This record reviews the main industrial relations developments in Estonia during 2004.
The government elected in March 2003, involving the right-of-centre Res Publica party, the right-wing Reform Party (Reformierakond) and the centrist Estonian People’s Union (Eestimaa Rahvaliit), remained in power during 2004, and no elections took place during the year. In October 2005, local elections will be held.
Political milestones in 2004 were joining NATO in March and becoming a member of the European Union in May. Accession to the EU poses various challenges for the government and social partners, which see one of their main tasks as ensuring the competitiveness of the Estonian economy in the EU while at the same time guaranteeing socially and regionally balanced sustainable economic development (EE0402101N and EE0407101N).
Two bipartite agreements between the Confederation of Estonian Trade Unions (Eesti Ametiühingute Keskliit, EAKL) (EE0308101F) and the Estonian Employers’ Confederation (Eesti Tööandjate Keskliit, ETTK) (EE0310102F) were concluded in 2004.
In April, negotiations over civil service pay between the government and EAKL failed to produce significant results, with the government rejecting union demands for a 20% increase for lower-paid groups. The government accepts that the pay system in force is outdated and there is a need to work out new principles for the system. ETTK has been very negative about the union's pay demand, stating that public officials already have good employment terms and conditions (EE0405102N).
In December, the Estonian Employees’ Unions’ Confederation (Eesti Teenistujate Ametiliitude Keskorganisatsioon, TALO) (EE0308101F) concluded a pay agreement with the government (EE0501103N). TALO’s main objective is to secure wage increases for employees with higher education working full time in a position demanding higher education, financed from the state budget (EE0311103F). In previous years, TALO and government have agreed that the minimum wage should be linked to the average national monthly wage. According to the agreement, the new minimum wage will be EEK 5,960 a month, while the average wage in Estonia in third quarter of 2004 was EEK 7,021.
There were no particular developments relating to branch-level agreements in 2004. In September, after lengthy negotiations involving the public conciliator, a new two-year collective agreement was signed in the healthcare sector (EE0409102F, EE0410102N). The social partners agreed to extend the new agreement to all categories of employees in the healthcare sector. In 2004, the negotiations were seen as particularly important, as there are fears of a potential large-scale migration of healthcare professionals, with shortages already appearing in some professions.
Most bargaining in Estonia is currently still conducted at enterprise level (EE0501103N). During 2004, it was not rare for trade union organisations to threaten to take strike action to support their demands.
A wages survey by the Statistical Office of Estonia (Statistikaamet, ESA) indicates that in the first three quarters of 2004, average wages rose by 5.0% compared with first three quarters of 2003 (the annual figure will be higher, as increases are generally greater in the fourth quarter). The increase in 2003 was 9.4%.
It was agreed in 2004 that the minimum wage should be increased by 8.5% in 2005 (see above). Increases in minimum wage rates were also agreed at branch and enterprise level. Although there has been a register of collective agreements since 2001, it does not give enough information to assess developments in the content of agreements. In total, the number of collective agreements in the registry is 206, concluded over the period from 2001 to 2004. In 2004, 76 agreements were concluded, of which the majority are enterprise-level collective agreements (EE0412101S). Pay for the majority of workers is still agreed in individual negotiations.
There were no noteworthy developments or discussions on working time issues in collective bargaining in 2004. According to the Working and Rest Time Act, working time should not exceed eight hours per day and 40 hours per week. There is no information available about collectively agreed normal weekly working time in Estonia and provisions relating to working time are rarely included in collective agreements (EE0406102F).
The issue of job security has been discussed at national level for several years, in the context of the draft of a new Employment Contracts Act (EE0309101N and EE0405103F). However, there are no essential differences concerning job security in the new draft compared with the current situation (EE0401104F).
Equal opportunities and diversity issues do not figure significantly in collective bargaining. In Estonia, business is treated as a 'gender-neutral' area. However, equality of opportunities for women and men in gaining access to the labour market, career advancement, earnings and reconciling work and family life have been identified as one of the aims of current labour market strategy in Estonia.
As in 2003, training featured as one of the main themes in collective bargaining at national level in 2004. The target for unions and employers is to abolish tax on employers’ costs relating to workers’ formal and informal education and training. Currently, these are treated as 'fringe benefits' and taxed as income (EE0402101N).
During the course of 2004, the government planned to implement several acts in order to ensure better-quality employment relationships and principles of fair pay, to increase employment and to further develop active labour policy measures (EE0402101N).
In May, after more than three years of discussions over the draft legislation, parliament (Riigikogu) ratified the Gender Equality Act (EE0401103F, EE0405101N). This Act creates a Gender Equality Commissioner. ETTK was of the opinion that the Commissioner should be appointed by tripartite agreement, as the Act primarily concerns equal treatment in working life. The Ministry of Social Affairs planned to appoint the Commissioner through a competition and by unilateral ministerial decision (EE0405101N). However, the Commissioner was not appointed by the end of year.
At the beginning of 2004, the Estonian government tried to enact a Social Dialogue Act. As Estonia needs to bring its legislation into line with the EU law, it must transpose the 1994 Directive on European Works Councils (EWCs) (94/45/EC), the 2002 Directive on national information and consultation rules (2002/14/EC) (EU0204207F) and the 2001 Directive on employee involvement linked to the European Company Statute (ECS) (2001/86/EC) (EU0206202F). Tripartite discussions over the draft legislation have been proceeding since 2003, but trade unions and employers’ organisations had major criticisms of the proposals (EE0403101F). In March, the social partners proposed to the government that it should abandon the draft of the Social Dialogue Act.
At the end of July, the draft of an Involvement of Employees Act, elaborated by the Ministry of Social Affairs, was sent to social partners for reconciliation. The draft Act regulates, on the basis of EU Directives, the involvement (information and consultation) of employees at transnational level (EE0409103F). Although trade unions and employers’ organisations had criticisms of this draft, the parliament adopted the Involvement of Employees Act on 12 January 2005.
During 2004, the draft of a controversial new Employment Contracts Act was under discussion (EE0309101N, EE0405103F). The draft of the Act aims to make employment relationships more flexible. However, according to trade unions, the provisions of the draft damage the interests of employees. At the beginning of June, EAKL organised a picket in front of government offices to protest against the fast-tracking of the draft Act. Trade unions also threatened to take strike action if their demands regarding the draft were not taken into consideration.
In April, parliament passed an amendment act of the Employment Contracts Act, which was related to the accession of Estonia to the EU and to the necessity arising from this to transpose into national legislation the requirements of various EU Directives.
In May, the government approved the drafts of amended legislation on working time (the Working and Rest Time Act and Holidays Act). The changes also aim to remove contradictions between EU Directives and Estonian legislation in this area (EE0406102F).
Estonia has two trade union confederations, EAKL and TALO, which between them represent around 14% of the labour force. In general, the number of trade union members is declining. During 2004 the trade unions attracted a significant amount of public attention, as during collective negotiations at different levels they threatened to take either strike action or some other form of protest actions if their demands were not fulfilled (see below under 'Industrial action').
ETTK is the only employers’ central organisation and its membership increased rapidly during 2004. According to ETTK’s manager of communications, Kadri Seeder, the confederation sees potential members among both large and small firms; the target for expansion of membership includes public sector companies and agencies.
The public visibility of trade unions increased greatly during 2004, as over the year there were several threats of strikes, and various trade union organisations held pickets and other protest actions. For example, in April 2004 over 80 members of the State and Self-government Institutions’ Workers’ Trade Union (Riigi- ja Omavalitsusasutuste Töötajate Ametiühingute Liit, ROTAL) picketed in front of the seat of the government. Their main demands were that the government should conclude a pay agreement and stop freezing the payroll fund for civil servants (EE0405102N). In addition, they wanted to draw attention to the fact that under Estonian legislation, civil servants do not have the right to strike.
On 27 May, the Federation of Estonian Customs Officers’ Trade Unions (Eesti Tolliametnike Ametiühingute Liit, ETAL) held a picket outside the government’s headquarters. The protesters were demanding a pay rise, in-service training and investments to strengthen customs controls on Estonia’s eastern border (EE0406101N).
The longest strike since Estonian independence took place in late September. After 10 months of negotiations over wage increases with management at Estonian Railways, the Estonian Locomotive Workers’ Trade Union (Eesti Vedurimeeste Ametiühing) decided to hold a strike. Over 200 train drivers held a six-day strike to support their demands for pay increases. Several support strikes and a number of solidarity actions were also carried out. The strike was ended by a deal brokered by representatives of the central trade union and the employers’ organisation (EE0410101N). This strike highlighted problems with Estonian legislation on strikes and especially the legality of support strikes (EE0410103F).
According to statistics from the public conciliator’s office, 20 applications were presented to the public conciliator to resolve collective labour disputes in 2004. These disputes involved around 60,000 employees. Most disputes over wages and most of the collective agreements referred to the conciliator ended with a positive result (EE0402102F). According to the public conciliator’s office, agreements were achieved in 82% of cases.
Estonia was obliged to bring its legislation in line with the EU 'acquis communautaire' before EU accession on 1 May 2004. Tripartite discussions over draft legislation in the area of employee participation, with a view to implementing the EU Directives in this field, have been underway since 2003 (EE0403101F) and agreement on the Involvement of Employees Act was finally concluded on 12 January 2005 (see above under 'Legislative developments'). However, this Act will only affect the small number of larger companies in Estonia that operate in several EU Member States and for which the obligation to form a European Works Council arises. Other participation issues remained unresolved.
The issue of absence from work did not feature in collective negotiations in 2004 and no particular legislative developments occurred in this field either. Some data on absence from work is available from the Health Insurance Fund (Haigekassa) and from labour force surveys, but there are no specific analyses carried out on this issue in Estonia.
There is no information about psychological harassment in Estonia.
Temporary agency working has emerged in Estonia only recently and there are as yet no statistics available on the incidence of this type of work. There has not been a great deal of discussion on this issue and no specific legislation has been developed. Neither were there any significant developments or discussions on other new forms of work in 2004.
The reasons for the relatively low level of temporary agency work could include the fact that employers use other means to achieve flexibility in employment relationships and that many firms are not aware of the possibility of such arrangements, However, it is expected that the share of agency work may increase in the future, as current labour legislation does not limit the use of temporary agency contracts in any way (EE0405103F).
In late 2004, the government disregarded a social partner proposal on unemployment insurance contributions. Trade unions and employers criticised this decision, claiming that it undermined the principles of social partnership. In October, the central social partner organisations called for unemployment insurance contributions to be cut in 2005, after which the Unemployment Insurance Fund (Töötukassa) made a proposal to the government to decrease employers and employee unemployment insurance contributions (EE0411101N). After the negative decision of government, the chair of ETTK, Tarmo Kriis, criticised the government by stating that in Europe there is a movement towards more autonomous social dialogue and towards decisions of social partners replacing legislative acts, but in Estonia the decisions of the state and government take precedence over the decisions of the social partners. (EE0412102N)
Several important legislative development will take place in 2005, including progress o the draft Employment Contract Act. In addition, the issues of vocational and informal education/training will be discussed further in 2005.
Trade unions are likely to increase their activities and it is expected that there will be more industrial action in the future, as unions have realised the power of this industrial relations weapon.
EU membership is expected to increase the interest of foreign investors to Estonia and this should help guarantee sustainability of economic development. Economic growth helps to increase nominal convergence and Estonia expects an increase in both minimum and average wage levels. This will hopefully decrease the potential migration incentives for the Estonian workforce (EE0404101F). Therefore, in 2005, one of the main tasks is to ensure the competitiveness of the Estonian economy and guarantee socially and regionally balanced development. (Kaia Philips and Raul Eamets, University of Tartu).