Estonia: Latest working life developments Q3 2018

The national minimum wage agreement for 2019, a proposal to make the labour law more flexible and a plan to establish an occupational accidents insurance system are the main topics of interest in this article. This country update reports on the latest developments in working life in Estonia in the third quarter of 2018.

Statutory minimum wage increase agreed for 2019

The Estonian Trade Union Confederation (EAKL) and the Estonian Employers’ Confederation (ETTK) agreed on the national minimum wage for 2019 during the third quarter of 2018. Last year, the minimum wage was increased by €30 to €500 per month (€2.97 per hour) and the social partners agreed that until 2022, the increase would be negotiated by taking labour productivity and economic growth into account.

This year, the negotiations took place during the summer without any public debate and the initial proposal was to increase the minimum wage by €40 per month. The project was then made public: people and organisations were invited to submit their reasoned opinions about the plan to the social partners during the month of September. Opinions had never been sought outside of the social partner organisations before. The feedback provided mainly suggested that the minimum wage was insufficient for many people.

Despite this, the final agreement was concluded on 1 October with a proposed increase of €40. A national minimum wage of €540 per month (€3.21 per hour) will come into effect in January 2019.

New labour law reflects modern work situations

In July, the Ministry of Social Affairs announced plans to the labour law in order to offer more flexibility to employees and employers. Current regulations are strict in terms of working type, time and place, and are not easily adaptable to new situations (e.g. remote work and platform-based work). The main changes include introducing a minimum/maximum-hours employment contract (where working hours are expressed as a range), more flexible conditions for fixed-term contracts, and a new employee form – employees with an independent decision-making competence. For the latter, regulations like daily and weekly rest time, maximum weekly workload and other conditions would not be applicable. The plans also aim to amend the occupational health and safety requirements in the case of remote ICT-based work and make employees responsible for their own workplace when they are working outside of their employers’ premises.

Reactions from social partners have largely been related to the plans for minimum/maximum-hour and fixed-term contracts. Trade unions are cautious and do not fully support these ideas. While they recognise the limitations of the existing regulations, they point out that working conditions and possibilities differ from sector to sector. In some sectors, the flexibility offered by minimum/maximum-hour contracts could put employees in a vulnerable position. The trade unions therefore believe that the solution to the problem lies in sector-level regulation through collective agreements.

Employer organisations, on the other hand, strongly support the proposed ideas. They agree with the Ministry that these changes merely follow current developments and should be part of labour law. They do not share the trade unions’ fear that employers would take advantage of the changes in some sectors. They also believe that sector-level agreements will not solve the issue, because there are no representative organisations to negotiate working conditions in many sectors and it would be unwise to force the creation of such organisations.

The plans will be discussed further among stakeholders, including social partners, over the coming months, with the changes expected to take effect from 2020.

Occupational accidents insurance system takes shape

The Ministry of Social Affairs also announced plans to create an occupational accidents insurance system in July. This will provide a fairer system for processing compensation claims in the case of work accidents involving employees (currently these costs are mostly covered by the solidarity health insurance system). The new system will also motivate employers to improve the working environment.

The size of the insurance premiums will depend on the risk level of the working environment (i.e. the safer the environment, the lower the premiums) and will therefore roughly depend on the specific sector. For example, it is expected that it could be around €6 per employee per year in the ICT sector and €160 in the waste management sector. In response to the concerns of employer organisations, the Ministry assured them that the new system would not increase their overall tax burden, as social tax or unemployment insurance premiums will be lower.

Trade unions support the plan, as it will make employers tackle the issue, conduct risk analyses and ultimately make work environments safer. Moreover, they suggest that the next step should be to create an occupational disease insurance system. In contrast, employer organisations feel that the new system will put too much responsibility on employers, while many accidents actually happen due to employees not following safety rules and instructions. According to them, the system should also motivate employees to ensure their own safety.

The details of the new system will be discussed further, with the changes expected to enter into force no earlier than 2021.

Commentary

In the coming months, a final decision is expected regarding the establishment of a supervision mechanism over the gender pay gap in public institutions. This topic was discussed in more detail in the update on the second quarter of 2018. [1]

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