Estonia no longer a cheap labor stop 's Parts

  • 2007-08-29
  • By Joel Alas

Parts also called for a buyback of Hansabank from its Swedish owner.

TALLINN - Four foreign-owned businesses have closed their Estonian factories, and several more are considering pulling out of the country as employment conditions put a squeeze on the economy.
A conference hosted by the British-Estonian Chamber of Commerce on Aug. 24 heard several production factories had been unable to find and retain enough staff to keep operating profitably.
At the same conference, Economic Minister Juhan Parts told business delegates that Estonia was no longer a country of cheap labor, and called on them to employ "brains not hands."
He said businesses that sought to take advantage of low wages should instead invest in technology to help modernize Estonia's production capacity.

"Companies should invest in technology. Good technology needs good high-paid labor," Mr Parts said.
"Estonia is not anymore a country of cheap labor. We have to think about how to utilize our resources and become competitive. We want to be known in 10 years as a country of many talents."
Parts' comments were not well-received by many of the conference delegates, who had come to discuss the question "Is Estonia still a good bet?"
One factory manager, Peter Shilling from Swedish-owned bathroom manufacture Svedbergs, announced his company was pulling out of Estonia and relocating to Thailand.
He said Svedbergs had been unable to find enough staff to meet production demands, making their three-year-old, 75-million kroon factory unprofitable.

"There is no labor in Estonia anymore. Our order book is full, but we cannot get the staff to make the factory viable," Shilling said. "We were not looking for cheap labor, we had good salaries. You've got good people here, but a lot of them are leaving."
Three other factories are also in the process of shutting down. PNJ, an industrial manufacturer, has relocated production to the United Kingdom. Nolato, which manufactures mobile phone parts, will move its factory to Mexico. The Finnish technology company Jutron will close one of its two Estonian plants based in Paide.
The conference heard at least three other businesses were also considering their positions.

Meanwhile, outside the conference Parts called on Estonians to "buy back" Hansabank from the Swedbank group. He said it was important for the economy for Estonians to have control over their own banking sector.
"The worst day of the Estonian economy was when Hansabank was taken over by a Swedish company. I call on Estonians to buy back Hansabank. Estonia should be in the business of financial services. We need powerful banks with full capacities."