The development and current situation of employers’ organisations
Estonia has one central employers' organisation which is recognised by trade unions and the government as a social partner - the Estonian Employers’ Confederation (ETTK). ETTK represents around 1,500 enterprises/establishments, employing around 145,000 workers, and engages in tripartite and bipartite negotiations at national level. Outside ETTK, there are three other employers'/business organisations recognised by the government, but they do not define themselves as social partners and are not accepted as such by either trade unions or the government. This article examines the development of employers' organisations and their current situation in 2003.
In this feature, we trace the development of employers' organisations in Estonia since independence in 1991 and examine their current organisation and structure.
On 29 November 1991, associations representing businesses in various branches of industry established the Estonian Confederation of Industry (Eesti Tööstuse Keskliit, ETKEL), which in 1992 began to represent employers in social partnership processes. On 4 May 1995, ETKEL was reorganised into the Estonian Confederation of Industry and Employers (Eesti Tööstuse ja Tööandjate Keskliit, ETTK). As a consequence, and with the aim of protecting the common interests of employers, the major employers' bodies for transport and other 'infrastructural' sectors - such as the Union of Automobile Enterprises, the Association of Shipowners, Estonian Railways, Estonian Energy and the Agricultural Producers’ Central Union - joined ETTK. On 20 November 1995, employers' associations in service sectors formed a second confederation – the Estonian Confederation of Employers' Organisations (Eesti Tööandjate Ühenduste Keskliit, ETÜKL). ETTK and ETÜKL recognised each other as independent associations of employers, established constructive cooperation and participated together in tripartite negotiations with the other social partners.
In the first half of 1997, the boards of ETTK and ETÜKL took the position - based on recommendations from the International Organisation of Employers (IOE) - that in order to protect more effectively the common interests and views of employers, the two employers’ organisations should merge. Negotiations began in September 1997 and ended on 29 November 1997 with the establishment of one central organisation of employers – the Estonian Confederation of Employers and Industry (Eesti Tööandjate ja Tööstuse Keskliit, ETTK). The reasons for the merger of the two organisations were to: increase competitiveness in the market; allow for greater influence on the authorities; and achieve greater visibility and a louder voice in society. A merged confederation was also considered to be more effective from the point of view of costs, communication and staffing. Since 1997, ETTK has on several occasions reviewed its tasks and restructured itself to gain greater visibility. In August 2001, ETTK changed its name to the Estonian Employers’ Confederation (Eesti Tööandjate Keskliit, although it was decided to keep the former abbreviation of ETTK).
In the terms of social dialogue, ETTK is now the only central organisation of employers in Estonia. ETTK is a non-profit independent umbrella organisation of employers’ organisations, based on voluntary membership by employers. ETTK is acknowledged by the government and trade unions as a social partner and participates in tripartite and bipartite negotiations and structures. There are no legally-defined representativeness criteria for either trade unions or employers’ organisations, with mutual recognition between organisations being the precondition for social dialogue and for signing collective agreements. Historically, ETTK on the employers’ side and the Confederation of Estonian Trade Unions (Eesti Ametiühingute Keskliit, EAKL) and Estonian Employees’ Unions’ Confederation (Teenistujate Ametiliitude Keskorganisatsioon, TALO) on the trade unions’ side (EE0308101F) have accepted each other as social partners at national level.
Besides ETTK, there are three other employers’ and entrepreneurs’ organisations recognised by the government, but as having specific tasks. These organisations have not defined themselves in their constitutions as social partners and they are not accepted by trade unions as such. The three organisations are:
- the Estonian Chamber of Commerce and Industry (Eesti Kaubandus-Tööstuskoda), which was established in 1925 as a 'public law chamber' and has been a member of the International Chamber of Commerce (ICC) since 1927. After being closed down by the Soviet occupation in 1940, the organisation was re-established in 1989 in order to promote a favourable business climate for switching to the market economy. Today the Chamber is the largest business association in Estonia. Its membership in August 2003 comprised around 3,340 companies, including the majority of large enterprises (mainly from the textiles, metalworking, timber, construction and food industries). The majority of the Chamber's membership nevertheless represents small and medium-sized enterprises (SMEs);
- the Estonian Business Association (Eesti Suurettevõtjate Assotsiatsioon, ESEA), which was established in 1996. The ESEA is a leading partner of the Ministry of Economic Affairs and Communication (Majandus- ja Kommunikatsiooniministeerium) and is involved in dialogue on various aspects of the economy (investment policy, exports, conditions for entrepreneurship etc), but also to a certain extent in areas such as labour policy, vocational training and pension reform. ESEA has around 40 members, most of which are large companies; and
- the Estonian Association of Small and Medium Enterprises (Eesti Väike- ja Keskmiste Ettevõtjate Assotsiatsioon, EVEA), which was established in 1988 as a non-profit organisation, based on voluntary membership by entrepreneurs and SMEs. The main task of EVEA is to promote entrepreneurship in its broader context. It provides consultancy services in many fields of entrepreneurship, such as accounting, legal issues and state support programmes, and information about potential financial resources abroad and foreign trade conditions. In 1997, EVEA became a member of ETTK for all matters related to social dialogue. However, at the end of 2001, EVEA split from ETTK. In 2003, EVEA groups more than 200 enterprises.
Several issues related to economic policy have been discussed between the government and employers’ and entrepreneurs’ organisations, including the priorities for Estonian economic growth, industrial policy and tax policy affecting entrepreneurship. In summer 1999, the government and the abovementioned four employers’ organisations signed a memorandum whereby the government granted entrepreneurial organisations the right to participate in the boards and surveillance of strategically important enterprises. The memorandum also highlighted the need to apply to a greater extent principles of democratic participation in the improvement of the entrepreneurial environment and in directing the state and the economy, as well as calling for mutual exchange of information, and consultation and participation in decision-making.
The Estonian Employers’ Confederation
The membership of ETTK includes both branch associations in different sectors of industry, such as construction, trade and services, and major individual companies. In 2003, ETTK represents 32 branch organisations and 33 individual large enterprises. In total, 1,513 enterprises/establishments were represented by ETTK in October 2003. However, this number does not include farming businesses, which are members of ETTK through the Estonian Farmers’ Federation (Eestimaa Talupidajate Keskliit, ETKL). Around 145,000 people (including farm workers) are employed by all firms which are direct or indirect members of ETTK. In total, ETTK's members employ 35% of all private sector employees.
Between 2001 and 2002, the number of companies/establishments affiliated to ETTK fell from 1,764 to 1,437 - a drop connected with the separation of EVEA from ETTK at the end of 2001 (see above). However, as EVEA represents mainly small enterprises, its departure did not greatly affect the number of employees covered by ETTK, which indeed rose from 138,221 to 141,712.
According to ETTK’s communication secretary, Kadri Seeder, the confederation sees potential members among both large and small firms. According to the Statistical Office of Estonia, there are around 200 enterprises with more than 200 employees, of which over 100 already belong to ETTK, with the remainder seen as potential members in the future. Similarly, around half of all enterprises with over 100 employees belong to ETTK and the other half are seen as potential members. However, the main group of potential members consists of small enterprises. ETTK's goal is that by the end of 2003 its affiliates will employ at least 200,000 workers.
Members of ETTK retain full independence in their activities, and none of ETTK's bodies has the right to interfere to the activity of its members.
Tasks and responsibilities
The aim of ETTK is the same as that of employers’ organisations almost everywhere – to create a climate for business in the country which is as favourable as possible. ETTK's programme for 2001-3 states that all legislation concerning employers and entrepreneurs should be drawn up in cooperation with its branch organisations. ETTK's stated mission is to raise the competitiveness of the Estonian economy by improving the economic environment and providing social stability. The main objectives of ETTK are to:
- represent members in relations with the legislative and executive authorities and the representatives of employees;
- defend the rights of its members; and
- represent member organisations both in Estonia and abroad.
The members of ETTK can participate in the work of the organisation through its democratically elected management structures, and also various commissions and working groups. They have the possibility, through ETTK, of helping to develop a favourable business environment via participation in the legislative process, primarily in terms of the preparation of laws covering labour or tax issues, for example.
In early 1996, ETTK forwarded proposals on the resolution of economic and social problems to the then Prime Minister, Tiit Vähi. The proposals had been prepared on the basis of a survey of ETTK’s members and including suggestions on the development of industrial policy and the main economic and social problems and their solutions. This was the first serious attempt by businesses to express their opinions in the area of economic policy. Today, ETTK’s main activities are in the social, labour and economic spheres. It is involved through various channels in shaping:
- national employment and labour market policy, and social security and pension reform;
- occupational health and safety policy;
- pay policy;
- working conditions and the working environment;
- vocational education and training and its reform,
- economic and entrepreneurship policy; and
- tax policy.
ETTK participates in tripartite and bipartite negotiations at national level. Tripartite negotiations started in the independent Estonia in 1992, when a first tripartite agreement concerning social security was concluded. Tripartite agreements have since gained increasing importance from year to year. During the period 1992-2003, a total of 16 tripartite agreements have been concluded at national level. Tripartite negotiations take place regularly, and this process leads to agreements on the minimum wage, the income tax-free amount of earnings and unemployment benefits. With every year, the social partners’ involvement in resolving labour market and social policy problems, as well as their involvement in EU accession process, has increased.
Through bipartite consultations, ETTK and the trade unions agree principles and viewpoints in the areas of social partnership, industrial policy and social security. One of these agreements, signed in March 1999 by ETTK and EAKL, created a joint project on 'the development of the social dialogue in Estonia', which sets out priorities for the extension of social dialogue, preconditions for the dialogue's development, and its role in creating new jobs.
ETTK represents the views of employers on the Socio-Economic Council (Sotsiaalmajandusnõukogu) and other tripartite bodies - such as the Estonian International Labour Organisation (ILO) Council, employment councils, vocational councils and labour dispute commissions. The Socio-Economic Council is a tripartite advisory body, established in 1999, which deals with a number of topics which were previously discussed through less formal tripartite negotiations. These include employment and labour market policy, job creation and productivity, working time and pay policy. The Estonian ILO Council (Eesti ILO Nõukogu) assists the Ministry of Social Affairs (Sotsiaalministeerium) in reforming social and employment legislation and developing an industrial relations system. In August 1999, the government and social partners signed an agreement on setting up tripartite employment councils. ETTK nominates the employers' representatives on these employment councils, whose task is to find integrated solutions for local socio-economic problems.
In order to achieve ETTK’s objectives, its management board may set up regional branches. The confederation currently has one regional office, in Ida-Virumaa (formed in October 1999). The objective of the regional office is to unite and organise the activities of employers in the Virumaa region in order to facilitate the achievement of ETTK's objectives in east Estonia. Its areas of activity include advising local and regional government bodies in matters such as entrepreneurship, vocational training, environmental protection, power engineering, investments and applying the principles of participatory democracy and social partnership. ETTK also has a regional representation in Hiiumaa, organised by the ETKL and by the Producers’ Association of Hiiumaa (Hiiumaa Tootjate Ühendus).
Through participation in the tripartite Foreign Minister’s Consultative Committee, as well as participation in several working groups, employers' interests are represented with regard to matters related to EU accession (which will occur in 2004). Since March 1998, ETTK has been a member of IOE, and since 2003 it has participated in the work of the Union of Industrial and Employers’ Confederations of Europe (UNICE) as an associate member (having previously been an observer member since July 1999). ETTK is also involved in the work of ILO.
In Estonia, tripartism is satisfactorily developed only at the highest – national - level. Agreements are concluded each year regarding minimum wages and some other aspects of social policy (such as unemployment benefits and the subsistence level). There is no collective bargaining at regional or sectoral level - except in the latter case for transport and some public sector areas such as culture and education (EE0309102F). Bargaining activity at enterprise level is low - as evinced by the small number of collective agreements signed at this level - and there are no bargaining coordination activities. National intersectoral bargaining, fixes only a minimum level of wages (and not a general increase) and most bargaining over working conditions is left to the enterprise level (mainly individual bargaining). Along with the fact that unionisation levels are low, this situation means that minimum working conditions and the protection of workers must be regulated mainly by legislation.
The only employers' confederation recognised by trade unions and the government as a social partner is ETTK. Besides ETTK, there are three other employers'/business organisations recognised by the government, but these organisations do not define themselves in their constitutions as social partners and they are not accepted as such by either trade unions or the government.
It seems to be good for the Estonian social dialogue that there is only one confederation on the employers’ side. In the authors' opinion, this makes social dialogue more transparent and concrete, because trade unions have only one partner with which to bargain. (Raul Eamets, Kaia Philips, University of Tartu)