The Estonian parliament has approved amendments to the Aliens Act, making it easier for companies to hire highly qualified workers from abroad. The changes take effect from 1 September 2013 and will cut the length of time it takes for a foreign national with specialist knowledge or skills to begin working in Estonia from around three months to one week. Residence permit applications will also be simpler for foreign students. Both employers and unions support the amendments.
Lack of qualified labour
Estonia’s unemployment rate was 10.4% among 15–64 year olds in 2012 and is still relatively high. However, this is of little help to companies that have a shortage of skilled labour because employers and many economic analysts have acknowledged that Estonia has a shortage of qualified specialists. Current legislation deters companies from hiring specialists from other countries because the process is highly bureaucratic and time-consuming. To make the Estonian economy more competitive, it has been decided that the Aliens Act will be amended to make it simpler for highly qualified specialists and students who are not Estonian citizens to obtain residence permits.
Simplified requirements
On 13 June 2013, the parliament approved amendments to the Aliens Act, which will take effect from 1 September 2013. The new regulations mean that the process of hiring foreign specialists will take a week, instead of the three to six months that it currently takes.
At the moment, foreign nationals offered a job in Estonia have first to obtain a long-term visa, and the company hiring them also has to seek permission from the Estonian Unemployment Insurance Fund (EUIF) to hire a non-national.
The new regulations make it possible for a foreign national to begin work as soon as they have a short-term visa and the company hiring them has informed the police and the border guard agency. The employee can then submit an application for a long-term permit to live and work in Estonia and can bring their spouse and any children to live with them while the application is underway. It is hoped that this simpler process will motivate more foreign specialists to move to Estonia with their families.
Employers may only take advantage of these simplified requirements if they pay at least the Estonian average monthly gross wage (€887 in 2012) multiplied by a coefficient of 1.24. The aim of this is to avoid an inflow of cheap labour.
Employers who cannot afford to pay this much, however, will still be able to seek the permission of the EUIF to hire a foreigner without advertising the vacancy first. Currently, employers are required to advertise a vacant job for three weeks and can only seek EUIF permission to hire a non-national if the job is not filled.
Where a foreigner works for more than one employer, only the first employer has an obligation to pay the Estonian average monthly gross wage multiplied by a coefficient of 1.24. However, foreigners working on short-term contracts who are paid less than this will also be given the right to apply for a residence permit.
The new regulations also make it possible for foreign students to work without a permit and stay in Estonia for six months after they have finished their studies if they wish, to try to find a job. Employers will no longer have to seek the EUIF’s permission to hire a non-national, nor pay the minimum wage set out in the new regulations, if they hire a foreign student who has a bachelor’s, master’s or doctoral degree from an Estonian university.
Reactions
Overall, the changes have been welcomed by both employers and trade unions.
The Estonian Trade Union Confederation (EAKL) stated that, by engaging more foreigners, Estonia will hopefully have a better educated workforce and move towards a more productive economy, and this will have a positive effect on the salaries of both national and non-national workers in the country. However, the confederation has also pointed out that Estonia should invest in the development of local specialists and acknowledge their achievements.
Employers welcome the simplified procedures but have criticised the higher-than-average pay requirement. They point out that, although the aim is to prevent an inflow of cheap labour, this level of pay is still not high enough to encourage highly qualified non-national specialists to live and work in Estonia, and they fear that the new regulations might not have the desired outcome.
Liina Osila and Katariina Rebane, PRAXIS Centre for Policy Studies