In the second half of 2005, the Estonian government and the EAKL trade union confederation have been negotiating over the pay of civil servants. Both parties have stated that the salary system for civil servants is outdated and that new principles need to be worked out for the system. In recent years, the government and EAKL have reached no pay agreements and the government has increased the salary rates of different civil servants selectively. Several civil service trade unions have organised protest actions in support of their demands.
Estonia's public administration and defence sector has almost 37,000 employees. According to the Statistical Office of Estonia, (Eesti Statistikaamet, ESA), the pay of civil servants is almost at the same level as the average wage of workers of foreign firms operating in Estonia and, on average, the wages of public servants are higher than the national average wage. However, according to Kalle Liivamägi, chair of the Trade Unions of State and Self-government Institutions Workers (Riigi- ja Omavalitsusasutuste Töötajate Ametiühingute Liit, ROTAL), the highest and lowest wages among public servants differ by a factor of about 15. In some occupations -such as police, rescue service, prison and customs officers - the wage levels are lower than the national average wage and there is shortage of labour. In several cases, actual earned wages can be somewhat higher, but this results from a high level of overtime working. Many civil servants choose to work overtime in order to to earn an acceptable wage, which could not be achieved on the basis of normal working hours.
An important factor in the wide wage differentials among civil servants is thought to be an untransparent supplementary benefits system, which results in extra payments for those in high ranking positions. According to Mr Liivamägi, the basic wage should constitute 60%-70% of civil servants' total remuneration, but on average supplementary benefits constitute two-thirds of the total remuneration of higher officials.
Legislative background
The Public Service Act (which entered into force in January 1996) regulates employment relationships in: the public service - ie employment in a state or local government administrative agency; and in state offices - ie employment in an elected or appointed position at institutions exercising legislative, executive or juridical power, state supervision, control or national defence.
Work in the public service is paid according to the salary scale and rates established by the law (for central state public servants) or by the local government council (for the public servants of local government administrative agencies). Pay in the public service consists of the basic salary together with additional remuneration. Additional remuneration is paid to public servants for:
- years of service - 5% of the salary rate for five years of service, 10% for 10-15 years, and 15% for 15 or more years;
- possession of an academic degree - a master’s degree gives an additional payment of 10% of the salary, and a doctor’s degree or equivalent 20%;
- knowledge of foreign languages - for the third and every additional foreign language, if it is used at work, there is an extra payment of 10% of the salary, but this may not exceed a total of 30%; and
- work in a position that has access to state secrets - the additional remuneration is up to 50% of the salary.
As well as these various possibilities to receive additional remuneration, public servants also have other benefits:
- a basic annual leave entitlement of 35 calendar days. Public servants are also granted one additional day for the third and each subsequent year of service, up to a maximum of 10 calendar days;
- a holiday benefit of up to one month’s salary, in connection with their basic annual leave entitlement;
- study loans secured by the state and written off using the funds in the state budget;
- study leave with pay for up to three months once every five years for professional development; and
- a state old-age pension whose value increases by 10% for 10-15 years of service, 20% for 16-20 years of service, 25% for 21-25 years of service, 40% for 26-30 years of service and 50% for more than 30 years of service.
Wage negotiations for 2006
On 27 June 2005, the Confederation of Estonian Trade Unions (Eesti Ametiühingute Keskliit, EAKL) (EE0308101F) and the government started bipartite negotiations over pay conditions for civil servants for 2006. EAKL’s aim is to achieve a 50% of pay increase for 2006 and to make the pay system more transparent. Harri Taliga, the chair of EAKL, states that this demand is justified, as the most recent increase in all the salary groups was in 2001. He argues that wages should increase by at least 9%, which is in accordance with economic growth and the increase in the consumer prices index.
In recent years, the government and EAKL have not reached any civil service pay agreements, as the government has rejected union demands and has increased the salary rates of different civil servants selectively (EE0405102N).
Mr. Taliga also describes the current salary system as totally untransparent, as various bonuses are added to very low level of basic salary to increase the pay level. According to their salary grade, the basic monthly salary of public servants can range from EEK 2,690 to EEK 12,500, and this amount very often forms a minor share of the total salary. An extreme example is the manager of the Tax and Customs Board (Tolli- ja Maksuamet), whose basic monthly salary is EEK 12,000, but whose various supplementary bonuses total EEK 68,000 per month.
Both unions and the government have stated that the salary system of civil servants is outdated and that there is need to work out new principles for the system. The Estonian Employers’ Confederation (Eesti Tööandjate Keskliit, ETTK) (EE0310102F) has also been very negative about the salary system and supplementary benefits of public officials, arguing that growing bureaucracy and the extensive costs of the public sector are restraining the development of the Estonian economy.
In April 2004, the government launched discussions over a new concept document for developing the public service, which included revision of the pay system. In the present negotiations, EAKL proposes to decrease the number of salary groups, as on the differences between the lower levels of salary grade are minimal, and to reduce the relative importance of the supplementary benefits.
Union demands and protest actions
The ROTAL union has sent several memoranda to the Prime Minister and government, and also to the global federation of public sector trade unions, Public Services International (PSI), in connection with the salary system of civil servants in Estonia, which it sees as unjustified. ROTAL also states that:
- government decisions taken in December 2004 that determine the conditions of payments for civil servants, were not agreed with ROTAL. The union argues that this undermines the development of social dialogue in Estonia; and
- the government has not implemented an agreement on wages, signed on 21 December 2004, in which the parties agreed to establish minimum wages for certain categories of workers. Since 1 January 2005, the minimum monthly pay should, for example be EEK 3,500 for assistants to tutors, EEK 5,000 for senior tutors in children’s homes and EEK 4,000 for social workers in homes for elderly people. However, the government has not implemented the agreement, referring to a shortage of financial resources.
On 15 September 2005, the Federation of Estonian Customs Officers’ Trade Unions (Eesti Tolliametnike Ametiühingute Liit, ETAL) (EE0406101N) and other civil servants held a demonstration in front of the government buildings. The customs officers demanded that the average monthly salary of custom officers should be EEK 14,000 and the share of basic salary should rise to 70%-80% of the total remuneration. According to the law on border service and police employees, each year of service worked by frontier guards and police officers during the 1990-4 period is considered as three years. This is connected with the extremely hard work during those years to protect the borders of Estonia. At the same time, the employment conditions of custom workers who worked on the border together with police and frontier guards during these years were unchanged, though it was initially planned to bring them into line with frontier guards and police officers.
Commentary
EAKL and ROTAL have sent several declarations and protest notes to different domestic and international organisations, and have been active in organising demonstrations and pickets. So far these actions have had no influence on the government’s attitude. It may be argued that trade unions are not very strong in the public administration sector and this allows the government to ignore their demands.
According to Estonian legislation, EAKL and other public servants’ trade union organisations have no legal tools to bring pressure on the government in the collective bargaining process, as civil servants do not have the right to strike (EE0412103F). Trade unions have proposed changes to the law, arguing that, while there should be limits, all workers working in public services should not prohibited from striking. Controversy over the issue has mounted since 2004. On several occasions, EAKL has failed to agree on a draft of Amendment Act of the Collective Labour Dispute Resolution Act and the acts related to it, as it believes that the draft restricts the right to strike. (Kaia Philips and Raul Eamets, University of Tartu)