Difficult wage negotiations in healthcare sector

In September 2004, bargaining over a new pay agreement for the Estonian healthcare sector has yet to be completed, despite the involvement of the public conciliator. Wage negotiations in healthcare are often lengthy and unsuccessful. This year, they have assumed particular importance because of fears of a potential large-scale migration of healthcare professionals, with shortages already appearing in some specialisms.

Public sector wages and working conditions in Estonia have attracted attention for several years, as the employees in these sectors are not satisfied with their relatively low wages (EE0405102N). According to the Statistical Office of Estonia (Statistikaamet), wages in healthcare sector and in education are only 81% and 87% respectively of national average wages. While during the last few years wage increases in these sectors have been higher than the increase in the average wage, the wage level is still not regarded as acceptable, as workers in these sectors have a higher educational level, their jobs demand continuous training and renewal of skills, and they have to accept more flexible working time arrangements and working conditions. Comparing the relative wage level in Estonian healthcare and education with that in other EU Member States, it is notable that in the latter countries, by contrast with Estonia, these sectors are usually among the better paid. Therefore, there is a fear in Estonia that many specialists from these sectors will emigrate. There is already a shortage of doctors, nurses and other specialists in the Estonian labour market and the problem is likely to become more acute in the very near future.

The wage negotiation process in healthcare sector is generally lengthy, with the public conciliator becoming involved in most cases and negotiations often ending in failure. The first collective agreement on pay for the healthcare sector was concluded in 1996 and the most recent agreement, concluded in June 2003 (EE0307101N), expired on 30 June 2004. In spring 2003, the negotiations over the new healthcare collective agreement were protracted, and trade union organisations were preparing for warning strikes if their demands on increasing minimum wage rates were not met. Finally in June 2003, unions and the employers’ organisation concluded a pay agreement, laying down minimum wage rates for doctors, nurses and care assistants. The main objective of the deal was to set minimum wages for different categories of worker and to equalise differences in minimum wages between regions and different types of hospitals. According to the agreement, hourly minimum wages were increased by up to EEK 50 for doctors (a 25% increase), EEK 25 for nurses and EEK 16 for care assistants (an 18.5% increase) from July 2003. Until the 2003 settlement, nurses had not had a pay agreement for more than six years, as all wage negotiations had ended in failure.

Parties involved in social dialogue

Employees in healthcare are represented by four trade union organisations:

• the Estonian Medical Association (Eesti Arstide Liit, EAL), which aims to protect the professional and economic interests of doctors, participate in drawing up health policy and improve healthcare in Estonia. EAL has more than 2,600 members;

• the Federation of Estonian Healthcare Professionals Unions (Eesti Tervishoiutöötajate Ametiühingute Liit, ETTAL), which organises doctors, nurses, care assistants, professionals with university degrees and mid-ranking professional staff, kitchen personnel, drivers, cleaners, departmental secretaries, customer service staff and so on. ETTAL has approximately 2,300 members;

• the Estonian Nurses Union (Eesti Õdede Liit, EÕL), which is the largest trade union organisation in the healthcare sector and represents 3,800 nurses; and

• the Trade Union Association of Health Officers of Estonia (Eesti Keskastme Tervishoiutöötajate Kutseliit, EKTK), which organises nurses and other health officers.

There is one employers’ organisation - the Estonian Hospitals Association (Eesti Haiglate Liit, EHL), which represents 19 major hospitals. The government is represented by the Ministry of Social Affairs. The financial resources for the healthcare sector are provided by the Estonian Health Insurance Fund (Eesti Haigekassa).

Financing system

According to the relevant legislation, the whole healthcare system is financed via the Health Insurance Fund, which receives its funding from social security contributions (13% of the payroll, paid by employers). Money for hospitals and other healthcare institutions is provided by the Health Insurance Fund based on agreed reference prices for medical services, plus the negotiated wage level. Hospital managers’ ability to increase wages depends on how much money the Fund contributes in the particular budget year. Wage negotiations are conducted between employers’ representatives (ie hospital managers, through EHL) and representatives of employees (trade unions). Until recently, representatives of the Health Insurance Fund were rather passive in these negotiations. The roles, responsibilities and obligations of the parties are various. Employers’ representatives can conclude collective agreements in principle, but they do not control the financial resources and therefore cannot guarantee the fulfilment of agreements. The Health Insurance Fund - which provides the financial resources - does not have the right to sign collective agreements.

In July 2003, the Health Insurance Fund, in order to guarantee the fulfilment of the new collective agreement, increased the reference prices for medical services and an additional budget of EEK 91 million for the Fund was approved by the government (EE0307101N). The government has been looking for other possibilities to guarantee the wage increase for healthcare professionals. Other sources of financing discussed include the initiation of negotiations with the social partners concerning a prolongation to two days of the waiting period for receipt of benefit for temporary incapacity for work, transferring to the employer the obligation to pay the benefit for the second day, and transferring to the employer the obligation to pay the benefit for two weeks while decreasing their sickness insurance contribution by 1%. The Ministries of Finance and Social Affairs are due to present specific proposals for financing pay rises for healthcare professionals in the near future.

Recent wage negotiations

The most recent wage negotiations in healthcare started in spring 2004 and ended in May with no agreement. The trade unions pay demanded increases in minimum hourly wages of EEK 70 for doctors, EEK 42 for health officers and nurses, and EEK 22.50 for care assistants. They also proposed the idea of concluding a long-term agreement, whereby minimum hourly wages will increase by 25%, 25% and 23% respectively in the coming years. The EHL employers' organisation proposed prolonging the previous agreement (valid until the end of June 2004) until additional funding is provided for wage increases, and extending the agreement to cover the whole healthcare sector (the 2003 agreement was not extended to the whole sector, as EHL claimed that it could not guarantee that all hospitals would apply the new minimum wage rates).

In June 2004, the four trade union organisations called in the public conciliator, as the wage negotiations with EHL had ended in failure. At the beginning of September, EHL stated that the maximum hourly increases it could offer employees were EEK 60 for doctors, EEK 30 for nurses and EEK 18 for care assistants. This would mean a minimum wage increase of 20% for doctors and nurses and only 12.5% for care assistants.

Negotiations assisted by the public conciliator continued through the summer and after lengthy negotiations the public conciliator made a final compromise proposal on 15 September 2004, involving minimum wage increases of EEK 62 an hour for doctors, EEK 32 for nurses and EEK 20 for care assistants. While EHL, ETTAL and EÕL agree with the public conciliator's proposal, EAL and EKTK do not. The latter two trade unions want to ensure additional financing and increased stability in the healthcare sector and have therefore proposed a three-year agreement. In 20 September, the public conciliator was expected to end the conciliation and mediation process, leaving all parties free to take whatever action they choose.

In June 2004, EÕL joined (EE0408102F) a 'strike pact' concluded between four other trade unions (EE0310101N) and at the beginning of September EÕL stated that it is preparing a warning strike if its demands are not met. The other parties to the strike pact declared that they will support the EÕL's demands, and in the event of a strike there will thus be more than 20,000 participants. Further, the Confederation of Estonian Trade Unions (Eesti Ametiühingute Keskliit, EAKL) (EE0308101F) has declared its support for healthcare sector trade unions in their wage negotiations.

Commentary

The main problem in healthcare wage bargaining is that the negotiations are held between representatives of employers (EHL, representing hospital managers) and employees (various trade union organisations), but the financial means for fulfilling these agreements are provided by a government agency, the Health Insurance Fund, whose representatives have until lately not been actively involved in negotiations. Even if the EHL employers’ organisation and trade unions can reach an agreement, the financing system means that the fulfilment of this agreement depends mainly on a party that is not responsible for the fulfilment of the agreement and has not been actively involved in the negotiation process. Therefore, there is need to rethink the roles and responsibilities of the social partners, the involvement of other parties and the process of social dialogue in the healthcare sector. Furthermore, previous negotiations in healthcare sector have shown that the social partners have a different understanding of the negotiation process, and that their levels of preparation, knowledge and negotiating experiences are very different. (Raul Eamets and Kaia Philips, University of Tartu)