs fall, as this pays not 70 percent of the salary as a benefit, but 50 percent of the salary, as working support. So, there are such types of changes which actually allow people to remain in the labor market, and which are ultimately beneficial for society, and are not necessarily costly on the budget.
Continuing maybe a bit with the areas of cuts that can be found in the Ministry of Social Affairs, often with these things, when we speak generally about reducing bureaucracy, reducing duplication, finding savings, everyone is very happy, but when we get into the details, it doesn't come together. People say, no, this is necessary, it can't be done, it disrupts whatever system, it reduces life in the countryside. Do you think it's really possible to save any material amounts?
Yes, but we're not talking about hundreds of millions here. In that sense, Finance Minister Mart Võrklaev (Reform) has mentioned in his interview that although it seems to everyone that our public sector is quite large, if you were to shut down all ministries and lay off all civil servants and not spend any money on bureaucracy, the savings would come to €130 million.
This isn't entirely true, because many civil servants or state employees have been moved from ministries to subordinate agencies, where they are somewhat separate from the ministry, but that sum wouldn't grow by much. So, we're talking about a small amount in terms of the budget, and even if saving five or ten percent, which is a significant amount affecting work, gives you an order of magnitude with which it's possible to make some change.
But for instance, in the health sector, there are very few benefits as such. At the same time, Estonia has a rather broad but inefficient hospital network.
I don't agree with that statement. Estonia's hospital network is not too large by any stretch.
The fact that it's possible to get medical care 24/7 in every county, and, even if resident doctors work in shifts in different hospitals, this is not at all reprehensible. They also need to gain professional practice; resident doctors work in hospitals in all countries anyway.
Second, the need for help in rural areas is not going to go anywhere, but we rather see the role of county hospitals rising in scope. Those places where we have gaps in healthcare or where we need more than we currently do include palliative care – everything related to end-of-life support and care. It's not possible to transport ten thousand people who need this annually to Tallinn and Tartu.
But looking at the message from your co-minister Signe Riisalo, she believes that it is viable to find additional funds, for example, by reducing parental benefits. What is your view on this? Do parental benefits need to be reduced in Estonia?
On one hand, what has been discussed in the media, about shortening the period for parental benefits, I personally do not support it. But I haven't seen any calculations, while the ministry is analyzing how parental benefits are used, what changes have occurred over time.
Experts' proposals on whether additional changes are needed to parental benefits, because many changes have been made over time, including to support working during the parental benefit period. Earning an income while staying at home with a young child cannot be prohibited.
We have changed the parental benefit system over time, while the future need to change the parental benefit scheme is undisputed. SDE, when introducing parental benefits, which if I recall correctly happened 20 years ago, believed it should be more uniform, that there was no need for such high ceilings.
Our understanding hasn't changed in this regard, but we have never discussed in the government what the different parties' positions are. We await the experts' analysis. But I understand that this topic creates discussion or excitement.
Similarly, there are temporary incapacity benefits, where there's no cap. The question is, if a person earns €1,200 or €12,000, then the sickness benefit is uniformly 70 percent of their income. Since there is a cap on other benefits, one may inquire whether we can reach political agreements there. All benefit schemes have such nuances, but this covers a very small part of the benefit recipients. The impact on the budget is small. But ultimately, if it's the right step, then those changes need to be made.
In your opinion, is Estonia's low birth rate a problem at all?
Yes, Estonia's low birth rate is an issue. However, we see that this low birth rate cannot be explained solely by the exceptionally small demographic groups reaching childbearing age.
We increasingly read news that other countries also have been seeing record low birth rates.
The question is whether indeed the coronavirus and the general anxiety about the war in Ukraine are what has been holding back child rearing.
Demographers explain it also by the rapid rise in the cost of living, because, inevitably, there are certain types of expenses associated with having a child.
Right now, there is so much uncertainty, inflation is rapid, and there may be uncertainty security, all of which has been leading to the postponement of having children.
All these explanations justify in part this low birth rate. This doesn't mean that we must accept that the birth rate will stay so low, however. Apart from anything else, Estonia is actually a very good place to have and raise children.
Maybe from this perspective, we should instead reward those who have children, and solve their material problems at the state level?
Actually, we are very generous, and largely we do this so that financial circumstances would not bar anyone from having children. As the Minister of Health, of course, I can't overlook the fact that, in addition to the importance of raw numbers of children born, it's also important that once a child is born, they remain healthy, that they get a good education, that they can participate in extracurricular activities, that their mental state is in order. We need to better support and care for the children once born, so they all can become happy adults.
But we are not doing this now?
I don't think we're doing enough. Now, in the wake of the sugary drinks tax, child obesity rates have been getting much attention, but, similarly, so has the incidence of anxiety, depression, or worry, among children. There are quite a few indicators pointing to risks, suggesting that we can do more for the health and wellbeing of children than we currently do.
So, actually, you personally or SDE have quite a big common ground with Isamaa, who have been pushing the issue of birth rate for years and continue to do so.
Just as with security, no party disputes that low birth rate is an existential problem for Estonia. The question is how generous we need to be, or whether this is the most important political issue. It probably isn't the most important political issue, but no one overlooks it, otherwise, we wouldn't have such generous supports, benefits, support for children. Even if we talk about free school meals, which is an unusual thing in many other countries.
What then is the most important political issue?
In terms of day-to-day politics, every day there's a new leading story, but if Estonia had just one euro, that euro should be invested in education.
Well, we do invest quite a bit in education.
Yes, but now there's clearly an issue with the succession of teachers, and we have other issues in education which we've been very thoroughly dissecting in recent months in the wake of January's teachers' strike.
I think many people hadn't previously thought about the teacher career model, or workload measurement or evaluation. Education, I think, is the most important issue. In this regard, looking at the costs in the budget, clearly the country is investing there, it has been a common ground for parties.
Well, indeed, the question once again is where and how we invest so that that one euro delivers the best quality to the education network. But recently, we've seen how local governments, which have decided to optimize or make the education network more efficient to maximize the impact of one euro in this network, getting a lot of negative feedback in both the media and from parents of the children at those schools. You as Social Democrats often do not support making the school network more efficient, do you.
Yes, I do not see that infrastructure issues in education or healthcare could be central or a game-changing matter.
There is also the question of quality: Often, the quality of education or healthcare is better in larger hospitals or schools.
In education and healthcare, there are many other things we measure besides volume and standardized activities. Infrastructure in both education and healthcare has largely been built with the support from the EU taxpayer. We will continue to get some funding there, as this hasn't been a significant budgetary expense, but future expenses in both education and healthcare are related to the number of people; ie. per-student funding.
Whether we move students to a smaller school or a larger school, to the countryside or the city, this does not affect the costs we allocate to education in the budget, and the same goes for healthcare.
We treat patients, and the question is in the visits, procedures, operations we perform, and these form the healthcare costs.
Whether we do this in one hospital, five hospitals, 20 hospitals, in the countryside or the city? That's a secondary thing. Yes, somehow heating bills must be paid, but that's a marginal part of all healthcare-related expenses. I assume this is the same in education, but what we should focus on is ensuring succession and retaining those who currently work.
This means somewhat of a change in attitude. We have shared the theme of promoting physical activity among children with Kristina Kallas(Eesti 200) and Heidi Purga (Reform), and here we see that a change in attitude is very important.
It can't be legislated that if a child comes home from school with muddy knees because they had been playing football, they can't be admonished at all, or that a child shouldn't receive any citation for going outside during break and coming back to class with wet hair, or that the school stadiums are locked, or that children aren't allowed outside during breaks.
We can make plenty of changes in connection with children's health and actually also concentration, learning outcomes, if we let them move about outside. But this cannot be changed by law, concerning the number of steps or locked doors. It's about societal attitudes, including how we, as parents, view teachers.
Let us perhaps also talk about broader issues, just as we previously discussed what can and cannot be done, and how certain things need to be changed. How much should the state try to guide people's lives, choices, decisions?
I think we're all human, and a human can make mistakes. They can behave in a way that negatively impacts on their health, they can change their mind on things. They can be and indeed often are irrational. We can't change that. We don't want to make mass produced, uniform people, marching in step. And actually, I think therein lies the core of social democracy.
Yet the public perception is that you want to prescribe how everyone should live and what they should do...
Actually, we want the opposite to that. We want every person to be able to make their decisions freely, so no one should have to marry to obtain health insurance or make career decisions with social guarantees in mind.
Now, as for a health-promoting environment, it is similarly the case that no one wants to ban either soft drinks or alcohol, but a health-damaging choice should not be too readily accessible, easy, convenient, or cheap, especially when it comes to children.
People can make their own choices, but the environment should support what is healthy, and what is not. So, we're not limiting people's choices.
However, for example, state or municipal-funded food, whether it be kindergarten or school lunches, should be healthy, and locally sourced.
This doesn't limit choices, but instead allows all children to actually get a full stomach, to learn properly, and develop appropriately for their age. So, the direction of indeed funding school meals and sporting opportunities more generously shapes the environment, but does not limit choices.
We can indeed allocate more funds to improve various issues, but when I start to follow the chain of what is harmful to people and what could then be restricted or hindered, that chain becomes quite lengthy. Ultimately, we end up needing to consider whether people should be allowed to ride motorbikes, say, or go downhill skiing. These are all activities that can be harmful to one's wellbeing.
However, we do not prohibit any of these choices for the individual. As long as you do not harm others, what you choose to do is ultimately a matter for you. What I believe is society's responsibility is to provide knowledge in schools about what is sensible in terms of one's health. People can freely choose, but the unhealthy option should never be the cheapest or easiest to obtain. That said, it is realistic for every adult to be able to make such a choice.
If we even talk about the sugary drinks tax, there arises a separate question on why we should only limit soft drinks. Perhaps if we're going to go down this path, we should limit all sugar, flour, oil, fat, indeed anything that people don't need an excess of. But by doing that, though, we would create societal structures which then control and monitor, and companies have to start reporting on things. This is clearly a waste of societal resources. People who could otherwise be doing something useful will start having to deal with bureaucratic matters.
For this reason the tax on sugary beverages is designed to fit into the Estonian tax system without causing an undue administrative burden or negative side effects.
I often receive feedback asking why we don't tax pastries, or bread. However, soft drinks are items not included in the dietary pyramid in any case.
Not a single nutrient will get missed out by a child or for that matter an adult if they do not consume any soft drinks. In the case of bread or sweetened yogurts, we can't say that these are items we want to remove or significantly cut out of a child's diet.
If we tax these, we then make the basket of goods more expensive, especially for low-wage earners, yet these items do have some nutritional value, while it is very difficult to overconsume on bread or solid sugar, but the liquid sugars in soft drinks are more easily absorbed. Plus indeed the experts say they are more harmful to the health.
This means soft drinks are a part of the diet which, looking at children's sugar consumption, health risks, and, ultimately, obesity, we can confidently decide should be more expensive and therefore harder to access.
We're not restricting anything; soda can still be sold everywhere, anyone can buy them, but we want to nudge children towards preferring healthier, lower-sugar drinks. And as experience from other countries shows, recipes then begin to change: To reach a lower tax bracket, the sugar content in sodas is reduced by the manufacturers, and ultimately, we all consume less sugar. This is the public health goal. So we have not actually restricted anyone's freedom.
This comes down really to a question of how freedom is defined. In the end, it is natural for people to to find ways around restrictions. A child will find a substitute sugar which can be obtained more cheaply or efficiently, for instance. It has fundamentally always been the case that if you remove one thing from the system, that system then starts to correct itself. But when I look at what's happening with the changes to the advertising tax (on alcoholic drinks – ed.) proposed by the Ministry of Economic Affairs and Communications, which is entirely understandable in its initiative to reduce administrative burdens and unnecessary bureaucracy, many health promoters are now very upset. They say that the ministry wants to make everyone drink. I don't see how this really tallies with the truth. Do you think we shouldn't be changing the advertising law right now?
My worry is that within the coalition agreement, we agreed to ban advertisements on payday loans, gambling, and sports betting. That was a government agreement. But for some reason, this coalition agreement didn't make it into the advertising law, and instead, relaxations on alcohol advertising or some other interesting thoughts that many people might have, whether they are from different manufacturers or marketers, made it in. So what happened to the task that the government actually set for amending the advertising law last spring? My first question is, why wasn't this task fulfilled? Then we come to the point where restrictions on advertising healthcare services are being removed...
Is that not reasonable?
Currently, you can advertise a specialty, a doctor, the services provided, the price, but the type of advertising where you can promise to guarantee quality or treatment results or say you are better than others or offer discounts like "two hips for the price of one," we haven't allowed in the healthcare context, until now.
The Ministry of Social Affairs does not support the implementation of these types of ads on healthcare services, because a healthcare service user cannot actually evaluate the quality and the promise made in the ad. When a commercial promises that a stain remover works incredibly fast, that's something a person can evaluate for themselves, but the quality of a medical operation to be performed on them is very difficult to assess, while the risks become apparent only afterwards.
Let's look at dental care, which for a large part of society in Estonia is actually inaccessible, and even for those to whom it is available, prices aren't really advertised. The pricing formulation is somewhat opaque, meaning people might end up paying more for dental services than they might in a competitive situation.
Sorry, but this question does not correspond with reality. In healthcare, everything that the Health Insurance Fund finances has cost-based and transparent prices. With healthcare services, anyone can go and see how much an appendectomy or heart surgery costs. Prices are approved by government regulation; there is no concern there.
Dental care has been a private sector service from the outset. There is a very small portion of dental care for children or for very patients with very complex issues that the Health Insurance Fund finances. Even in these cases, prices are agreed upon, are uniform, and transparent. But if a person wishes to compare how much one service costs with one dentist versus another, unfortunately, that is not realistic.
Competition, something which should promote low prices, transparency, high quality, and shorter wait times, has not in fact led to that situation with regard to dental care. Our services are expensive and inaccessible to people, and price formation is opaque. But this has been the decision in many countries, that full dental care for adults is not subsidized. Now the question is, should this sector be regulated more? Until now, there hasn't been the political will to do so.
Perhaps regulate less? Allow dental care companies to compete, advertise prices, seek clients.
But dental care advertising exists. No one is restricting the publicization of prices on websites or in advertising, but for some reason, it's not done. This has not been a directive or decision by the state.
We have the same situation with banks, which can't advertise mortgage interest rates as a primary feature due to advertising law, leading at least one bank to say that our mortgages are more expensive because people don't shop around. Our advertising law restricts activity. Perhaps in many cases, the solution would be to reduce such restrictions, even with the example of alcohol advertising. If we reduce what the Ministry of Economics considers unnecessary restrictions, there would be less bureaucracy and a better life.
I don't know anyone who misses alcohol advertising or whose freedom is restricted because they don't see beer ads on television for several minutes.
They show them anyway, right?
Indeed, studies show that advertising has the most impact on children and teenagers, whose critical thinking is not as developed, and on people who already have a problem, be it alcohol dependence or gambling addiction. So, what's the benefit?
An adult without an addiction simply doesn't bother watching these ads. And for others, the risks associated with advertising are there. What is the societal benefit we gain from broader alcohol advertising or from advertising gambling or payday loans?
Freedom is also a value in itself is it not?
Freedom, yes, but for whom? Is advertising freedom something which people actually might want?
On the other hand, do we need to regulate everything in detail in society?
No, we don't need to regulate every small detail. You act as if a restriction needs to be something very complicated. Wouldn't the simplest step be to just ban something? That way, no supervision is needed. But then again, do we want to live in a society where a large number of things are banned? No, we don't, and that's why I haven't made such decisions, only that advertising sports betting near schools, or filling prime time TV with alcohol ads, in any case a large part of people do not want these things, but their freedom is not restricted in any way if they don't see these ads.
The Ministry of Economic Affairs and Communications' idea likely wasn't to do with inundating people with alcohol advertisements, but rather about reviewing what is permissible and what is prohibited, and how oversight is conducted. However, I would also like to touch on the topic of platform work. Here, the current government has been dragging its feet at the European level insofar as regulating the rights of individuals working on platforms goes (here Aaspõllu is referring to service providing platforms such as Bolt – ed.). In Estonia, as in much of the rest of the world, there's somewhat of a "Wild West" scenario whereby people working for platforms seem to be exempt from the law of the land in Estonia. Do you see a need for change in this area?
In recent years, it's evident at the European level too that ongoing changes in labor markets are widespread: Gig work, working via platforms...
But if someone drives a taxi or delivers food via a platform for 40 hours or more a week, this is no longer really a "gig;" it's a full-time job.
There have been clear changes in how work can be performed, indeed in how work tasks are viewed. This is a widespread issue across Europe, prompting years of discussion about the need for a common regulation and debate over a directive on platform work. The aim is to better protect the rights of platform workers, while also following a desire not to over-regulate an evolving sector. These two desires collided; the directive was finally voted on at the beginning of this week.
Estonia was not opposed to it.
The agreement now moves towards having deliberated and agreed upon what constitutes platform work and that, domestically, the rights of these workers need to be regulated. However, no centralized approach was adopted, and, as with many compromises, it is somewhat of an in-between measure. Not everyone is completely satisfied, but it's somewhat of a step forward, acknowledging that new forms of work exist within the labor market, and that a lot has changed. Domestic labor laws should now keep up with these changes.
Do you see in the near future a situation where taxi drivers will all pay employment taxes or all couriers will have health insurance?
SDE supports universal health insurance in the sense that access to medical care should not be a privilege, regardless of how you work, or how much tax you pay.
This is already somewhat in place. So if you're in pieces, you'll get put back together again.
Naturally we fund emergency and life-saving care for all. The question is whether this is the most efficient approach for society, requiring a person to be in such bad shape in the first place, that the care we provide is of an emergency nature, instead of enabling, for example, family doctor visits and the early diagnosis of illness, and prescribing medication.
For sure universal health insurance is a matter of choice, be it to motivate people with a bigger stick to formally take up employment, or to purchase health insurance. But anyway, platforms: Are we going to do something about them in Estonia?
We need to amend the legislation to adopt the directive, but these discussions have not yet taken place at government level. Eventually, changes in work life need to be codified. Without a doubt, I support social guarantees for workers. What do we do with perhaps tens of thousands of people who have worked via platforms or taken on gig work when they reach retirement age and find they have little to no pension entitlement?
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Editor: Mari Peegel, Andrew Whyte
Source: Vikerraadio's "Reedene intervjuu", interviewer Huko Aaspõllu.