A recent Work In Estonia study states that fewer and fewer workers can be found among Estonian residents in the manufacturing sector, and the need for foreign workers is therefore growing. The OSKA professional council has likewise pointed out that the Estonian education system and the smaller incoming generations cannot supply businesses with the workers they need in sufficient numbers and with the right skills.
The disappearance of jobs affects all of society, because they determine how well we can sustain our country, that is, whether and how generous a pension we can pay, what level of medical care we can afford and how much we can invest in security, since most of the state budget's tax revenue depends on labour and consumption taxes.
If jobs are not created or sustained here, or if there are fewer of them, that means either continued tax hikes or a significant reduction in welfare and public goods. That is one option, but contraction will not make us richer overall. A society's prosperity is still created in business that develops and grows.
Estonia is not alone in the talent shortage
The small size of Estonia's labour market and the shortage of workers, the rapid rise in wages and some of the developed world's strictest restrictions on hiring foreign talent have been hurting our economic competitiveness for some time now. This holds back the development and growth of local companies and discourages foreign investors from putting money into Estonia and creating jobs here. Such investments are vital in a small economy.
We tend to forget that we are not the only ones trying to solve a labour shortage. The shortage exists in other developed countries too, and we are competing with them for people who have the skills we need. Of course, hiring foreign workers is not a magic wand for solving the labour shortage, but it is one important piece of the solution.
It is neither sensible nor possible to teach every speciality in Estonia. Our labour market is small and, due to demographic trends, there will be fewer workers each year. In addition, as prosperity grows some jobs have become less attractive, and the younger generation values jobs with more variety over routine ones. Someone still has to do those jobs, and developed countries use foreign workers to help.
Labour migration, immigration and war refugees
Unfortunately, immigration, labour migration and, more recently, helping war refugees are being mixed up in public discussion in Estonia. When employers talk about recruiting foreign workers, they mean controlled and temporary labour migration, not letting people in indiscriminately or handing out citizenship. When a work permit or job ends, the person leaves.
Nor do employers deal with foreign workers as a hobby or out of interest, but out of necessity. Hiring from abroad is not the path of least resistance or the cheaper option, it is a more expensive but unavoidable choice. Recruiting from across the border comes with thousands of euros in costs to find the worker, recruit them, sort out paperwork and arrange their settling in.
That is why every employer prefers locals when possible, because they are easier to reach, easier to assess before hiring, and easier to deal with. In addition, a local can manage their life outside of work and the related paperwork and bureaucracy on their own.
A crying need for engineers
Foreign workers are needed both for simpler jobs and, as a particularly painful problem for our most successful and export-hungry companies, for engineering, technology and IT specialist roles. Lower-skilled and higher-skilled positions are also linked, because simple jobs create the conditions for highly specialised positions and vice versa.
That is why, for our companies to develop, for our shared prosperity to grow and to keep the country running, we need to take a fresher look at labour migration and the recruitment of foreign workers.
For example, the immigration quota (0.1 percent of the population, or about 1,300 people per year) was set almost 30 years ago and made sense given the social mood and political situation of the time, but it has now outlived its usefulness. Fortunately, this has been understood by Minister of Economic Affairs Tiit Riisalo, who has set a goal of doubling the economy and now plans to double the foreign worker quota.
Extend the start-up exemptions to the whole economy
We also have practical experience to draw on, entrepreneur and investor Sten Tamkivi recently said in an interview, because Estonian start-ups have enjoyed exemptions when bringing skilled workers into Estonia: "Maybe it really is time to declare this experiment a success, because you can see that it makes the economy grow and lets entrepreneurs do things more broadly. There is no point in keeping these narrow start-up exemptions in place over the long run, we need them for the whole economy."
Our advantage is the chance to avoid the mistakes other countries have made and to organise immigration into Estonia in a way that admits people who have the skills we need, who want to contribute to our economy, who fit into our cultural environment and who themselves contribute to integration by taking an interest in the language and customs. Employers are looking for those workers too.
The article appeared in ERR's opinion section.