Estonian unions and current crisis

Harri TaligaMay 29, 2009

Unions 2009

• Union density rate – below10%, declining

• 1,5 (?) confederations:– EAKLConfederation of Estonian Trade Unions

re-established in April 1990 (first TUC in 1919)

– TALO (Estonian Employees’ Unions’ Confederation) – split from EAKL in 1993-1994

• 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• 1992-2003 – 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 2002-2008• 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 (12. 2006)

• National minimum wage agreements– 2007: increase by 20% – 3600 EEK– 2008: increase by 20,8% – 4350 EEK– 2009: no increase - 4350 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 14-16 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)

GDP growth 1996-2008

5,7%

11,7%

6,7%

9,7%

7,7% 7,8% 7,1% 7,5%9,2%

10,4%

6,3%

-3,6%

-0,3%

-6,0%

-4,0%

-2,0%

0,0%

2,0%

4,0%

6,0%

8,0%

10,0%

12,0%

14,0%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Increasing unemployment

• 2000–2007: 9,3% p.a. in average

• 2008: 5,5%

• 2009: 12,2%

• 2010: 15,6%

Employed and unemployed 1998-2008

606,5

579,3572,5

577,7585,5

594,3 595,5

607,4

646,3

655,3 656,5

66,1

80,5

89,9

83,1

63,6

67,2 66,2

38,4

52,2

40,5

32,0

560

580

600

620

640

660

680

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

20

30

40

50

60

70

80

90

100

Employed Unemployed

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%

MINIMUM VERSUS AVERAGE WAGE 2000 - 2009

89118

159 172 192230

278 278

28,3 %30,0 %

35,2 %34,1 % 33,3 % 31,9 % 31,7 %

33,6 %

0100200

300400500600

700800900

2000 2002 2004 2005 2006 2007 2008 2009*)

Eur

os

0%

5%

10%

15%

20%

25%

30%

35%

40%

Minimum wage Average wage Minimum vs average

Statutory minimum wages per hour, 2009 in EUR

9,49

8,71

8,65

8,47

8,41

7,2

4,05

3,78

3,67

3,41

2,71

2,1

1,93

1,73

1,7

1,64

1,48

1,4

0,96

0,71

0 1 2 3 4 5 6 7 8 9 10

Luxembourg

Ireland

Belgium

Greece

Malta

Portugal

Czech Republic

Slovakia

Latvia

Romania

Statutory minimum wages per hour, 2009 in PPS

9,03

8,22

8,17

7,95

7,41

6,86

5,02

4,57

4,43

4,07

3,21

2,95

2,71

2,42

2,41

2,41

2,35

2,29

1,62

1,54

0 1 2 3 4 5 6 7 8 9 10

Luxembourg

France

UK

Malta

Slovenia

Portugal

Czech Republic

Estonia

Lithuania

Romania

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

2004 1400 EEK 26%

2005 1700 EEK 24%

2006 2000 EEK 23%

2007 2000 EEK 22%

2008 2250 EEK 21%

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!

www.eakl.ee