Hando Sutter on the changes to the Employment Contracts Act: scaring workers with changes is mean-spirited

It is not scaring and misleading people with changes that helps to empower them in labour relations, but informing them about their rights and opportunities and raising awareness, emphasises Hando Sutter, head of the Confederation of Employers, in ERR’s opinion columns.

Wages, which have risen rapidly despite the recession, and the labour market, which has remained strong against expectations, point to demographic trends – a falling birth rate and fewer people entering the labour market. In addition, Estonian employment has been at the top of the European league for many years and has grown mainly at the expense of part-time workers, showing that local people are already at their maximum activity level. Bringing even more Estonians into the labour market will therefore require greater flexibility than has been the case so far.

If employers are making more and more efforts to find and keep good people and are willing to be more flexible in terms of working hours and location, then the legislation should allow those who want to do so.

That is why the government and the Minister of Economy and Industry are on the right track in modernising labour law. The labour market has been waiting for and needing such decisiveness for many years, as discussions have been held but action has been difficult.

The competitiveness of our business environment will suffer if labour law remains rigid. This hampers economic growth and job creation, and thus national tax revenues. This is not in the interests of workers or employers.

Socialists and trade unions, on the other hand, have chosen the path of misleading and intimidating workers to fight the changes. Such social agitation is irresponsible and seeks to denigrate employers, but it also demeans workers who appear unable to stand up for themselves.

Both parties are interested in an employment contract

There are two parties to an employment contract, and both want to conclude it – the employee needs a job, income and self-fulfilment, the employer wants a motivated worker. It is therefore in the interests of both parties to negotiate and agree the terms of the contract.

The planned changes offer flexibility as working patterns have changed and sometimes work is offered on an episodic-seasonal basis. Generations with different needs and expectations are also active in the labour market. Increasingly, employers are listening to their specific needs and are willing to accommodate them.

An opportunity, not an obligation

Employers see every day that employee awareness is not to be underestimated. Younger generations, in particular, are demanding of everything and often make both demands and challenges for work organisation. A surfing holiday and exploring the world can be more important than a job or a career, for which a holiday is not enough.

Perhaps making work more flexible will not take anything away from those who want to continue working full-time, metaphorically 9-17. This is likely to remain the most common form of contract. It will, however, improve the security of part-time workers who cannot, do not want to, or wish to create value with multiple employers. As employment contract law has not yet allowed such flexibility, contracts have been used in the form of contractual obligations or, in the worst cases, undeclared work. This means that guarantees such as working and rest time, minimum wage requirements and holidays do not apply, and the state loses out on taxes. It is reasonable and necessary to change this.

Concerns known for a long time

This comes as no news to policymakers or trade unions, as these concerns and the changes needed have been discussed in both bipartite and trilogue meetings for years, but there has been little progress. For example, a two-year experiment to introduce more flexible working time arrangements in the commercial sector, the “flexitime” pilot project, failed because unions insisted on conditions that were too rigid. The process was too complex and did not invite take-up. This shows that it is not worth over-regulating to keep up with the times.

The current changes will also be a compromise, as employers and workers, for example, see the need for more flexible labour law. The fact that the result does not meet 100% of the trade unions’ wishes does not mean that there was no involvement. Interested parties have been involved in the process and have had the opportunity to express their views. It is a question of what the parties want – to move forward, or to hold back rigidly while the world around us changes.

The Estonian labour market works

In Estonia, trade union membership and representativeness among employees is low, and the conclusion of collective agreements, i.e. voluntary agreements between employees and employers, is sometimes, for historical reasons, more modest than in other European countries. In the absence of such a practice, the social partners have adapted to these circumstances and have been able to negotiate things among themselves.

This should not be a reproach, but a sign that our labour market works. If there is no agreement between the parties, there will be no agreement. If someone breaks agreements and laws, there is a safety net, from the Labour Inspectorate to the Labour Disputes Committee and the courts. There are rule-breakers all the time, but they do not characterise all the tens of thousands of employers and more than 700 000 workers here. Trade unions will certainly continue to play an important role as social partners, but the added value they offer to workers must keep pace with the times.

The article appeared on the err.ee portal.