Estonia: Industrial relations developments in Europe 2007
A national level minimum wage agreement and two sectoral level agreements were concluded in the course of 2007. The exact number of company level agreements is not available. There have been several collectively agreed wage increases as a result of the rapid economic growth; other relevant issues have been working and rest time and occupational health and safety. The most important legislative changes concern the regulation of employee information and consultation issues and the decision of the Supreme Court to ban the dismissal of older workers in public sector.
1. Political developments
In March 2007 government elections were held after which a new coalition government was formed by representatives of the right-wing Reform Party (Eesti Reformierakond), the conservative Pro Patria and Res Publica Union (Isamaa ja Res Publica Liit) and Estonian Social Democrat Party (Eesti Sotsiaaldemokraatlik Erakond).
- social partnership with the new government has not proven to be effective. For example, both the draft Employment Contracts Act and the state budget proposed by the government have been criticised for not being formed in a transparent process and not regarding the opinions of third parties, including the social partners. Also, the Confederation of Estonian Trade Unions (Eesti Ametiühingute Keskliit, EAKL) and the Estonian Employees’ Unions’ Confederation (Teenistujate Ametiliitude Keskorganisatsioon, TALO) have referred that collective bargaining negotiations with the current government have not been effective, moreover there have been no tripartite agreements for some time already.
No local elections were held in 2007.
In the end of 2007 debates were held over the candidates to be appointed to the position of Chancellor of Justice (Õiguskantsler). According to legislation, the Chancellor of Justice is appointed to office by the Riigikogu, the Parliament of Estonia, on the proposal of the President of the Republic for a term of seven years. However in December 2007, the candidate presented by the president did not find support in the Riigikogu. The term of office of the current Chancellor of Justice, Mr Allar Jõks, will end in March 2008. The current Chancellor of Justice has referred to several problems regarding the industrial relations in Estonia (EE0710019I, EE0702049I, EE0701059I, EE0604029I, EE0603019I).
In 2008 the new Chancellor of Justice will be appointed to office; no elections will be held.
2. Collective bargaining developments
Please give details of the number of collective agreements negotiated in 2007 by level (eg national, sectoral, company), compared with numbers of agreements negotiated in 2006. Outline any trends/shifts between levels of bargaining, or changes in bargaining coverage.
There are two sources of information used in order to provide information on the collective agreements negotiated in 2007: 1) the register of collective agreements administrated by Ministry of Social Affairs (Sotsiaalministeerium) which includes only part of the agreements since there is no surveillance system or punishments for violations present; 2) Expert opinions of the trade unions: EAKL and TALO.
As in 2006, in 2007 one national level bipartite agreement for minimum wage for 2008 was concluded between EAKL and Estonian Employers’ Confederation (Eesti Tööandjate Keskliit, ETTK). Estimates on the number of employees being influenced by the agreement vary from 15,000 as estimated by ETTK to 100,000 as indicated by the Estonian Tax and Customs Board (Maksu- ja Tolliamet). According to Statistics Estonia (Statistikaamet) there are 40,000 people receiving minimum wage (EE0712019I).
Also two sectoral level collective agreements were concluded which were discussed in 2006, therefore no sectoral level agreements were concluded last year. A minimum wage agreement was concluded in the health care sector between the government, Estonian Hospitals Association (Eesti Haiglate Liit, EHL), Estonian Nurses Union (Eesti Õdede Liit) and the Federation of Estonian Healthcare Professionals Union (Eesti Tervishoiutöötajate Ametiühingute Liit, ETTAL). Due to disagreements between employee representatives, one group in the sector (mostly doctors) are not covered by the agreement. Still, the minimum wage agreement covers about 88% of the healthcare sector (see also EE0802019Q).
Another collective agreement was concluded in the road transport sector by the Estonian Transport and Road Workers' Trade Union (Eesti Transpordi- ja Teetöötajate Ametiühing, ETTA) and The Union of Estonian Automobile Enterprises (Autoettevõtete liit). The new sectoral level agreement will be valid from 1 February 2008 to 31 December 2009. The agreement prescribes conditions on working and rest time and minimum wages which are extended to the whole sector (EE0801019I).
Most of the collective bargaining is still concluded at enterprise level. However there is no reliable statistics on the number of agreements or coverage on that level. According to the data in the Ministry of Social Affairs, 91 new collective agreements were registered in 2007 compared to 85 in 2006. However, the register includes only part of the agreements and therefore the number of enterprise level collective agreements is most probably higher. For example, as at spring 2007 EAKL had registered 175 valid agreements covering 62,277 employees (compared to 176 agreements with coverage of 65,200 in 2006). In addition, according to EAKL 13% of employees working in the domains covered by them are covered by enterprise level collective agreements.
According to Statistics Estonia, the average wage at third quarter of 2007 was EEK 66.78 (about €4.27 as at 13 December 2007) per hour, i.e. EEK 10,899 per month (€697). In the first three quarters of 2007, the average gross salary increased around 20% compared to the respective quarters in 2006.
As a result of the national level agreement concluded between EAKL and ETTK, the minimum wage increased by nearly 21% to EEK 4,350 (€278) per month from 1 January 2008 compared to EEK 3,600 (€230) in 2007. This is transferred to an hourly minimum wage increase from the current EEK 21.50 (€1.37) to EEK 27 (€1.73). The increase of 21% has been the highest (EE0712019I).
In health care sector the minimum wages of nurses increased by 26% to EEK 52.50 (€ 3.36) per hour and by 21% for caregivers to EEK 29 (€1.85) per hour (EE0702059I). There was no minimum wage agreement for doctors as their representatives did not sign the agreement. However, the minimum wage will increase for all health sector employees from 1 January 2008, despite the presence of collective agreement, including doctors. In road transport sector the minimum wages are increased by 50% on average to EEK 7,060 (€451) for bus drivers and EEK 6,050 (€387) for other drivers.
2007 brought additional wage increase for some occupational groups also. This includes a wage increase for public servants by 42.4% on average (EE0703019I). However, this was not the result of a collective agreement even though negotiations were held previously. Also, the rapid wage increase in public sector is criticised by ETTK who declared that the wage increase in public sector should not exceed private sector in order to maintain flexibility in wages. In addition, a collective agreement increased the minimum wage of skilled workers with a vocational certificate in the metalworking sector to EEK 5,000 per month (€320) and EEK 29.70 (€1.90) per hour.
- 13 December 2007 a Government Regulation on the Requirements of the supervision of drivers’ working, driving and rest time came into effect which regulates the control mechanisms of drivers’ working and rest time. Also, the collective agreement concluded in the road transport sector regulates several working time issues, including some flexibility issues (i.e. the possibility of dividing a working day into several parts). EAKL has referred that the working time reductions have not been an issue in enterprise level collective bargaining. TALO however has indicated that flexibility agreements, in terms of conciliation of work and family life, have been an issue in their collective negotiations, especially among employees working in cultural organisations. ETTK has also turned attention to flexible forms of work by informing their members on the use of different forms of work, including flexible working time arrangements.
According to EAKL, other main themes in collective negotiations in 2007 have been rest time, the relations of employers and trade unions in the company, social guarantees and also working environment. Working conditions and occupational safety have been an issue among the members of TALO who have applied for tax reductions on employees’ health related expenses covered by employers (e.g. use of sports facilities, swimming pool, gym, etc.). However there is no agreement on the subject at present.
3. Legislative developments
On 1 October 2007, a decision by the Supreme Court declared invalid the articles of the Public Service Act that legally permitted the dismissal of public sector employees aged over 65 years based on their age. Similar articles of the Employment Contracts Act affecting private sector employees were changed more than a year ago (EE0710019I, EE0604029I).
After long discussions a new Employee Representative Act came into force on 1 February 2007 which set out conditions for employee information and consultation. With the new system, employers with at least 30 employees are required to inform and consult their workers regardless the presence of trade union representative (EE0701039I). However, EAKL has referred that there have been several problems in putting the requirement into practice and there is no surveillance system or sanctions used for non compliance.
Social Benefits for Disabled Persons Act was changed which created a differentiated benefit system for working age disabled and disabled elderly. The benefit for working age disabled was increased by 30% while the benefit for disabled children and elderly was kept at the same level. Also, a new benefit to compensate expenses of disabled persons in order to work was established. The maximum amount of the benefit is EEK 4000 (€256) per 3 years.
Changes in the Occupational Health and Safety Act were made in order to harmonize regulations with the requirements of the European Council Directive 89/391/EEC. The act regulates more precisely the prevention of work accidents and the responsibilities of employers.
As in 2006, the income tax was decreased gradually from 22% in 2007 to 21% in 2008 and the basic exemption (non-taxable amount) has increased from EEK 2,000 (€128) per month in 2007 to EEK 2,250 (€144) per month. According to the current Income Tax Act, the income tax will be further decreased by 1% each year to the level of 18% in 2011 and the monthly non-taxable amount will be increased by EEK 250 (€16) each year up to EEK 3,000 (€192) in 2011.
4. Organisation and role of the social partners
Elections were held in EAKL for the new governing board for the next 4 years. 6 out of 11 members of the board were re-elected. The chairperson of EAKL has remained the same with the re-election of Mr Harri Taliga for the next 4 years.
The membership levels of trade unions have indicated a general declining trend in Estonia. According to the Estonian Labour Force Surveys, the trade union membership has declined from 14% in 2001 to 8.4% in 2006. The membership of EAKL has also slightly declined: compared to 2006 the membership fell by 302 persons. The main reasons have referred to be collective redundancies in industries with high membership levels (ERM Factsheet). The members of TALO have also referred to declining membership levels, mostly due to the declining number of teachers (the number has fell from 18,278 in 2000 to 15,183 in 2007).
There have been no remarkable changes in the representativeness of ETTK in 2007.
5. Industrial action
According to EAKL, the activity of industrial actions was somewhat lower compared to previous years as there were no legislative changes processed that would concern the basic rights of workers or trade unions. Two smaller strikes/disputes may be pointed out. Firstly, a one hour warning strike was held on 26 October 2007 in five Estonian regions with about 400 bus drivers participating and demanding a minimum wage increase among bus drivers. As an agreement was not reached, a threat of general strike in public transport followed which would have started on 11 December and would not end until a minimum wage agreement is reached. However, the strike was cancelled after the sectoral level agreement was concluded.
Secondly, a picket was held in front of the government building by the Estonian Railworkers’ Trade Union (Eesti Raudteelaste Ametiühing) to draw attention to the problems in the railway sector and protest against the extensive dismissal of employees. According to an Estonian newspaper (Postimees), about 50 workers participated. A small picket was also held by seaport workers for pressuring their employer to conclude a collective agreement, raise the wage levels and turn more attention to occupational health and safety issues.
In addition, there were strike plans and threats in the health sector and one of the biggest textile companies in Estonia, Kreenholm. In both cases the strike was cancelled after a wage agreement was concluded (see EE0702059I on health sector negotiations). However, it has to be noted that Kreenholm is going through significant restructuring. Several activities are closed up and 1,676 employees are laid off in years 2007-2008 (see ERM Factsheet and EE0705029I).
There have been no changes in the regulatory environment. However, the trade unions have continuously pointed out the need to cancel the ban on strikes in public sector (EE0603019I). In 2007, EAKL submitted a respective complaint to ILO Committee on Freedom of Association. In January 2008 the case is still open.
6. Gender pay gap
Please give brief details of any collective bargaining or legislative developments, or social partner initiatives, in 2007 that aim to narrow the pay gap between women and men. This should include information on any action taken by the social partners to implement the provisions on tackling the gender pay gap in the joint “framework of actions on gender equality” adopted in 2005 by the EU-level social partners (EU0509203F).
There are no activities which are directly aimed at decreasing the gender pay gap. EAKL has referred that they have informed their members on the need to fix wage rates for certain jobs or positions which would provide an equal pay for men and women working on same positions. However, they also referred that the pay gap often depends on the variable pay which is not controlled by the collective agreements.
However, there are some changes in the Parental Benefit Act (Vanemahüvitise seadus) which may influence the equal opportunities of women and men on the labour market. In 2007, 100% of previous salary of a parent on parental leave was compensated for 455 days while in 2008 the period is extended to 575 days. In addition, the compensation for 10 days long paternal leave for fathers during mothers’ maternity leave or 2 months after the birth was increased from EEK 66 (EUR 4.2) to 100% of previous salary.
7. Temporary agency work
There is very little information on the extent of temporary agency work in Estonia. A study carried out by Research Centre Klaster and University of Tartu estimated that there are about 2,400 active temporary agency workers in Estonia (EE0711019I). Moreover, EAKL has referred that as the number of temporary agency workers is so small the issue is not high on the agenda of trade unions. Most of the temporary agency workers do not join trade unions due to the temporary character of their work and therefore the trade unions do not have the means to protect the rights of these types of workers.
8. Other relevant developments
In addition to the above mentioned issues, TALO has referred that as there are no fixed terms of social partnership in negotiating with the local governments, the collective negotiations on that level are often delayed and more difficult. Namely, there are constant disputes on whether the associations of trade unions should have the authorization to negotiate on behalf of individual local governments or not.
9. General
9.1 Commentary
According to both EAKL and representatives of TALO, the wage negotiations will most probably remain high on the agenda. There has been a very rapid average increase in wages which, however, has not covered all the employees. EAKL predicts that since the very fast economical growth is slowing down, the negotiations will become more difficult than previously.
Another important issue will be the change of the current Employment Contracts Act which was presented to the public in the beginning of 2008. The draft act met opposition from several parties for reducing the social guarantees and the rights of workers. The draft act will probably be discussed further and amended significantly during 2008, before put in force.
Marre Karu, Kirsti Nurmela, PRAXIS Center for Policy Studies
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