EMCC European Monitoring Centre on Change

Perceptions of globalisation: attitudes and responses in the EU — Estonia

  • Observatory: EMCC
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  • Published on: 02 March 2008



About
Country:
Estonia
Author:
Epp Kallaste, Liis Roosaar
Institution:

Disclaimer: This information is made available as a service to the public but has not been edited or approved by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

In Estonia the impact of companies’ relocations and off-shoring on employment is not much discussed currently. The labour market situation is discussed mostly in the context of labour shortages. As a consequence to high economic growth, problems related to hiring foreign workers have emerged in Estonia and with labour force emigration as well. In terms of foreign entrepreneurship, there are no specific advantages or disadvantages compared to domestic investors. Establishing subsidiaries is not more difficult for foreign companies than for domestic companies due to Estonia’s liberal economic policy. Foreign investments are encouraged and foreign investors are helped by a special agency Enterprise Estonia. Social partners do not have explicit positions towards specific aspects of globalisation such as relocation and investment decisions. General attitude towards globalisation is rather positive in Estonia.

Government action to prevent or reduce the extent of off-shoring/relocation

Are there any recent examples in your country (i.e. over the past 3-4 years) of the government intervening to prevent particular activities from being relocated abroad or to reduce the scale of this?

Generally the Government of Estonia does not interfere in cases concerning off- shoring/relocation. Enterprise Estonia (Ettevõtluse Arendamise Sihtasutus, EAS) which is one of the largest institutions within the national support system for entrepreneurship in Estonia has confirmed that the government has not taken any steps to prevent relocation or to reduce its scale.

However, the Government has tried to create a favourable climate for entrepreneurship in general, which could make Estonia an attractive place for investors, e.g., in Estonia there is no corporate income tax on reinvested earnings.

If so, please give summary details and indicate the activities concerned

Social partner attitudes towards off-shoring/relocation

Have there been cases over the past 3-4 years where the possibility – or threat – of relocation of production has featured as a factor in collective bargaining?

In Estonia there is no systematic data available on collective agreements’ content and collective bargaining. Existing data do not provide enough information about the contents of agreements. According to the Confederation of Estonian Trade Unions (Eesti Ametiühingute Keskliit, EAKL), relocation has not been mentioned in their member organisations’ collective agreements.

If so, please indicate the cases concerned, how the possibility has been used and whether its use has become a more frequent occurrence.

Are there any cases over the past 3-4 years where trade unions have successfully resisted plans to relocate production abroad or have managed to reduce the extent of this?

No, there is no information on cases where trade unions have successfully resisted plans to relocate production abroad.

One recent case can be described where a trade union resisted but unsuccessfully. In September 2006, Tallink (the leading passenger shipping company on the Baltic Sea) was registering the company’s ships in Latvia for reasons of cost reduction. The Estonian Seamen's Independent Union (Eesti Meremeeste Sõltumatu Ametiühing, EMSA) organised a protest in front of the main office of Tallink. Furthermore, EMSA applied to the Prime Minister of Estonia Mr. Andrus Ansip to ask for governmental support for Estonian shipping in order to retain jobs. Also, a public letter was addressed to Mr. Enn Pant, the CEO of Tallink. However, there was no intervention on the side of the Government and EMSA did not manage to change the decisions of the board of directors.

If so, please indicate the cases concerned and outline their main features Are there any cases where trade unions have accepted the need for the relocation of production – or part of it – abroad as a means of maintaining or improving the viability of companies and so of preserving some jobs and even ultimately expanding them?

No, there is no information on such cases.

If so, please briefly describe the cases concerned

Government policy on foreign-owned firms controlling significant sections of the economy

Does the Government in your country have an explicit policy on restricting the acquisition of domestic companies in certain sectors by foreign-owned firms?

If so, please give summary details and indicate which sectors this applies to as well as whether any distinction is made between companies according to their nationality (e.g. whether non-European companies are treated differently from European ones)

No, the Government of Estonia does not have an explicit policy on restricting the acquisition of domestic companies. On the contrary, the policy is promoting foreign investments and the foreign investors are treated the same way as Estonian companies.

There are some strategic areas (e.g. infrastructure) in which the Government retains ownership instead of privatising to either domestic or foreign companies. But these are deteremined on a case by case basis rather than by an explicit policy. However, in case of privatisation there is no difference made between the domestic and foreign investors (e.g. railway was privatised to foreign owners, but was recently re-nationalised due to problems in operation of railway by the privatising company).

Are there any restrictions on foreign-owned companies setting up branches or subsidiaries in your country either generally or in specific sectors?

Please indicate the sectors concerned and the stated reasons for the restrictions. Please also indicate whether the restriction apply to companies from other parts of the EU as well as from outside

There are no restrictions on foreign-owned companies setting up branches or subsidiaries in general. According to the comments of EAS on the legal system in Estonia, foreign investors have equal rights and obligations to local entrepreneurs. All foreign investors may establish a company in Estonia in the same way as local investors, no special restrictions are made. In addition, foreign investments are protected by domestic law and international agreements. Estonia has concluded treaties for the protection of investments with several countries including the U.S., Germany, France, Finland, Sweden, Norway and Switzerland. Also, agreements on avoiding double taxation have been reached with 32 countries, including the EU countries. In order to facilitate foreign investors’ activities in Estonia, EAS has created a web page (http://www.investinestonia.com/index.php) that provides accurate information on every business oriented aspect that could interest foreign investors.

Are there any sectors of the economy in which the acquisition of a domestic company has not been allowed over the past 3-4 years?

There have been no such restrictions.

If so, please indicate the sectors concerned and the nationality of the foreign companies involved as well as the reasons given for the decision

Social partner responses to the take-over of domestic firms by foreign-owned ones

Have there been any recent cases (i.e. over the past 3-4 years) where trade unions have resisted foreign acquisition of domestic companies explicitly because of the nationality of the company concerned?

No, there is no information of such cases.

If so, please give summary details, indicating whether there is any evidence of different attitudes being shown towards European firms as opposed to companies from outside Europe

Have there been any recent cases (i.e. over the past 3-4 years) where domestic companies have resisted acquisition by a foreign-owned firm on the grounds of its nationality?

There is no information on such cases.

If so, please give summary details, indicating the nationality of the company concerned and whether there is any evidence of European and non-European companies being regarded differently in this regard.

Attitudes to globalisation

Have employers’ associations in your country adopted a stated position as regards the main aspects of globalisation – i.e. outsourcing or the relocation of production abroad and the acquisition of domestic companies by foreign-owned ones?

If so, please give summary details, indicating whether or not the position varies across sectors of the economy

The Estonian Employers' Confederation (Eesti Tööandjate Keskliit, ETTK) has a generally worded position regarding the globalisation. Generally ETTK supports openness of the economy as well as good economic relationships with foreign countries. However, there is no specific position regarding outsourcing, relocation or acquisitions.

Have trade unions in your country adopted a stated position as regards the main aspects of globalisation – i.e. outsourcing or the relocation of production abroad and the acquisition of domestic companies by foreign-owned ones?

If so, please give summary details, indicating whether or not the position varies across sectors of the economy

The Confederation of Estonian Trade Unions (Eesti Ametiühingute Keskliit, EAKL) has not, according to their leader Mr. Harri Taliga, formally decided and stated position as regards the main aspects of globalisation but the actions of the organisation have been based on the following principles:

  • globalisation and relocation of jobs is an objective process;
  • it is pointless to fight against globalisation but the process should be influenced in a way that enables employees to benefit from the situation;
  • low-cost outsourcing for companies from other countries is a phase of development that Estonia should overcome as soon as possible – otherwise Estonia cannot be competitive;
  • Estonia needs high-value jobs in new innovative economic areas – the creation of such jobs should be supported by the Estonian labour market policy that among other tasks should pay attention to education and retraining of employees;
  • foreign owned enterprises are not allowed to apply double standards of working conditions and working relationships that are higher in their home country and lower in Estonia. Estonian law and collective agreements cannot be broken.

*A Eurobarometer survey on globalisation was carried out in 2003 in the EU-15 Member States. This might serve as a useful point of reference for the countries concerned, to see, for example, whether or not national attitudes expressed in the survey are in line with similar surveys which have been conducted nationally. The survey findings are available at:

http://ec.europa.eu/public_opinion/flash/FL151bGlobalisationREPORT.pdf

Have there been any surveys of public opinion in your country over the past 3-4 years on attitudes towards globalisation or on the various dimensions of this (as listed above)?

From the Special Eurobarometer poll on the Future of Europe in 2006 (conducted in Estonia by the poll company EMOR) it appears that Estonians have a rather favourable attitude towards globalisation. While of all respondents in the EU25, 37% regarded globalisation as a good opportunity for national companies due to the opening up of markets; in Estonia over half of the respondents regarded it as a good opportunity (51%). Globalisation was regarded as a threat by 47% of the respondents in EU25, while in Estonia only 27% regarded globalisation as a threat to Estonian companies. Older people are a bit less favourable towards globalisation (among people aged 55 and over, 40% estimated globalisation to be an opportunity to Estonian companies).

There is a competitiveness survey carried out each year since 2001 by the Institute of Economic Research (Konjunktuuriinstituut) in Estonia for the publication of “World Competitiveness Yearbook” made by the Institute for Management Development (IMD) in Lausanne. The survey touches upon the globalisation and aspects of it. The survey is carried out among high- and middle-level managers for measuring non-statistical aspects of economic environment (in 2006 54 managers were interviewed). The managers were asked to assess statements describing the situation in Estonia on a scale from 1 (the most negative in relation to competitiveness) to 6 (the most positive).

The average grade for different aspects of the Government work was 4.28 (in total 40 different aspects were graded e.g. investment support, currency policy, establishment of new companies etc.). The regulations concerning foreign investors’ rights in Estonia to take control over local companies was scored 5.30, indicating that there are not much restrictions made on behalf of the Government. Also the investment support from the Government to foreign investors is found to be attractive in Estonia by managers (score for corresponding statement was 5.06).

High- and middle-level managers scored the general attitude towards globalisation in Estonia by 4.10 (1-negative attitude, 6-positive attitude) indicating rather positive attitude towards globalisation. In general the managers do not feel that Estonian economy is threatened by negative consequences of globalisation. Namely, statement “relocation of industries out of the country threatens your country’s economy” was graded 3.58 (1- threat is greatest, 6 – no threat), threat of relocation of research and development activities on economy was graded 3.43 and services 3.67. Thus even though public opinion towards globalisation is rather positive, the threat of relocation is felt to some extent.

If so, please summarise the main findings of these. Please give a breakdown, where possible, in terms of the characteristics of respondents (e.g. by sex, age, socio-economic group, education level, occupation, sector of employment or region).

Have these surveys made a distinction between the different dimensions of globalisation (as listed above) or have separate surveys been carried out on these dimensions?

No, there are no surveys available on the different dimensions of globalisation.

If so, please summarise the main findings of these as regards:

Where possible, please give a breakdown in each case in terms of the characteristics of respondents (e.g. by sex, age, socio-economic group, education level, occupation, sector of employment or region)

Have these surveys made an explicit distinction between globalisation and the process of European integration, by, for example, distinguishing between relocation of production to other EU Member States and relocation to countries outside the EU or between the take-over of domestic companies by EU-owned firms and take-over by non-EU companies?

No, there are no surveys available.

If so, please give summary details of the differences in response to EU integration as opposed to globalisation.

Commentary

Estonia, with a liberal economic policy and an open economy, is open to both positive and negative influences of globalisation. At the same time, the Government of Estonia has a non-interventionist policy towards entrepreneurship, domestic and foreign investors are treated equally. Thus it seems that globalisation is expected to bring more gains than losses. Also public opinion is rather positive towards globalisation in Estonia.

Nevertheless, the experience of trade unions has indicated that relocation processes may not always be favourable to Estonian employees (see the case of Tallink above). Due to increasing labour costs and economic growth in Estonia, more relocation cases may emerge in pursuit of cheap labour strategy. This requires the state’s attention on labour, training and retraining policies/strategies.

References:

Special Eurobarometer. The Future of Europe. First results: April 2006 [http://www.emor.ee/downloads/general/Eesti EB-tulemused200605.pdf]

EKI, EAS (Eesti Konjunktuuriinstituut, Ettevõtluse Arendamise Sihtasutus), Eesti rahvusvaheline konkurentsivõime 2006. Aastaraamat, Tallinn, 2006.

Epp Kallaste, Liis Roosaar, PRAXIS Center for Policy Studies

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