Employers to Estonian PM: Certainty needed for economy to grow

TALLINN - In order to break the downward trend of the Estonian economy, trust and cooperation between the government and entrepreneurs must be restored, the leaders of the Estonian Employers' Confederation said at the first official meeting with Prime Minister Kristen Michal.

"The confidence of the Estonian public and entrepreneurs regarding the future has fallen to the lowest level in recent years, and this directly affects the state of the economy -- whether entrepreneurs dare to invest and people to consume or not," Hando Sutter, managing director of the Estonian Employers' Confederation, said in a press release.

"In order to turn the Estonian economy towards growth and increase competitiveness, we need to restore a relationship of trust and cooperation between the government and business organizations. We and the entrepreneurs are ready to contribute to this with our experience and concrete proposals, and it was good to hear that we agree with the head of government on this," Sutter added.

The employers' expectation for the government is that the promised tax peace will actually last.

"Local taxes are also taxes, and the coalition party's words have an impact," Kai Realo, head of the general assembly of the Employers' Confederation, said, referring to the idea following the tax decisions made to discuss the implementation of additional local taxes and to perpetuate the security tax promised as a temporary measure.

According to the prime minister, no new taxes will be introduced in Estonia before the Riigikogu elections in 2027.

"Collecting taxes is one side of proper state finances. The other side is controlling and cutting the growth of expenses," Ain Hanschmidt, deputy chair of the general assembly of the Employers' Confederation, said.

According to him, the lack of money can be alleviated in some areas by involving private money -- for example, in higher education partly in the form of tuition or in healthcare by raising the limit of employers' health expenses.

The employers also drew attention to the price of energy -- the increase in the final price of electricity to the highest in the region significantly worsens the competitiveness of Estonian companies and scares away industrial investments, which are essential for economic growth. Entrepreneurs expect the government to work to create a credible plan that would ensure the transition to green energy with security of supply and a competitive final price for local consumers. It was agreed that the employers will make their own specific proposals in the near future to achieve this goal.

Employers are also mapping the places where the red tape that is exhausting business can and must be reduced, both domestically and in administrative affairs resulting from the requirements of the European Union, for presentation to the Cabinet.

Other topics discussed at the meeting included the lack of skilled workers, which is slowing down economic development, and the need to update the Employment Contracts Act, which, due to changed forms of work, no longer meets the expectations of either employees or employers. Employers' representatives also reiterated their support for the government's plan to increase the limit of foreign workers to up to 0.2 percentage points.

Increasing the competitiveness of the economy is the goal of both the government and the Employers' Confederation, and therefore the meeting discussed how the organization, broadly representing more than 2,000 Estonian employers, and the government will cooperate in the future to fulfill this goal. On Monday, the prime minister and employers agreed on regular meetings to keep attention on the progress of the most important activities improving Estonia's competitiveness.

The Estonian Employers' Confederation is a body bringing together the main business organizations of Estonia and many large companies. In total, the confederation directly and through its branches represents more than 2,000 Estonian companies, which employ 250,000 people in total. The confederation is an apolitical non-governmental organization.