OSKA analysts: Estonian labour migration policy needs clear principles

The debate on the inclusion of foreign labour in the Estonian labour market should shift the focus from the question “should we?”. “on what principles?” bringing workers here. Labour migration policy needs to establish coherent and clear principles, with short- and long-term objectives, write OSKA analysts Silja Lassur, Andres Viia and Yngve Rosenblad.

Estonia’s population is ageing and the natural birth rate has been negative for a long time, meaning that the number of young people entering the labour market is lower than the number leaving it. This is not only the case in Estonia: in many European countries, immigration has become the main and only factor holding back population loss.

In addition to education policy, the country has a range of measures to address labour shortages, including reducing unemployment, upgrading the skills and qualifications of the local workforce, etc., but internal resources are still limited due to a shrinking and ageing population.

OSKA predicts that the need for foreign labour in Estonia is likely to grow in the next decade. Each year, there will be a shortage of around 1 400 top specialists and 700 skilled workers, whose needs cannot be met by Estonian graduates. In addition, it can be expected that a large number of Ukrainian war refugees will return home and leave our labour market.

People enter the country on different grounds

Estonia’s current migration policy is fragmented, complex and diverse, making it difficult for employers and migrants alike to navigate all the conditions. Labour migration policy is based on an immigration quota (0.1 per cent of the population) and its specificities, which is why the quota is at the centre of debates on foreign labour.

At the same time, we see that the Estonian labour market is not only affected by labour migration, but also by the number of beneficiaries of international protection, intra-EU migration, family migration, etc. In 2023, third-country nationals with a temporary residence permit who entered Estonia under the quota would account for only 12 per cent of workers with a temporary residence permit in Estonia.

The data also show that while the current migration policy aims to encourage highly skilled and highly qualified foreign workers to come to Estonia, we have a very high number of foreign workers in low-skilled and unskilled jobs. In 2023, the total number of foreign workers in the Estonian labour market was 66 400. Of these, 11 500 were employed as professionals and managers, 35 650 as skilled workers and 15 400 as unskilled workers.

The number of both professionals and unskilled workers has more than doubled in five years, while the number of skilled workers has increased slightly less. The largest contribution to the increase in the number of skilled and especially unskilled workers has come from war refugees from Ukraine.

Estonia’s migration policy does not favour the import of unskilled workers, and the requirement that the average Estonian wage be paid to the imported worker generally applies. For war refugees and other beneficiaries of international protection, this requirement does not apply. As a result, it is quickest and easiest for beneficiaries of international protection to enter the labour market through unskilled occupations, which have the lowest language requirements. Without the war in Ukraine, it is unlikely that the Estonian labour market would have so many foreign workers among the unskilled workers.

Experience in richer countries shows that as prosperity increases, local people’s values for work change, and it is often unskilled jobs that locals are reluctant to do. A striking example is seasonal work in agriculture.

Long and short stays

The use of foreign labour in skilled and unskilled jobs is beneficial and makes sense for society. For example, in industry, tourism, agriculture, etc., bringing in workers from outside can help smooth out fluctuations in labour demand, or “peaks and troughs”: when there is a boom in the economy, companies can bring in temporary foreign labour; when there is a downturn, they do not recruit, but their own people keep their jobs. This also avoids over-training locals for jobs that could quickly disappear.

This extra labour should come into the country for a short period of one to three years. In order to reduce the potential risks associated with migrants, the state could work with employers to select destination countries from which to source short-term workers. A number of European countries have also concluded cooperation agreements with third countries on labour migration.

In the case of higher-skilled foreign labour, companies are often interested in having an engineer or top technologist who has arrived here as a long-term core employee. To keep good people in our labour market for longer, integration needs to be addressed at both national and company level.

The very best professionals are usually people of prime working age, with previous work experience, who also have families to bring with them to Estonia. It is important to pay attention to the integration of the whole family, including the spouse.

According to the OSKA survey, around 40 percent of family migrants (including children) are employed in the labour market, and around 20 percent of them are professionals. They are therefore an important addition to the Estonian labour market. Unfortunately, one of the reasons for leaving Estonia before their work permit expires is that the family is not suitable.

One way of attracting specialists for professions with higher labour shortages (e.g. doctors, nurses, engineers) is to invite them to study in Estonian higher education institutions. Many countries use foreign students as a managed and desired migration route. During their studies, students can be introduced to Estonian culture and taught the language, so their integration into society takes place before they enter the labour market and more smoothly.

Clear rules are needed

So we need both foreign workers who would be here for short periods to give their families a better life at home, and foreign professionals who would want to live and work in Estonia for longer periods and integrate into Estonian society.

This requires a range of measures to regulate labour migration and a clear labour migration policy that also takes into account other types of migration. Labour migration policy should set out short- and long-term objectives and principles that reduce the complexity of the current system while leaving it sufficiently flexible and responsive to needs.

The article appeared on ERR’s Numbers page.