Government presents new draft labour law

For several years, the government and social partners have aimed to modernise labour law as they consider the current Employment Contracts Act to be outdated. At the beginning of 2008, a new draft version of this act was presented to the public. The draft received strong opposition from trade unions and social democrats, who argue that its content will decrease the social security of employees.

Previous attempts to change labour legislation

The current Employment Contracts Act (Töölepingu seadus) has been in effect since 1992. For several years, the social partners and labour market experts have argued that the act is outdated and in need of modernisation – for example, in terms of regulating new forms of work or the implementation of the flexicurity approach. In August 2003, a version of the draft Employment Contracts Act was discussed by the central trade unions and employer organisations, but differing views emerged (EE0309101N) and the draft was not presented to parliament for further discussion (EE0405103F) before 2004. In 2005, the draft act was abandoned when a new government was formed which had different views on modernising labour law.

New attempts to modernise labour law

In January 2008, a new version of the draft Employment Contracts Act was presented, drawn up by experts from the Ministry of Social Affairs (Sotsiaalministeerium) with the assistance of experts from the Ministry of Justice (Justiitsministeerium). The new draft act aims to implement the flexicurity approach, coordinating labour law and private law, and making the legislative framework more transparent. In this way, the new draft act aims to regulate new forms of work – such as temporary agency work or telework – reducing the administrative burden, increasing flexibility in the labour market, increasing the social protection of the most vulnerable groups of workers and improving workers’ adaptability to structural changes.

Draft act mostly criticised

Since the draft act was presented to the public on 9 January 2008, the social partners and labour market experts have criticised it, since they were not involved in the discussions leading to its creation. Although some issues on modernising labour law were discussed during 2007, the social partners did not receive feedback from the government on their proposals.

The content of the draft act has also been strongly criticised by other various actors in the field. The Confederation of Estonian Trade Unions (Eesti Ametiühingute Keskliit, EAKL) has commented that the current situation – in terms of the problems posed by the current legislation – has not been sufficiently analysed in order to proceed with labour law modernisation. In addition, the draft has been criticised as being too complicated and confusing for the average worker to understand, which may lead to false interpretations of its content. On 28 January 2008, EAKL organised a demonstration outside the offices of the Ministry of Social Affairs in order to express discontent with the draft act. Furthermore, at a press conference, EAKL pointed out the confusing points of the draft act and put forward their arguments in relation to these aspects.

The Estonian Social Democratic Party (Sotsiaaldemokraatlik Erakond, SDE) argues that the draft act reduces the social protection of employees as it is not in accordance with the principles of flexicurity. According to SDE, flexibility and security should be better balanced. The party has proposed that a tripartite agreement should be reached with the various social partners in order to modernise labour law.

The Estonian Employers’ Confederation (Eesti Tööandjate Keskliit, ETTK) supports the draft act and the flexibility mechanisms it has proposed.

ETTK and EAKL started bipartite negotiations in February 2008 in an effort to reach agreement on the labour law modernisation. Tripartite meetings with the Ministry of Social Affairs have also been initiated at which the social partners can submit their proposals and discuss the points of disagreement. The parties aim to reach an initial version of an agreement by the end of March 2008.

Implementation of flexicurity approach

Labour market experts have indicated that the government approach does not present a balance between the four pillars of flexicurity: flexibility, social security, lifelong learning and active labour market policies. Various experts, including Reelika Leetmaa of the PRAXIS Centre for Policy Studies, Tairi Rõõm from the Bank of Estonia and Raul Eamets from the University of Tartu, have commented on the issue in Estonian daily newspapers. These experts concluded that implementing the flexicurity approach should address all four of the abovementioned pillars of flexicurity simultaneously and include clear goals for every aspect on modernising labour law.

Analysis has indicated that despite the relatively strict regulation, the mobility of labour between jobs in Estonia is one of the highest among European countries. This suggests that, in reality, the labour market is much more flexible than regulations indicate. This could be due to poor enforcement of labour law. At the same time, social protection during unemployment is relatively low due to both the low income replacement rate of unemployment benefits (EE0707029I) and poor coverage of the system compared with other countries. Moreover, Estonia is characterised by a low level of expenses on active labour market policies (0.11% of gross domestic product in 2006) and participation in lifelong learning (with 6.5% of 25–64 year-olds participating in training in 2006).

Kirsti Nurmela, PRAXIS Centre for Policy Studies

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