Transcript Slide 1

Effect of Economic Crisis
on Estonian Industrial Relations System
Kerly Espenberg
University of Tartu
Centre for Applied Social Sciences
15 November 2012
Final conference of the project „The economic crisis impact on industrial relations national 7/17/2015
systems: Policy responses as key recovery tools“
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)
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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.
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 CASS is the network-type knowledge organisation and
co-
operation division in the University of Tartu.
Estonian industrial relations system.
State-level dialogue
STATE (Ministry
of Social Affairs)
EMPLOYERS
CONFEDERATION
- Estonian Employers
Confederation
EMPLOYEES
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,
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ragiology, journalists,
etc)
Estonian industrial relations system.
Sector-level dialogue
 Weakly developed: in 2000s sector-level collective
agreements signed in transportation and health care
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Estonian industrial relations system.
Organization-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
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Foundations’ registry)
Estonian industrial relations system.
Legislation
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Estonian industrial relations system.
Trade union membership
 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
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Estonian industrial relations system.
Advantages of collective agreements
(Espenberg et al 2012)
For employer and employees
-
Cooperative relationships, involvement
Clarifying laws
In the public sector an argument used when negotiating about state
funding
For employees
For employer
-
Motivated employees
Lower administrative costs
Higher security (no strikes)
-
Higher security
Better working conditions,
benefits
More power when negotiation
collectively
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Estonian industrial relations system.
Reasons for low number of collective
agreements (Espenberg et al 2012)
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
Nature of the
collective agreements
-
Relations between employees
and the employer
Low flexibility, decreasing
flexibility in management
Administrative burden to the
employer
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Economic crisis
GDP per capita in
PPS (EU27=100)
Real GDP growth
rate (%)
Government
consolidated gross
debt, % of GDP
Changes in tax
revenue, %
Export growth rate
(%)
Average monthly
gross wage (EUR)
2006
2007
2008
2009
2010
2011
66
70
69
64
64
67
10,1
7,5
-4,2
-14,1
3,3
8,3
4,4
3,7
4,5
7,2
6,7
6,1
19,9
22,9
2,6
-4,2
-1
7,3
12
10,7
7,0
-22,4
27,1
28,3
601
725
825
784
792
839
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Economic crisis
•
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
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find new markets in replacement of those that were lost
Economic crisis
Lay-offs, increase in unemployment rate

Wage cuts, non-paid leave

Decrease in working hours

Wage cuts
900
800
700
600
500
400
300
200
100
0
35.5
36
35.1
35
33.7
33.3
33.1
31.9
516
172
601
192
34
33
31.7
725
825
784
792
839
32
31
230
278
278
278
278
30
29
2005
2006
Minimum wage
2007
2008
Average wage
2009
2010
2011
Minimum wage/average wage
→ The bargaining power of employees decreased because
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during the crisis the main aim was to maintain the job
%
EUR

Problems faced during the crisis
 High youth unemployment rate
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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.
20 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 2013
1.
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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
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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
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and demonstrations were arranged in several places
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 2011 793 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
% of
teachers
Minimum
wage (in 2012)
Minimum wage (since 1
January 2013)
No skill-category
4%
608 €
700 €
Junior teacher
6%
608 €
700 €
Teacher
70%
644 €
700 €
Senior teacher
17%
736 €
736 €
Teachereducationalist
3%
889 €
889 € 7/17/2015
Problems faced during the crisis.
Sector-level dialogue
 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)
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Problems faced during the crisis.
Sector-level dialogue
 Medical workers’ strike: results (increase of minimum
hourly wage)
Workers
Estonian Hospital Association
Before the strike
Doctors
20%
6.6%
Nurses
43%
6.6%
Medical care workers
42%
6.6%
10 October 2012
Doctors
11%
6.1%
Nurses
17.5%
9.7%
23%
13.7%
Medical care workers
Agreement 25 October 2012 (enters into force in March 2013)
Doctors
11%
Nurses
17.5%
Medical care workers
23%
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Problems faced during the crisis.
Sector-level dialogue
 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
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Problems faced during the crisis.
Organisation-level dialogue
 Decrease in number of collective agreements signed
100
90
80
70
93
97
81
60
65
50
54
54
2010
2011
40
2006
2007
2008
2009
 Not always the collective agreements were followed
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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
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Challenges
For state:
 Recovering the trust of the employees’ representatives
 Overlooking laws
For trade unions:
 Better communication of their role in society
Thank you for your attention!
For employers:
 ?
Kerly Espenberg
[email protected]
http://ec.ut.ee/rake
Centre for Applied Social Sciences CASS
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