Estonia: Latest working life developments – Q2 2016

Changes to labour market laws to make it easier to hire workers (especially ICT specialists) and a focus on ways to reduce the gender pay gap 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 2016.

Focus on improving labour market legislation

The government approved additional changes to the Aliens Act to ease the salary criterion set for employers who hire workers from outside the European Union. Previous provisions required employers to pay foreign workers an amount equal to (at least) the annual average gross monthly salary of the employer’s main area of activity, but not less than the annual average salary, multiplied by a coefficient of 1.24 (according to the most recent official data). With the new amendments, employers are only required to pay the average gross monthly wage of the employer’s main area of activity. If the average salary of the main area of activity is higher than the average salary in Estonia, the employer is obliged to pay at least the average Estonian gross monthly salary.

In response to the lack of skilled information and communications technology (ICT) workers in Estonia, the changes also exclude ICT workers from the current immigration quota. According to the Aliens Act, this cannot exceed 0.1% of the permanent population of Estonia annually.

The Ministry of Social Affairs published a bill that focuses primarily on the terms of employment and working conditions for young people (mainly 15–17 year-olds who have left school). The legislative proposals aim to make it easier and more attractive for employers to hire them.

The bill also includes changes in on-call working time for ICT and healthcare workers by eliminating current rigid working and rest time rules for these sectors, where the nature of the work sometimes makes it necessary to work longer than is permitted by law. Trade unions in the healthcare sector are strongly opposed to the changes. The Ministry of Social Affairs, however, claims that the proposed on-call time regulation accommodates the work requirements of workers in the sector more efficiently.

Other measures implemented in the second quarter of 2016 include allowances for employers to support job creation in eastern Estonia – a region that is suffering from a high unemployment rate due to several companies making large numbers of people redundant following the recent significant fall in global oil prices.

Finding solutions for the gender pay gap

Estonian Equal Pay Day was held on 13 April. Several ministers commented on the problem of the gender pay gap, urging society to recognise fathers who are actively involved in parenting and noting the need to reserve a period of parental leave for fathers so that mothers could participate in the labour market more.

In May, the European Commission published its country-specific recommendations for Estonia for 2016 (PDF). One of the issues mentioned in the programme is the need to reduce the gender pay gap in Estonia, which is currently the largest in Europe at 28.3% in 2014, compared with the average gender pay gap in the EU28 of 16.1% (according to Eurostat statistics). Although the government plans to give Labour Inspectorate the powers to conduct surveillance on the gender pay gap in enterprises, a specific plan is yet to be revealed.

Commentary

The third quarter of 2016 looks to bring exciting developments in Estonia, with debate during the presidential elections in August 2016 highlighting, among other important issues, the labour market and economic competitiveness. Also, changes in the Employment Contracts Act are the subject of discussions between the Ministry of Social Affairs and social partners.

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