Collective bargaining examined

Estonia has a relatively well-developed system of tripartite dialogue and bargaining at national level, but bipartite collective bargaining at sector and company level is still quite limited. The overall rate of coverage by collective bargaining stands at 28% of the workforce, sectoral agreements are few and company agreements cover only a small proportion of enterprises. This article outlines the legislative framework and current situation in practice.

This feature outlines Estonia's legal provisions on collective bargaining procedures, and looks at the current situation in terms of the number and level of agreements.

Legislative framework

The main statutory basis for both tripartite and bipartite collective bargaining is the Collective Agreements Act adopted in 1993. It states that a collective agreement can be bipartite or tripartite. The issues which may be the subject of tripartite collective bargaining are:

  • the minimum wage and the procedure for amending it based on rises in the cost of living;
  • additional measures to ensure occupational safety and health;
  • additional employment guarantees;
  • other additional guarantees pertaining to employment which the parties consider necessary; and
  • procedures for monitoring the performance of the collective agreement and providing the necessary information.

The issues which may be the subject of a bipartite collective agreement include the conditions for:

  • pay
  • working conditions;
  • working time and rest time;
  • suspension, amendment and termination of employment contracts;
  • the lay-off of employees; and
  • health and safety at work.

The law stipulates no obligation on the part of employers to initiate negotiations or to conclude a collective agreement and, similarly, no right for employees to demand the initiation of negotiations or conclusion of an agreement. While the procedure for negotiations over collective agreements is established in the law, it does not provide for the drawing up or conclusion of 'interim protocols', deadlines, and whether and when negotiations should be held, or their length.

A collective agreement applies to all those belonging to the organisations concluding the agreement, unless another scope of application is described in the agreement. In practice, most (enterprise-level) collective agreements apply to all the workers within the enterprise regardless of their trade union membership. If a worker is covered by more than one collective agreement, the most favourable agreement is applied. Since June 2000, a sectoral collective agreement can be extended by decree to all enterprises and workers in a sector, even when these are not members of the organisations concluding the agreement. As this amendment is quite recent, it is not clear whether this opportunity to extend the scope of application will indeed be used by the social partners (both social partners have to agree on this). In 2003, there are only two agreements which have been extended in this way.

The period of validity of a collective agreement is one year, unless otherwise stated. During the validity of the agreement, a peace clause applies, preventing industrial action. Each year, a new agreement must be concluded, until which time the old one is valid. Upon expiry of the term of a collective agreement, the parties are required to comply with the terms and conditions of that agreement until a new agreement enters into force, with the exception of the peace obligation to refrain from calling a strike or lock-out.

Labour disputes that arise from the conclusion or implementation of collective agreements are resolved under a procedure prescribed in the Collective Agreements Act and in accordance with the Collective Labour Dispute Resolution Act.

Levels and outcomes

Tripartite collective bargaining process can occur at both national and regional/local levels. The main actors at the national level are: the Ministry of Social Affairs, which represents the government; the national trade union organisations – the Confederation of Estonian Trade Unions (Eesti Ametiühingute Keskliit, EAKL) and the Estonian Employees’ Unions’ Confederation (Teenistujate Ametiliitude Keskorganisatsioon, TALO); and, on the employers’ side, the Estonian Employers’ Confederation (Eesti Tööandjate Keskliit, ETTK). The main outcomes of tripartite concertation have been 16 tripartite agreements signed since 1992. These have dealt with matters such as the national minimum wage, the level of tax-free income, unemployment compensation, social security, vocational training and employment. In 2002, EAKL, TALO and ETTK concluded an agreement on minimum wages, which was in principle the first collective agreement covering all public sector employees.

Bipartite collective bargaining in Estonia is usually conducted at two levels:

  • sector and branch level, where the agreements are concluded between representatives of the appropriate employers’ and trade union organisations; and
  • enterprise level, where collective agreements are concluded between local trade union organisations and the management of the enterprise.

Collective agreements are most often signed in transport, engineering, the food industry, the wood industry, textiles and clothing and chemicals. At sectoral and branch level, most agreements are concluded for state-owned enterprises or formerly state-owned enterprises. The main topic of branch-level agreements is the same as for enterprise-level agreements – workers' remuneration. Other issues negotiated include safety and compensation in the event of accidents at work. In some branches - such as manufacturing, merchant shipping and fishing - there is no employers’ branch organisation and no sectoral agreements can be concluded. The emphasis in such branches is wholly on enterprise-level collective bargaining.

The number of collective agreements concluded at sector level is quite small. In 2003, five branch trade unions affiliated to EAKL have concluded such agreements, covering 10,900 members and 16,300 workers in total. Six branch unions of TALO have concluded sectoral collective agreements.

According to the official register of collective agreements, the number of registered collective agreements at enterprise level in 2003 stands at 130. In reality, the number of collective agreements is higher because some are not registered (the register was created only in 2001). However, the number has declined over the years and is very small, taking into account the fact that there are roughly 40,000 business entities of all kinds. The number of workers covered by enterprise-level agreements is around 53,160. The overall coverage rate of collective agreements is low, at around 28% of the workforce.


'Classical' sector-based collective agreements, as they exist in many EU Member States, are limited in Estonia to that in the transport sector. There also exist some sector-based agreements that are somewhat atypical in that the sector is/was monopolised by one state-owned company - as in the oil sector, mining, electricity, railways and postal services - or the employer is the state - eg the agreement between EAKL and the government on the wages of civil servants.

The Ministry of Social Affairs and trade unions want to stimulate the bipartite system, especially at sectoral and national level, as an instrument for social dialogue. At the same time, the Ministry supports the view of the employers’ organisations that no legal obligation should be introduced to conclude sectoral agreements. It should remain a voluntary process whereby the social partners find areas of common interest and build up a relationship of trust.

The number of collective agreements concluded in Estonia is quite small and employers have seldom been forced by means of industrial action (strikes etc) to conclude collective agreements. This is partly because of the weak organisation of workers, and partly due to the fact that refusal to conclude a collective agreement is not seen as constituting a labour dispute. The low level of trade union membership is accompanied by a low level of collective bargaining coverage. This indicates that there is little binding collective bargaining above enterprise level, and thus agreements cannot be extended further (there are only three extended agreements in total) and the coverage rate is low.

To sum up, the social dialogue in undergoing development in Estonia. Social partner organisations are quite young institutions – only during the last decade have employers’ organisations and trade unions been established and become relatively active at national level. Social dialogue at sectoral and company level is notably less developed than at national intersectoral level. This is evident from low representation, and the institutional and financial shortcomings of social partner organisations. Collective agreements on pay and working conditions are negotiated in only a limited number of economic sectors and companies. In the immediate future it is important to focus more on developing social dialogue at sectoral and company level. It is also necessary to expand the range of issues for negotiations beyond pay and working conditions. (Raul Eamets and Kaia Philips, University of Tartu)

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