Estonia: Latest developments in working life Q2 2019

Pay rise demands and industrial action in the academic sector, the employment crisis in Ida-Viru County and new requirements surrounding the submission of data to the employment register are the main topics of interest in this article. This country update reports on the latest developments in working life in Estonia in the second quarter of 2019.

New academic trade union strikes over pay

After a busy first quarter, [1] the Council of Academic Trade Unions (Akadeemiliste Ametiühingute Nõukogu) continued to be very active in the second quarter of 2019.

In May, the trade union presented its draft collective agreement to the employer organisation Universities Estonia. The trade union is demanding a pay rise of 30% or at least €350 per month for all employees, on the grounds that their pay has remained the same or been increased much more slowly than for other employees in the public and private sector. The trade union also wishes to regulate the length of paid holidays through the collective agreement, requesting 35–56 days of annual leave depending on the specificities of the job.

According to the trade union, the main reason for the standoff regarding the pay level is that less than 0.5% of Estonia’s GDP is being used to finance the research and science field through the state budget, despite the fact that in the relevant government strategy it was agreed that the level would be 1%. In December 2018, an agreement was signed stating that the government would increase the financing over the next three years to achieve this goal (which is a prerequisite for pay rises). However, on 29 April 2019, the new government overturned this agreement and stated that it would not increase the public financing.

In response, the trade union organised an hour-long warning strike in June and promised to organise other industrial actions until the government was willing to change its stance and make pay increases in the sector a possibility again.

Employment crisis in energy sector

So far this year, 450 people have been laid off or not had their temporary employment contracts renewed in the energy sector in Ida-Viru County, Estonia. At the beginning of June, it was announced that up to 1,300 employees would be subject to furlough (a set period during which an employee does not report to work or receive a wage but maintains their job) during the summer. If the situation does not improve, a further 450–500 employees could be laid off by the end of 2019, leaving around 1,000 employees unemployed.

The reason behind the current crisis is a sharp decline in Estonia’s electricity production. This is due to the recent increase in the price of carbon emission quotas and electricity from Russia and Belarus, which is exempt from EU carbon dioxide emissions fees, flooding the market.

In June, the trade unions declared that the government must intervene and support the affected employees in order to avoid a social catastrophe, especially as the region already has the highest unemployment rate in Estonia. The topic was also discussed in the framework of the tripartite meetings between the government, trade unions and employer organisations at the end of June.

As the region has always been vulnerable in terms of employment, the government has granted around €50 million since 2014 to regional support measures and development programmes, resulting in 500 new jobs. In the light of the current crisis, an additional €1.6 million was granted to the programme, so that the 2019–2023 budget is now €20.2 million.

The Estonian Unemployment Insurance Fund (EUIF) is prepared to offer support to the affected employees. This includes retraining, as the region has plenty of vacancies (although at a lower wage level), but most of them require specific skills. The Ministry of Social Affairs has announced that if the EUIF support is not sufficient, the ministry will apply for additional support from the European Globalisation Adjustment Fund (EGF). This was last used in the region in 2016, when 1,500 workers lost their jobs.

Employers rebuff new criteria for employment register

In 2014, the employment register was created to tackle undeclared work. All legal and natural persons who provide work are required to register their employees, including volunteers, irrespective of the form or the length of their employment contract. [2]

As of 1 June 2019, new information must also be stored in the registry – the specific job title and the address of the location where the work is mainly performed. The purpose of the new requirement is to collect more specific data about jobs and occupations in order to generate better employment statistics, develop regional policy (such as planning new public transport routes and the location of services) and feed into the plan to organise a population census in 2021 based on registries only, without using face-to-face interviews.

The new requirement regarding the location of employees has been criticised by employer organisations. In their official opinion given during the parliamentary readings, the Estonian Employers’ Confederation (ETTK) did not support the changes, stating that they would imply an increase in administrative burden and no change in terms of data quality. The latter opinion stems from the fact that for remote workers and those working abroad, the main location should be the address of the main office of the employer (according to the guidelines). However, this results in false information being provided about the jobs and mobility patterns of the employees.

Outlook

In the coming months, several topics will be in focus. Firstly, the new government plans to change the funded pension scheme by allowing people to opt out of the mandatory second pillar. Secondly, the peak-level social partners have begun negotiations over the national minimum wage for 2020, which should result in an agreement before the end of the year. Thirdly, there are likely to be further developments regarding the sector-level collective bargaining highlighted in this report during the third and fourth quarters of 2019.


Footnotes

  1. ^ Eurofound (2019), Estonia: Latest developments in working life Q1 2019 .
  2. ^ Eurofound (2015), Estonia: Employment register to tackle undeclared work .

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