The Estonian government at its Thursday meeting approved a bill to amend the Aliens Act to allow for the exemption of top-level specialists from Estonia's annual immigration quota as well as extend the maximum term of short-term employment to 12 months while leaving the immigration quota itself unchanged.
Minister of the Interior Andres Anvelt (SDE) said in a press release that the objective of the immigration quota is first and foremost to protect Estonia's own labor market. "At the same time," he continued, "We need foreign top-level specialists to enliven the economy and create additional jobs for our people. The government based its decision-making on the maximum involvement of our people in the labor market and reducing regional unemployment."
According to the forecast, up to 300 top specialists from third countries are to start work in Estonia this year.
The bill would exempt top-level specialists from the immigration quota. Currently, they have been unable to immigrate to Estonia for several years in a row due to the immigration quota being maxed out. A top-level specialist as defined in the amendment is an alien with professional training who must be paid at least twice the gross national salary by their employer in Estonia, spokespeople for the government said.
The bill would also introduce an A2, or elementary, language proficiency requirement for immigrants who have lived in Estonia on a fixed-term residence permit for at least five years and wish to seek a new residence permit or extend their existing one. This requirement would only apply to those who are issued their first residence permit after these amendments have entered into effect on July 1.
"An individual living in Estonia for an extended period of time must learn the language and, through this, better integrate with Estonian society," Anvelt said. "We have established all kinds of language learning opportunities in our country, and there will be new [opportunities] added in the future."
To alleviate cyclical labor shortages, the bill would extend the maximum term of short-term employment from the current nine months to one year.
The explanatory remarks accompanying the draft bill stat that as a result of these changes, the number of foreigners in short-term employment in Estonia is expected to grow by 2,500, to whom 124 top-level specialists living in Estonia on a fixed-term residence permit will be added.
More foreign specialists, more tax income
The average gross monthly wage in the fourth quarter of 2017 was €1,271, of which the employer pays 33 percent or €419 euros per month in social tax. If 2,500 new workers are registered as short-term employees working in the country for one year and each worker is paid the required average gross wage, Estonia will receive approximately €12.6 million in additional social tax per year. Foreign employees also consume goods and services locally.
According to Ministry of Finance's 2017 economic forecast, Estonia's annual GDP per employed person averages €34,400, and the tax income of the state budget totals approximately €12,000 per year per employed person. If 124 top specialists are added in 2018 with the amendment of the Aliens Act, according to the Ministry of the Interior's calculations, this will mean an increase of €3 million per year in tax income.
An immigration quota of 0.1 percent of the permanent population of Estonia was implemented in the 1991 Immigration Act in order to limit immigration. An immigration act on the same basis was implemented in the 1993 Aliens Act.
The immigration quota from earlier does not include people who come to Estonia to study, work in positions in the information and communication technology field, startups or in relation to research activity and people who come to Estonia for enterpreneurship in relation to startups and large investments. Also, the quota does not include people working in Estonia on a short-term basis, citizens of the European Union, the United States and Japan.
The immigration quota was filled both last year and the year before regardless of distinctions — in December 2016 and July 2017. Based on that, the interior minister made a proposal to the government to change the immigration quota to avoid the situation in which the quota regulation becomes an obstacle in brining in workforce from outside the European Union.
The government decided not to raise the immigration quota and rather alleviate immigration restrictions with other means — by extending the maximum time of working in Estonia on a short-term basis and to exclude top specialists from the quota.
On average, altogether 1,740 temporary residence permits for working have been issued per year since 2014. Year over year, this has increased to 2,273 permits in 2017.
The number of short-term work registration decision rose drastically last year. While in 2015 and 2016, approximately 1,800 short-term employees were registered both years, then last year, the Police and Border Guard Board registered 7,584 short-term employees.
The Police and Border Guard Board is forecasting 10,000 short-term work registration applications for 2018, which is 2,416 more than in 2017. It is likely that the extension of the time period allowed for short-term work will increase the registration of short-term work of up to one year, as it allows to use foreign employees with a temporary residence permit in fields that are sensitive to the cyclicality of economic development, and reduces the need for applying for a temporary residence permit for work possibilities lasting up to a year.
Editor: Aili Vahtla