Labour market

Estonia has one of the highest employment rates in Europe and companies are finding it increasingly difficult to find suitable people to fill vacancies. The shortage of skilled workers has been one of the main obstacles to our economic development for years. Demographic trends show no sign of a solution: fertility rates suggest that in just two decades the shortfall in the working-age population will be a fifth larger than today. From three people of working age for every person of retirement age today, there will be two people of working age by 2040 and as few as 1.5 by 2060.

This is a familiar problem throughout the developed world, and countries are looking to foreign experts for relief. But here too, the current situation in Estonia is not good. The World Economic Forum’s Global Competitiveness also notes that this is where Estonia unfortunately lags behind.

At the same time, Estonia has some good prospects in this area. For example, the organisation of labour law in Estonia is one of the most reasonable in the European Union. It was largely this flexibility that enabled us to leave the last recession behind us relatively quickly and to maintain a high level of employment, in other words, to offer people work. However, as employment relationships and working patterns are changing rapidly in today’s world, Estonian labour law is still somewhat outdated. Challenges such as an ageing population, rapidly evolving technology and the increasing share of flexible forms of work and micro-enterprises call for even more flexible labour law. Modernising regulation is therefore an essential part of tackling labour shortages.

With labour shortages becoming increasingly critical, it is important that workers are healthy and sick leave is kept to a minimum. Achieving this objective requires a health-friendly working environment and a greater contribution to workers’ health by the social partners. Alongside a safe working environment, workplace relationships are also important in this area, with 99% of workers attaching importance to getting on well with their line manager. Good communication between employers and employees helps to avoid conflict, increase employee motivation and contribute more to getting the job done.

Based on the above, employers have developed their main views and proposals on labour market issues and published them in the Employers’ Manifesto.

Want to get involved and contribute to the Labour Market Task Force? Let our working group coordinator know!

Proposals to the country

• In the face of rising labour shortages, external labour policy as a whole should be reassessed. In many sectors, skilled workers are needed who cannot be quickly trained in Estonia, or who cannot be trained in a reasonable way.
• Teleworking has become the norm, but the division of responsibilities between employer and employee needs to be better regulated.
• Reduce the number of public sector workers by 3,000 a year over ten years. This will free up labour for the private sector, whose role in providing public services could also increase.
• The Employment Contracts Act needs updating, as it no longer reflects labour market realities. It is younger workers and those with important family responsibilities who want to take short jobs rather than being tied to one employer for a long period or who have employers offering short-term work.
• Abolish the cap on immigration ofprofessionals (above-average paid workers) to encourage them to work formally in Estonia.
• The employment contract must allow for more flexible working arrangements. For example, to allow for a range of workloads to be defined in order to encourage better employment, especially part-time work. Fixed-term contracts should be made more flexible.
• Not to penalise employers who invest in the health of their workers.
• Changes to on-call time would reduce the need for labour, as on-call time no longer means being on-call at the workplace and doing work, due to technological advances.

Proposal for an employer

• Adapt jobs for the elderly and people with reduced working capacity. Experience from other parts of the world shows that this is good for a country’s economic development and helps people feel valued.
• Support the integration of non-Estonians into Estonian life as much as possible, as this will reduce fears in society and promote better job performance. There are already a number of employers in Estonia
  to take a lead from.
• Offer workers more and more flexible working opportunities. Take into account workers’ needs, because employers need to be more flexible too. The whole world is moving towards this.
• Contribute to the health of your employees by providing opportunities for sport, health checks, healthy working conditions and, where necessary, treatment. It pays off.
• Improve and rethink the quality of management in your company. This is a major challenge for managers in all the major sectors in Estonia.

Proposal for workers

• Skills and knowledge need to be constantly updated. Take part in regular training and retraining – it’s the only way to stay competitive in the labour market in the long term. People’s active working lives are getting longer and the retirement age is rising. Being successful requires continuous learning and acquisition of new skills throughout your career.
• Your health is your most precious asset, take care of it. You are primarily responsible for your own mental and physical health, including safety at work. Don’t be afraid to ask for advice or help if you need it.