Opinion: Estonia’s competitiveness at risk

03.01.2013, 09:39

Teet Tender, CEO of PwC Advisors, writes in Äripäev that it’s characteristic for the Estonian labour market that as soon as the country’s economy starts to recover, the country runs out of qualified labour force and develops an acute lack of blue and white collar workers.

Eurostat reported that Estonia‘s labour costs were growing the fastest in the EU in the third quarter which is weakening the country’s competitiveness and export capacity.

The fact that there simply are no people available with required skills is an inevitability which is plaguing not only labour-intensive manufacturers, but also service enterprises. As long as Estonia remains a provider of relatively simple subcontracting jobs, we need masses of workers to help keep labour costs at competitive levels.

On the other hand, if Estonia were to focus more on intelligent work with higher value added, it has to create more favourable conditions to attract brains from abroad.

I think that although the level of labour costs is important, it should not be exaggerated. Estonia adjusted its economy to the crisis quickly and swiftly and now that the Estonian economy is doing relatively well in comparison with the rest of Europe, it is important to keep employees motivated and successfully compete with neighbours. And if employers feel that their workers deserve more pay, they should do it.

A recent customer survey by PwC shows that in spite of the fact that the European economy is stagnating, the majority of Estonian enterprises were planning to hire more employees this year. This means that Estonian employers are determined to win market share and this is positive news for the whole economy.

Although every executive and financial director knows how important it is to keep down labour costs, the Estonian state and enterprises have proven that they are capable to adapt swiftly and remain competitive which his why we need more and better labour to implement our success. This will temporarily result in faster growth of costs, but hopefully in the long term it will help Estonian enterprises to become stronger and create more value added. Äripäev