2003 Annual Review for Estonia

This record reviews 2003's main developments in industrial relations in Estonia.

Political development

A general election was held in March 2003, resulting in the left-of-centre Estonian Centre Party (Eesti Keskerakond) and the right-of-centre Res Publica party (which was founded in December 2001), gaining a roughly equal share of the vote (25%). A new government was formed by Res Publica, the right-wing Reform Party (Reformierakond) and the centrist Estonian People’s Union (Eestimaa Rahvaliit). The former government consisted of the Centre Party and Reform Party. Ene Ergma, the speaker of parliament (the Riigikogu), is from Res Publica and, for the first time in Estonian history, a woman.

Another political milestone in 2003 was the referendum in September on joining the European Union. A majority of the population - 64% - voted in favour of EU membership. Before the referendum, the Confederation of Estonian Trade Unions (Eesti Ametiühingute Keskliit, EAKL) and the Estonian Employers’ Confederation (Eesti Tööandjate Keskliit, ETTK) signed a joint declaration supporting EU accession and called for a vote in favour.

Another noteworthy political event was an intensive debate around a 'national agreement' on Estonia's future development between political parties, non-governmental organisations, the social partners and other bodies. Various individuals and institutions - including the President of the Republic, the government and a group of social scientists - sketched several drafts for such a national agreement. Estonia's first national agreement, prepared with the support of the President, was finally signed on 20 October 2003. The agreement primarily focuses on children and education. The signatory parties regard as a pivotal development goal the target of at least doubling living standards and reducing social inequality considerably by 2015.

Collective bargaining

Two tripartite agreements were concluded national level in November 2003. The first was on the draft of a new Employment Contracts Act (EE0309101N), which entered the parliamentary process at the end of 2003. The second related to increasing minimum non-taxable income. Under this accord, monthly minimum non-taxable income will be increased from EEK 1,000 to EEK 1,400 a month in 2004 and to EEK 2,000 a month by 2006.

Two bipartite agreements between EAKL and ETTK were concluded in 2003: in September on the principles of the draft of the Employment Contracts Act (EE0309101N); and in November on the increase in the minimum wage for 2004 (EE0311101N). Obligatory social insurance payments in respect of work-related accidents and occupational diseases were also under negotiation. However, no agreement was achieved, despite the fact that discussions have been ongoing for many years.

The Estonian Employees’ Unions’ Confederation (Eesti Teenistujate Ametiliitude Keskorganisatsioon, TALO), which covers mainly cultural and education workers, sought to conclude a pay agreement with government in 2003. TALO's main objective was to secure wage increases for employees with higher education working full time in a position demanding higher education and financed from the state budget (EE0311103F). Due to several disagreements relating both to substantial and technical issues, this agreement was not concluded and on 4 December TALO organised a strike (EE0312103F) (see below under 'Industrial action').

There were no particular noteworthy developments relating to branch-level agreements in 2003. There are two such agreements in the Estonia private sector - in transport and in the healthcare sector. The agreement concluded in the transport sector is extended by decree to cover the whole sector. The healthcare sector agreement (EE0307101N) is not usually extended to employees other than those of the Estonian Hospitals Association (Eesti Haiglate Liit, EHL), although in 2002 this agreement was extended to whole sector. As EAKL is very interested in developing its branch-level organisations, an increase in branch-level agreements is expected in the future. Most bargaining is currently conducted at enterprise level (EE0309102F). The overall coverage rate of collective agreements stands at around 28% of the workforce.

Pay

It was agreed that the minimum wage should be increased by 15% in 2004. According to a bipartite agreement between EAKL and ETTK on the principles of increasing the minimum wage (signed in 2001), the minimum wage increases gradually each year, taking it up to 41% of the national average wage by 2008 (EE0311101N).

Increases in minimum rates were also agreed at branch level. In the healthcare sector, the increase was 25% for doctors and 20% for nursing staff (EE0307101N). The agreement for the transport sector sets out the increase in minimum wages for different wage groups from 1 January 2004, according to the growth of the consumer prices index in 2003.

Although a register of collective agreements was created in 2001, it does not give enough information to assess developments in the content of agreements. There is no information on pay or other conditions agreed at enterprise level. In Estonia, pay for the majority of workers is agreed in individual negotiations.

Working time

There were no noteworthy developments or discussions on working time issues in collective bargaining in 2003. According to the Working and Rest Time Act, working time should not exceed eight hours per day and 40 hours per week.

Job security

Job security was discussed at national level during 2003 in the context of the draft of a new Employment Contracts Act (EE0309101N). However, there are no essential differences concerning job security in the new draft compared with the current situation. There is no major change to elements such as the grounds for concluding fixed-term contracts, the reasons for terminating contracts, notice periods and the extent of severance pay.

Since the end of 2002, workers whose employment is terminated by mutual consent are not eligible for unemployment insurance benefit. However, there are concerns that contracts considered to be terminated by mutual agreement are, in reality, often terminated by the employer, but this is concealed in order to hide the fact that redundancies are taking place. Some discussions around this theme have taken place among trade unions, but there have been no significant developments.

Equal opportunities and diversity issues

Equal opportunities and diversity issues do not figure significantly in collective bargaining,. Current legislation on gender equality is widely deemed to be inadequate. In Estonia, business is treated as a 'gender-neutral' area. Important legislative acts concerning gender equality have not yet been adopted and general awareness is not very high (EE0312102F). However, equality of opportunities for women and men in gaining access to the labour market, career advancement, earnings and reconciling work and family life have been identified as one of the aims of current labour market strategy in Estonia.

Training and skills development

Training featured as one of the main themes in collective bargaining at national level in 2003. The target for unions and employers is to abolish taxes on employers’ costs relating to workers’ formal and informal education and training. Currently, these are treated as 'fringe benefits' and taxed as income. This issue will be discussed further in 2004.

Legislative developments

In terms of legislation, debate during 2003 centred on the Parental Benefits Act, eventually promulgated by the President on 19 December. The Act envisages benefit equal to the average wage of the parent (but not less than EEK 2,200 and not more than EEK 15,741 in 2004), for one parent during leave in the year after giving birth.

Tax exemptions for transportation costs between the workplace and a worker’s home had been sought by employers’ organisations, and were written into the Income Tax Act during 2003. In addition, health costs covered by employers can be now tax-exempted if a risk analysis of the workplace is carried out and a occupational health doctor recommends a solution to any problems.

At the beginning of 2003, amendments to the Work Accidents and Occupational Diseases Act were accepted. Accordingly, there is now no need to elect a working environment representative if the number of workers in the enterprise is less than 10. There is only an obligation to consult with workers about occupational health and safety issues in such enterprises. Further, accidents on the way to or from work are no longer considered to be work-related accidents.

Also at the beginning of 2003, changes were made to the Law on Individual Labour Disputes. The amendments introduce the possibility that a dispute can be resolved solely by the leader of a 'dispute committee' if the claims are accepted by the other party. Previously, all disputes had to be settled by the whole committee.

Draft laws on gender equality and social dialogue (see below under 'Employee participation') were debated during the year, but not adopted.

The organisation and role of the social partners

At the end of 2002, EAKL broke off from social dialogue and recalled its representatives from all tripartite bodies. EAKL claimed that the government had not fulfilled agreements concluded earlier, as it had refused to increase non-taxable income and unemployment benefit. EAKL restored its participation on social dialogue after the change of government in spring 2003.

The central organisations of trade unions and employers are restructuring with the aim of being more coherent. For example, EAKL has excluded some organisations which are not strictly considered to be trade unions. In 2003, the Union of Boat Pilots was excluded and the Services and Production Workers Unions’ Association was liquidated. However, the Estonian Nurses Union (Eesti Õdede Liit) joined EAKL. Overall, the number of people belonging to EAKL through branch unions grew in 2003 (EE0308101F).

On the employer side, several branch associations joined or left ETTK. For example the Estonian Business Association (Eesti Suurettevõtjate Assotsiatsioon) left ETTK, as it is more of a 'business leader'-oriented association than one that represents entrepreneurs in general. In total, the number of companies that ETTK represents and the number of employees in these companies stayed virtually unchanged (EE0310102F). According to ETTK’s communication secretary, Kadri Seeder, the target for expansion of membership is public sector companies and agencies.

Commentators believe that it would be helpful to clarify the public sector collective bargaining process. Currently TALO, which organises a wide range of public sector workers, bargains with the government. At the same time, some of its members belong to enterprises in the municipal sector, of which some are directly governed by the government while some are governed by private law. This variety in the enterprises’ ownership makes it very difficult for TALO to define one particular social partner with which to negotiate.

Industrial action

On 4 December, TALO held a one-day strike to support its demands for pay increases for education and culture workers. This was the first real strike since Estonia gained its independence. The main purpose of the strike was to demand wage increases for employees with a higher education working full-time in a position demanding higher education and financed from the state budget (EE0311103F). According to the board of TALO, 18,670 of its members took part in the strike, plus 1,522 employees belonging to member organisations of EAKL (EE0312103F). Several support strikes were also organised on 4 December. After the strike, TALO expected to continue wage negotiations and called for the government, together with other employers, to work out an effective wage policy for the public sector.

In 2003, there were eight collective labour dispute-settlement applications presented to the Public Conciliator. The main reason for disputes was the conclusion of a new collective agreement. According to Merle Aro, the secretary of the Public Conciliator's Office, the main focus of these agreements was pay, although it is difficult to say whether labour disputes arise from pay issues or from the collective agreement itself.

In September 2003, three major trade unions in the transportation sector signed a joint strike pact which will make it possible for them to organise wide-ranging industrial action across the whole sector. The three union organisations involved have a total of more than 8,000 members and a combined strike fund of around EEK 5 million. The full scope of the pact extends to around 12,000 workers in aviation, shipping, railway, bus and road transport (EE0310101N).

Employee participation

Employee information and consultation rights are currently enshrined in several laws, such as the Law on Trade Unions and the Law on Occupational Health and Safety. As Estonia needs to bring its legislation into line with the EU law, it must transpose the 1994 Directive on European Works Councils (EWCs) (94/45/EC), the 2002 Directive on national information and consultation rules (2002/14/EC) (EU0204207F) and the 2001 Directive on employee involvement linked to the European Company Statute (ECS) (2001/86/EC) (EU0206202F). In this context, tripartite discussions on a draft Social Dialogue Act, drawn up by the Ministry of Social Affairs, started in 2003 (EE0403101F). The proposed legislation would lay down general principles for employee information and consultation, with the general aim of advancing the social dialogue between employers and employees. However, trade unions and employers' organisations had major criticisms of the proposals, and the Act had not been adopted by the end of the year.

Stress at work

The issue of stress at work did not feature in collective negotiations in 2003 and no particular legislative developments occurred. According to a 2002 study (Working Life Barometer in the Baltic Countries 2002, Juha Antila and Pekka Ylöstalo) 33% of employees claimed that work intensity was too high and 38% that mental stress had increased during the past year. According to statistics from the Labour Inspectorate (Tööinspektsioon), 'overload', caused by psychological factors, is the second-largest cause of occupational diseases after illnesses related to vibration.

A development plan for occupational health, which will run until 2007, was prepared in 2003. The plan sketches out the activities needed for creating a comprehensive occupational health and services system. In the plan, it is stated that the capacity to work is crucially dependent on stress. According to the draft of the plan, measures to reduce stress and psycho-emotional stress factors in the work environment will be developed in 2004.

Undeclared work

According to the Estonian Institute of Economic Research (Eesti Konjunktuuriinstituut, EKI), 13% of employees received wages which were paid totally or partly without taxes in 2002. This problem is acknowledged by all labour market parties, as it creates unfair competitive advantages for some companies, leaves some workers without social guarantees, harms tax discipline and reduces income for the state. On the initiative of EAKL, a round table of trade union and employers’ representatives and officials from the Tax Board (Maksuamet) and the Labour Inspectorate was held in November 2003. Under discussion were the possibilities of reducing the payment of undeclared wages and strengthening control mechanisms for the implementation of the relevant laws and regulations (EE0312101N).

At the end of 2003, the Ministry of Social Affairs (Sotsiaalministeerium) started an advertising campaign to promote official and written employment contracts. The campaign was targeted at employers, as they are seen as the stronger party in the employment relationship. The campaign focused on the mutual benefit of official contracts, which give security to both parties. The campaign ended with a major conference on labour market issues in November 2003.

New forms of work

Temporary agency working has emerged in Estonia only recently and there are as yet no statistics available on the incidence of this type of work. There has not been much discussion about this issue and no specific legislation has been developed. Neither were there any significant developments or discussions on other new forms of work in 2003. According to the Working Life Barometer in the Baltic Countries 2002 cited above, fixed-term contracts applied to 23% of employees and around 9% of employees were teleworking in 2002. According to the Eurostat labour force survey, 6.7% of the workforce worked part time in 2002

Outlook

Several legislative developments will be of importance in 2004, including the draft Gender Equality Act, which was approved by the government at the beginning of January 2004. However, ETTK did not approve the draft, believing that it would inhibit the activity of employers and business in a substantial way by establishing an unjustified number of additional obligations for the employer (EE0312102F).

In addition, the issues of taxation of vocational and informal education/training and the principles of indemnification of the expenses of accidents at work and occupational diseases will be discussed in 2004 at meetings between the social partners. The information and consultation of employees will be discussed more intensely as Estonia joins the EU on 1 May 2004 and compliance with EU Directives must be ensured. A solution to the long-standing problem of work accidents remains to be found. Finally, the unresolved dispute between TALO and the government is likely to surface again in 2004. (Epp Kallaste, Kaia Philips and Raul Eamets, University of Tartu)