Effect of Economic Crisis on Estonian Industrial Relations System Final conference of the project „The economic crisis impact on industrial relations national systems: Policy responses as key recovery tools“ 8/28/2015 Kerly Espenberg University of Tartu Centre for Applied Social Sciences 15 November 2012

Outline of the presentation Some facts about Estonia, UT, CASS Estonian industrial relations system Economic crisis and its impact on industrial relations in Estonia Challenges Research methodology 1. Desk analysis (previous studies, media, statistics) 2. Interviews (about 15) 3. National debate (in October) 8/28/2015

Some facts about Estonia, UT and CASS ESTONIA Total population 1.34 mln GDP per capita in PPS (EU27=100, 2010): 64 UNIVERSITY OF TARTU Founded in 1632 Estonia’s leading centre of research and training Research focuses on subjects as diverse as medicine and philosophy, genetics and computer science CENTRE FOR APPLIED SOCIAL SCIENCES Established in 2007 Mission: to offer society high-quality applied research and analyses in social sciences. The purpose of CASS is to raise the relative importance of sustainable strategic planning based on knowledge in society. CASS is the network-type knowledge organisation and co- operation division in the University of Tartu. 8/28/2015

Estonian industrial relations system. State-level dialogue 8/28/2015 EMPLOYERS EMPLOYEES STATE (Ministry of Social Affairs) CONFEDERATION - Estonian Employers Confederation CONFEDERATIONS: -Estonian Trade Union Confederation (private sector) -State and Local Governments’ Employees’ Trade Union Confederation (public sector) -Estonian Employees’ Unions’ Confederation (education, culture, customs, engineers, ragiology, journalists, etc)

Weakly developed: in 2000s sector-level collective agreements signed in transportation and health care 8/28/2015 Estonian industrial relations system. Sector-level dialogue

Dual employees representation system A trustee is an employee of an employer who is elected by a general meeting of the employees of the employer to represent the employees in the performance of the duties arising from law in relations with the employer. A collective agreement generally applies to all the employers and employees belonging to the organisations that are parties to the agreement unless otherwise provided by the agreement The exact number of trade unions and federations of trade unions in Estonia is not known (there are appr. 270 trade unions and approximately 40? federations of trade unions registered in the Estonian NGOs and Foundations’ registry) 8/28/2015 Estonian industrial relations system. Organization-level dialogue

8/28/2015 Estonian industrial relations system. Legislation

Trade union membership rather low (appr. 8%) Most of collective agreements are signed on company level Appr. 6% of companies have signed collective agreements Third of all workers are covered by collective agreements 8/28/2015 Estonian industrial relations system. Trade union membership

Estonian industrial relations system. Advantages of collective agreements (Espenberg et al 2012) 8/28/2015 For employer and employees -Cooperative relationships, involvement -Clarifying laws -In the public sector an argument used when negotiating about state funding For employer and employees -Cooperative relationships, involvement -Clarifying laws -In the public sector an argument used when negotiating about state funding For employer -Motivated employees -Lower administrative costs -Higher security (no strikes) For employer -Motivated employees -Lower administrative costs -Higher security (no strikes) For employees -Higher security -Better working conditions, benefits -More power when negotiation collectively For employees -Higher security -Better working conditions, benefits -More power when negotiation collectively

Estonian industrial relations system. Reasons for low number of collective agreements (Espenberg et al 2012) 8/28/2015 Society level -Lack of traditional industrial relations system -Low support to the development of the industrial relations by the state Society level -Lack of traditional industrial relations system -Low support to the development of the industrial relations by the state Organization level -Low awareness -Negative attitude towards the need of collective agreements -Low activity of the employees’ representatives Organization level -Low awareness -Negative attitude towards the need of collective agreements -Low activity of the employees’ representatives Nature of the collective agreements -Relations between employees and the employer -Low flexibility, decreasing flexibility in management -Administrative burden to the employer Nature of the collective agreements -Relations between employees and the employer -Low flexibility, decreasing flexibility in management -Administrative burden to the employer

8/28/ GDP per capita in PPS (EU27=100) Real GDP growth rate (%) 10,17,5-4,2-14,13,38,3 Government consolidated gross debt, % of GDP 4,43,74,57,26,76,1 Changes in tax revenue, % 19,922,92,6-4,27,3 Export growth rate (%) 1210,77,0-22,427,128,3 Average monthly gross wage (EUR) Economic crisis

8/28/2015 Lay-offs, increase in unemployment rate Structural employment due to the firing a large number of workers with a relatively low level of education in the construction and industrial sector at the beginning of the crisis. There was a lack of highly qualified skilled workers, such as engineers, who could have helped develop own production and find new markets in replacement of those that were lost

Economic crisis 8/28/2015 Lay-offs, increase in unemployment rate Wage cuts, non-paid leave Decrease in working hours Wage cuts → The bargaining power of employees decreased because during the crisis the main aim was to maintain the job

Problems faced during the crisis 8/28/2015 High youth unemployment rate

Problems faced during the crisis. State-level dialogue State abandoned several agreements made with the social partners Labour contracts act (flexicurity) Entered into force in 1 July 2009 (planned 1 January 2010) Security package agreed percentage point increase in the unemployment insurance in the initial stage of unemployment, and a 10 percentage point increase from the 101st until the 360th day of unemployment → at first postponed and then abandoned 2. 40% unemployment insurance benefit guaranteed to those quitting their job upon agreement or at their own initiative → abandoned 3. Increase in the unemployment to 50% of the national minimum wage → postponed until /28/2015

Problems faced during the crisis. State-level dialogue Involvement of the social partners to decision making lacking or rather formal Government’s decision to include the reserves of the Unemployment Insurance Fund and the Health Insurance Fund in the state budget Increase in unemployment insurance premium Amendments to the termination of collective agreements under the Collective Agreements Act 8/28/2015

Problems faced during the crisis. Sector-level dialogue Teachers’ strike 7-9 March 2012 Main claim of the strikers: increase in minimum wage of teachers by 20% 682 educational institutions (17,234 educational workers: 10,000 teachers and 7,000 other educational sector employees) Support strikes were organised: members of health care, transportation, cultural and other associations and unions participated in support strikes. Simultaneously with the strike of educational personnel, the Estonian Trade Union Confederation organised a support strike in which a total of 7,000 workers participated (including over 4,000 health care workers, approximately 1,500 members of the Intellectuals Union, 800 transportation workers, 400 energy workers and over 200 railway workers). Overall, 20 strikes were organised in Estonia in support of the requests of teachers and EAKL. Furthermore, pickets, strike meetings and demonstrations were arranged in several places 8/28/2015

Problems faced during the crisis. Sector-level dialogue Teachers’ strike outcomes. The draft that changes the wage system is in the process of receiving feedback and comments From January 2013 the average wage for teachers will increase to 840 EUR (in EUR) and the minimum wage to 700 EUR (right now 608 EUR). In addition, 20% of additional funds will be given to schools that can be used for developing the motivational and wage policy system by the principal 8/28/2015 % of teachers Minimum wage (in 2012) Minimum wage (since 1 January 2013) No skill-category4%608 €700 € Junior teacher6%608 €700 € Teacher70%644 €700 € Senior teacher17%736 € Teacher- educationalist 3%889 €

Medical workers’ strike Doctors and medical care workers 1-26 October 2012 Main request of the strikers: 20% wage increase for the doctors, more than 40% for nurses and medical care workers (the offer of the Estonian Hospitals Association before the strike: 6.6% wage increase for all). Also: decrease in workload Supported by teachers, family doctors, Estonian doctors in Finland and Sweden, rescue workers, railwaymen, power engineers, public sector workers (ca 16,600 persons) 8/28/2015 Problems faced during the crisis. Sector-level dialogue

Medical workers’ strike: results (increase of minimum hourly wage) 8/28/2015 Problems faced during the crisis. Sector-level dialogue WorkersEstonian Hospital Association Before the strike Doctors20%6.6% Nurses43%6.6% Medical care workers42%6.6% 10 October 2012 Doctors11%6.1% Nurses17.5%9.7% Medical care workers23%13.7% Agreement 25 October 2012 (enters into force in March 2013) Doctors11% Nurses17.5% Medical care workers23%

From 2013 the doctors-residents will be paid for full- time work The workload of doctors and nurses will be decreased 20% in outpatient and 16% in-patient work 8/28/2015 Problems faced during the crisis. Sector-level dialogue

Decrease in number of collective agreements signed Not always the collective agreements were followed 8/28/2015 Problems faced during the crisis. Organisation-level dialogue

Positive aspects Teachers’ and doctor’s strikes have raised discussion about industrial relations (incl. the role of the trade unions and collective agreements) in society Ministry of Social Affairs has started to overlook the industrial relations’ regulations in cooperation with the state-level social partners 8/28/2015

Challenges For state: Recovering the trust of the employees’ representatives Overlooking laws For trade unions: Better communication of their role in society For employers: ? 8/28/2015 Thank you for your attention! Centre for Applied Social Sciences CASS Kerly Espenberg