Estonia: Annual Review — 2011

  • Observatory: EurWORK
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  • Published on: 28 November 2012


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Overall, the year 2011 can be characterised as quite stable and without any major changes in the economy or political sphere. However, the relationships between the government and social partners deteriorated significantly during 2011 having a major impact on social dialogue in Estonia. In December 2011, social partners left the supervisory body of Estonian Unemployment Insurance Fund in order to protest against governments’ actions to consolidate the Funds reserves into state treasury and not decreasing the unemployment insurance tax. In contrast, the number of collective agreements has started to increase again after recession and several legislative changes that would boost the labour market were put into practice.

1. Political and economic developments (200 words)

Please give very brief details of:

  • The government (s) in office during 2011
  • Any general or significant regional/local elections held in 2011
  • Any other significant political events which took place in 2011
  • Any forthcoming national or important regional/local elections or significant political events
  • Any major economic developments which are likely to impact upon employment and industrial relations.

If a new government took office during the year, briefly summarise the implications for policy on employment and industrial relations.

On 6 March 2011, parliamentary elections took place. The governing Reform Party (Reformierakond, RE) and leading opposition party Estonian Centre Party (Keskerakond, KE) gained the most votes. However, the current government formed of Reform Party and the conservative Pro Patria and Res Publica Union (Isamaa ja Res Publica Liit, IRL) continued their office together.

On 29 August 2011, presidential elections were held. The incumbent president, Mr Toomas-Hendrik Ilves was re-elected in the first round of presidential elections in Parliament and will stay in the office for the next 5 years. Thus, overall neither elections brought any significant shifts in the political arena.

The Estonian economic growth had been higher than expected throughout 2011 as in the third quarter of 2011 the GDP increased by 8.5% compared to the situation one year ago. Still, the autumn forecast of Bank of Estonia expects Estonia’s economic growth to slow down in 2012 and does not rule out a new recession in case the external environment tensions intensify. Overall, during 2011 the economic situation has been quite stable. At the same time, it can be said that the tensions in Europe have influenced the employers and the government to be more careful and deliberate in its decisions.

2. Legislative developments (300 words)

Please give brief details of important legislative developments with implications for industrial relations and working conditions, where these are not covered in other sections of your response. For example, this might include new or amended legislation on issues such as employment rights, working time, pay and conditions of employment, termination of contract, equality, social security (with implications for the employment relationship), training, new forms of work, the labour market, health and safety etc.

During 2011, several legislative changes were made that should boost the economy and increase the competitiveness of labour market risk groups.

In June 2011, the Supreme Court of Estonia declared a provision of the Health Insurance Act unconstitutional according to which persons older than 65 years had the right for shorter sickness benefit compared to younger persons. It was decided that the differences for persons older than 65 will be lost from the act.

Also in June 2011 the fringe benefits tax on work related studies was abolished, which means that from 1 January 2012 payments made by employers for work related studies of their employees will no longer be taxed. This should encourage investments in raising employees' qualifications and contribute to higher labour productivity and overall competitiveness

In August, the financial value of the training vouchers provided for the unemployed to participate in addition and retraining was more than doubled from the initial 959 euros to 2,500 euros.The training voucher enables to choose training from the list of service providers approved by the Unemployment Insurance Fund (EUIF).

In August changes in the Funded Pensions Act came into effect according to which employers are exempt from the fringe benefit tax starting from 1 January 2012 when making contributions to the pension accounts of their employees. The employer payments to pension accounts are not predetermined and not mandatory.

In December 2011, social partners concluded an agreement to raise the minimum wage rate by 4.3% up to 290 euros per month which is the first increase since 2008 (see EE1201019I).

Although no new measures have been implemented to increase occupational health and safety, the issue of occupational accident and illness insurance system still remains under question and should be implemented in 2014.

3. Organisation and role of the social partners (300 words)

Please provide brief details of any major changes in the organisation and role of the social partners in your country during 2011. This might include trade union or employers’ organisation mergers, changes to social dialogue structures, or changes in membership levels and representativeness.

There were no significant changes in the organisation and role of the social partners during 2011. Also, there is no up to date data on trade union membership. According to most recent information, around 10% of employees belong to a trade union in Estonia (see also EE1105049Q).

Regarding mergers and splits, in March 2011, the Estonian Oil Shale Producers Trade Union Confederation (EPTAL) was reorganised to an Independent Trade Union of Mining and Energy Workers (Kaevurite ja Energeetikute Sõltumatu Ametiühing) (see EE1202029Q).

The number of member organisations in one of the central trade union confederations in Estonia, Estonian Trade Union Confederation (EAKL) has not changed in 2011 (19). However, information on membership numbers in terms of employees and any changes during 2011 is not yet available. Information on any changes in membership in the second trade union confederation in Estonia, Estonian Employees’ Unions’ Confederation (TALO), is also not yet published.

The membership of Estonian Employers Confederation (ETTK) has decreased from 105 in 2010 to 99 in 2011.

4. Developments in collective bargaining and social dialogue (350 words)

Please give details of the number of collective agreements negotiated in 2011 by level (eg. national, sectoral, company), compared with numbers of agreements negotiated in 2010. Outline any trends/shifts between levels of bargaining, or changes in bargaining coverage.

  • To what extent are there derogations from collective agreements? Describe any trends in terms of derogations.
  • If there have been any major bipartite or tripartite initiatives at national level, please provide details. (Do not include initiatives which deal specifically with the economic situation as these should be covered in question 5)
  • Other conditions of employment (these might include training and skills, job security, occupational pensions, equal opportunities and diversity issues)

In Estonia, most collective agreements are concluded at the enterprise level. The only national level collective agreement is the national minimum wage agreement concluded between the national level trade union and employer confederations - ETTK and EAKL. After three years of standstill, in December 2011, ETTK and EAKL concluded a bipartite agreement which would increase the national minimum wage by 4.3% from €278 to €290 from 1 January 2012 (see EE1201019I).

Overall, in 2011, 48 collective agreements were concluded according to the collective agreement register at the Ministry of Social Affairs (Sotsiaalministeerium) compared to 25 in 2010. Although the number of collective agreements has almost doubled compared to 2010, it is still much lower compared to 2008 (81). However, since not all enterprises who have concluded a collective agreement have registered these at the collective agreement database, it is difficult to assess how many collective agreements were really concluded.

In 2011, no sectoral level collective agreements were concluded. In 2010 one such agreement was concluded between the Ministry of Interior ( Siseministeerium) and the Confederation of Trade Unions of State and Local Government Employees’ (ROTAL), which covered 8,700 persons (see EE1102019I).

Since the content of most collective agreements is not available, it is difficult to assess whether and how the contents of collective agreements have changed in 2011 and also what kind of working conditions have been included in the agreements. Also, there is no information to assess any derogation from collective agreements.

For further information on developments in pay and working time in the course of 2010 please see the relevant annual updates at /ef/search/node/eiro OR annualreports?oldIndex

5. Responses to the economic situation

With regard to the current economic situation, please give brief details of:

  • cross-sectoral and sectoral level initiatives, the responses of the social partners in your country, with a focus on any bipartite or tripartite initiatives to tackle any economic problems;
  • government responses to the economic situation with an impact on industrial relations and on labour law;
  • and any significant effects of the economic situation on the industrial relations system.

If initiatives have been reported in an earlier Annual Review, please provide an update.

One initiative that was positively resolved in 2011 was the minimum wage increase. During 2011, trade unions pushed for an increase in the national minimum wage (see EE1107019I) arguing that it was vital to increase the purchasing power of those receiving the minimum wage. After long negotiations, social partners finally reached an agreement for a minimum wage increase for 2012 (EE1201019I).

As for social dialogue on national level, the end of 2011 brought declining trust and cooperation between the government and social partners. In December, the Parliament approved the consolidation of EUIF and Estonian Health Insurance Fund (EHIF) reserves into the state treasury despite intense resistance from social partners. In addition, the government refused to decrease the unemployment insurance tax from 4.2% to 3% as was proposed by the social partners (EE1112019I). This caused a conflict between the social partners and the government which ended with employers leaving the supervisory bodies of EUIF and EHIF and EAKL halting its representatives’ mandate in the supervisory bodies of EUIF and EHIF.

At the same time, on enterprise level activity in terms of concluding collective agreements seems to be increasing in terms of the number of collective agreements registered (see also paragraph 4 above).

The changes described above are not directly linked to tackling the effects of the economic crisis. Although, these developments are showing signs of improvement after a long stand-still period at enterprise level. Although on national level social partnership agreements have not started to show signs of improving situation.

6 Developments in working conditions

Please report the most important developments in the field of working conditions and quality of work and employment during 2011 in your country. The following topics should be taken into consideration:

  • career and employment security – including job security, income, information, consultation and participation and equal opportunities;
  • health and well-being of workers – including health problems, risk exposure, impact of changes in work organisation, and violence, harassment and discriminations;
  • developing skills and competences – including qualifications, skills and competences, career prospects and training opportunities
  • work-life balance – including issues such as working time, time management at work and social infrastructures.

For answering this question, please make use of all national sources of data on working conditions such as national surveys, quantitative and qualitative research and administrative reports (for example, from the labour inspectorate or health and safety authorities). Please report also on policies, programmes or initiatives implemented at national and regional/local levels by public institutions and social partners. Please make sure you are not reporting the information already provided in question 2.

In 2011, no significant changes were implemented to improve the working conditions of employees. As was stated earlier the occupational illness and accidents insurance scheme is still under discussion, however, no decisions have been made. The scheme should be implemented in 2014.

In order to improve the competitiveness of persons who have interrupted their professional education, programme KUTSE that invites to continue interrupted professional education has been widened as it is now open to all adults older than 25 who are motivated to acquire a qualification. Also, in order to improve the quality of higher education in Estonia, in December the higher education reform was approved in the parliament. According to the reform state financed study places will be raised for higher education institutions. The new regulations will take effect since 1 September 2012.

Regarding work-life balance, the implementation of parental pension reform is under discussion in the parliament and the decision regarding its implementation should be made in 2012.

Since data on any working conditions developments in 2011 are not available by February 2012, there are also not many research results to report on. First survey results might be expected in the second half of 2012 (for instance a survey on training of adults in enterprises was conducted by Statistics Estonia, also some insights on working conditions are provided by the annual Labour Force Survey). Registry data that is available more quickly does not provide much information on working conditions, but concentrates more on the unemployed (for instance registry data of Unemployment Insurance Fund).

According to the data of the Labour Inspectorate (Tööinspektsioon) the number of occupational accidents has increased about 15% in 2011 compared to 2010 (from 3,215 to 3,741 accordingly) at the same time the number of occupational and work-related illnesses has remained almost at the same level as in 2010 (258 in 2010 and 254 in 2011) . However, there are many reasons to believe that the number of occupational accidents is underreported and the number of occupational diseases is underestimated.

The number of labour disputes had dropped from 3,803 in 2010 to 2,909 in 2011 according to the data of Labour Inspectorate. The number of labour disputes has dropped massively since 2009 when 6,371 disputes were registered. Although the situation in the labour market has started to stabilize, there are reasons to believe that the number of disputes has dropped since people are still afraid of losing their jobs and are willing to accept poorer working conditions. 7 Industrial action

Please give brief details of strikes and other industrial action during 2011, including:

  • statistics on the number of strikes, workers involved and working days lost (absolute number and per 1,000 workers) for as much of 2011 as is available (please indicate briefly what types of action are or are not included in these figures – eg. are only strikes with a minimum number of workers or days lost included, or is only “official” action included?), and how this compares with previous years; and
  • any particularly large or significant strikes/lockouts or other disputes;

There were no strikes organised in Estonia in 2011, however some smaller and bigger demonstrations were held in 2011.

On 5 September, around 20 teachers held a small demonstration protesting over low pay and demanding a pay increase. On 25 October a two hour demonstration was organised by Estonian Education Personnel Union (EHL) to protest against teachers’ low salary. An estimated 1,700 persons participated in the demonstration demanding a 20% pay increase for teachers. However, since the government has stated that there are no financial resources for such pay increase, teachers have announced to organise a strike from 7-9 March 2012 (see EE1202029I).

On 15 December, around 100 Tallinn transport workers held a small picket in front of the town hall demanding a 17% pay rise for all Tallinn transport workers. However, these demonstrations did not mean any stops in work, thus there are no number of working days lost to report on.

8. Restructuring

Please give brief details of major and significant incidences of company restructuring and workforce reductions in 2011 and how they were dealt with, especially where these led to important industrial disputes or collective agreements, or had other notable industrial relations implications.

The EUIF pays insurance benefit in all cases of redundancies when the employment relationship has lasted for at least 5 years. In 2011 5,955 persons were designated insurance benefits upon lay-offs. This is almost twice as low as in 2011 when 10,451 people were entitled for the benefit. This indicated that restructuring in terms of redundancies has reduced in 2011.

Similarly, the number of people entitled to benefit upon employers’ insolvency has also reduced. In 2011 2,463 people were entitled to the benefit, compared to 6,341 in 2010.

Similar developments can also be observed based on the ERM database, which reports only on large restructuring cases. In 2011 a total of only 4 cases of restructuring are reported in the ERM (compared to 15 in 2010) covering the creation of 400 new jobs. There were no large cases of redundancies reported in 2011. This reflects that restructuring cases were not as large scale as in 2010 and it mostly remains below 100 jobs affected.

9. Other relevant developments

If there been any other significant developments affecting employment relations in 2011 that have not been mentioned above, please give brief details.

Most of the relevant developments for 2011 are reported above. However, there are several important developments in terms of working conditions as well as industrial relations expected in 2012. For instance, the government programme for 2011-2015 refers that several active labour market measures will be revised in the framework of codification of legislation in social sphere and the draft is planned to be presented by the end of 2012. Also, several disputes between the government and the social partners are expected to see some conclusion in 2012. There have also been initiatives to change legislation related to collective agreements, which will also be decided in 2012. Thus, while 2011 was quite stable without any significant developments, the year 2012 will see some important changes and developments in terms of industrial relations as well.

Liina Osila, Kirsti Nurmela, Praxis Center for Policy Studies

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