Estonian unions and current crisis Harri Taliga May 29, 2009

Unions 2009 Union density rate – below10%, declining 1,5 (?) confederations: –EAKL Confederation of Estonian Trade Unions re-established in April 1990 (first TUC in 1919) –TALO ( Estonian Employees’ Unions’ Confederation) – split from EAKL in February 2009 – Teachers and univeristy teachers unions left TALO

EAKL EAKL has 19 affiliates in: – industry – transport – private services – health care – state and local authorities

EAKL (2) Central office – 11 employees 6 regional offices – 7 employees Central office: President Secretaries: organising, legal issues, wages/negotiations, international PR-manager lawyer

Social dialogue 1992 April – first tripartite agreement – 17 tripartite agreements –Minimum wage –State unemployment allowance –Basic income tax exemption –Participatory democracy –Guarantee fund –Principles of new Employment Contract Act

Social dialogue (2) Spring 2008 – tough tripartite negotiations on new Employment Contract Act April 23, 2008 – delegations signed agreement on the Bill –amendments only on tripartite approval –enforcement one year after adoption Government broke its word

Bipartite negotiations Unions – employers –National: confederations –Branch: sectoral federations/associations –Company: union and employer Unions – government –Civil servants’ salaries –Teachers’ salaries

EAKL – Employers’ Confederation December 1999 – memorandum February 2001 – unemployment insurance March 2001 – social partnership August 2001 – principles of increasing minimum wage for September 2003 – principles of new Labour Contract Act Agreements on minimum wage (2002 – 2008)

Collective agreements 2008 Total coverage – 28% 1 national agreement 2 sectoral/branch agreements –public transport –health care Energy, railway, mining covered by company agreements

Unions’ achievments Protection of unions’ rights in Employees Representatives Act ( ) National minimum wage agreements –2007: increase by 20% – 3600 EEK –2008: increase by 20,8% – 4350 EEK –2009: no increase EEK ESF money for social partners’ capacity building (2008 – 2014)

Priorities for unions Organising and recruiting members Increasing representativity Increasing bargaining capacity Increasing ability to take industrial actions –2004 – 2007 EAKL and affiliates organised strikes, demonstartions, picket lines every year –2008 – warning strike of EMSA

Priorities for unions (2) Promote European social model –strong industrial relations – partnership and workers’ participation –higher labour and social standards –social inclusion –fight against any discrimination

Challenges for Estonian unions Reluctance of the state to engage in social dialogue –no real interest in social partners’ involvement –attempts to limit (by amendments to legal acts) the unions’ influence and to push unions out from the dialogue

GDP growth 2000–2007: 8,7% p.a. in average 2008: –3,6% (preliminary) 2009: –8,5% (MoF) vs –12,3% (BoE) 2010: –2,5% (MoF) vs 0,2% (BoE)

Increasing unemployment 2000–2007: 9,3% p.a. in average 2008: 5,5% 2009: 12,2% 2010: 15,6%

Inflation CPI –2000–2007: 4,1% p.a. in average –2008: 10,6% –2009: 0,7% –2010: – 0,6%

Wages Nominal wages –2000–2007: 12,5% p.a. in average –2008: 14,4% –2009: – 4,4% –2010: – 2,3% Minimum wage –2000–2007: 14,2% p.a. in average –2008: 20,8% –2009: 0,0%

Policy of the Government Autumn 2008: unrealistic 2009 budget bill – adopted in December –GDP increase +2,6% –Spending 98,5 billion kroons (deficit –0,8%) February 2009: –Public spending cuts – 6,6 billion kroons –Join Euro in mid-2010

Policy of the Government (2) April 2009: –Additional cuts – 8,5 billion kroons –Enforcment of the new Employment Contract Act, but without of agreed increase of the unemployment insurance benefits –Euro is not the goal, but additional benefit

Income tax changes Monthly basic exemption Income tax rate EEK26% EEK24% EEK23% EEK22% EEK21%

Unions response Cuts are not creating economic growth Support of the domestic demand needed –Redistribution of the income tax: basic exemption up to 5000 EEK/month income tax rate up to 26% Joining Euro at any costs not acceptable

Unions response (2) Social insurance reserves to be used according to their purpose Enforcement of the Employment Contract Act –only on agreed in spring 2008 conditions –alternative – new agreement

Thank you for your attention!