Estonia: Latest working life developments - Q3 2016

A new three-year sectoral collective agreement for bus drivers, concerns about transposition of the Enforcement Directive, and social policy reforms are the main topics of interest in this article. This country update reports on the latest developments in working life in Estonia in the third quarter of 2016.

Sectoral-level collective bargaining

In Estonia, sectoral-level agreements are concluded only in the transport and healthcare sectors. The negotiations in the transport sector started in the spring and resulted in a collective agreement in September, when the Union of Estonian Automobile Enterprises ((Autoettevõtete Liit)  and the Estonian Transport and Road Workers Trade Union (ETTA) concluded a three-year agreement setting new minimum wage levels for all bus drivers. By 2019, the current minimum monthly wage of €800 and the minimum hourly wage of €3.20 will have increased year-on-year to €945 and €4 respectively. Negotiations in the healthcare sector started in January but, after a one-hour warning strike in September, are being mediated by the National Conciliator.

Amendments to legislation in process

In September, the Ministry of Social Affairs consulted stakeholders on a bill to strengthen the role of labour dispute committees, to take effect from 1 July 2017. Proposed changes include enabling the committee to deal with:

  • issues related to working conditions (for example, health and safety at work);
  • issues arising from a collective agreement;
  • financial claims exceeding €10,000 (instead of being dealt with by the courts).

Amendments to the Working Conditions of Employees Posted to Estonia Act, which were necessary for the transposition into Estonian law of the Enforcement Directive (2014/67/EU), were passed at their first reading in Parliament.

The European Commission announced that, despite the opposition of 11 Member States, it will continue with its proposals to revise the directive. The Estonian Employers’ Confederation (ETKL) continues to oppose the Directive and the amendments to Estonia’s Act on posted workers, arguing that it hampers free movement of services and workers and increases employers’ administrative burden. The parliament’s European Union Affairs Committee (ELAK) also expressed its disappointment with the European Commission’s announcement. A spokesperson for ELAK echoed the employers’ concerns, but also criticised the European Commission for not thoroughly discussing the issue with Member States.

Reforms in social policy

In August 2016, the Ministry of Social Affairs announced it would present amendments to the system of parental leave and parental benefits to the government in autumn 2016. The plan is to increase the flexibility of the system in order to:

  • promote and increase the participation of fathers in childcare;
  • encourage women to stay in the labour market;
  • better reconcile work and family life;
  • allow parents to work while also receiving (partial) parental benefit.

Estonia’s current system is quite generous, as parental leave can be taken for up to three years and parental benefit is paid for up to 1.5 years.

In September, the government discussed the sustainability of the pension system in the context of an increase in the number of older people and a decline in the number of people of working age in the population. The official retirement age is currently 63, but it will increase to 65 by 2026. The Ministry of Social Affairs has proposed increasing the retirement age to 70 by 2040 and then tying it to a person’s life expectancy. At the same time, it also proposed cutting the link between the size of a person’s wage and their state pension and, instead, linking it to the number of years worked, so that the inequality in wages (including the gender wage gap) would not be reflected in people’s pensions. This caused heated discussions. The Estonian Trade Union Confederation (EAKL) pointed out the need to improve health and safety at work as well as opportunities for lifelong learning before raising the retirement age, so that older people would be able to continue to work. However, no decisions have yet been made.

The government is also continuing with the reform of special pensions for particular workers, as the current system burdens the pension system and is considered unfair on other pensioners. In September it was decided that, as of 2020, the special pensions for police officers and officials, prosecutors, defence forces and rescue workers would be abolished. It is also planned to abolish special retirement regimes for workers in arduous or hazardous jobs.

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