Lack of workforce is starting to choke the Estonian economy

12.02.2013, 10:30

Economist Maris Lauri says that one of the biggest problems facing Estonia is lack of workforce.

“Businessmen need to understand that there are much fewer employees than what has been officially reported. There is no sense to talk about potential 700,000 employees because the actually number of 630,000 or 70,000 people less than estimated,” Lauri wrote in her blog.
“Lack of workers is quickly becoming absolute. Where to find a suitable worker? No wonder then, that voices urging authorities to allow more immigrant workers into Estonia are getting louder.
“Virtually the only possibility to increase the number is to bring back to the labour market people who are inactive at present. We need to attract more people to part-time jobs and focus more on retraining workers,” she said.
There are five groups of people who could be attracted to the labour market: people with special needs, other nationalities than Russians living in Estonia, apprentices from other countries, students, elderly and retirees.

People with special needs
As for people with special needs: while there are almost 90,000 of them who have lost their work capacity, only a third of them – 33,000 – are working. This group includes people who have a master’s degree or are simple manual workers which makes it attractive for employers. They are also generally loyal, very motivated and ready to do simple manual jobs that regular workers would not like to do. The unemployment insurance fund can also support such hiring and employers don’t have to pay social tax on them.

Other than Russians
As for other nationalities than Russians living in Estonia, they make up 30% of the Estonian population. “Whenever one says non-Estonian, people think Russians. When we some years ago started to ask our employees about their nationality, we found out that 60% of our employees were non-Estonian, but not Russians,” says Vaido Palmik, CEO of Estanc, manufacturer of steel tanks.
Palmik said that the company employs Lithuanians, Latvians, Udmurts, Ukrainians and  Belarussians, among others. Palmik says that there are no language problems in the company. “When we hired a production manager, he almost spoke no Estonian, Today, he speaks and writes Estonian like anyone else,” he says, adding that the company is finding new employees mainly by word of mouth.

Foreign apprentices
One opportunity is to find new apprentices through the AIESEC network that mediates information about young foreigners. One benefit is that such apprentices can be used for exporting to foreign countries, especially if it is their home country. Often, such apprentices become full employees of the company.

Students and schoolchildren are often used as seasonal workers. If everything goes well, the company can make them full-time employees. Coffee chain Kehrwieder says that all its commercial managers started as seasonal workers.

Elderly and people on old-age pensions
Only 20% of the total of 400,000 old-age pensioners are employed, mostly working  part-time. Their benefit is that they are highly motivated and unlikely to change jobs easily.