Thursday, December 18, 2008

After months of infighting and mutual accusations, the parliament has finally passed the new labour bill. Without going into the back story too deeply, the coalition claimed it will help the economy by making life easier for employers, and the opposition claimed it removed too many benefits and securities for employees. According to the public record, the Centrist party voted against the bill, the three coalition parties voted against (including the Social Democrats, who ought to be defending worker's rights at all costs), and the minor parties mostly didn't vote at all.

What's changed?

According to the handy guide from Postimees, the following:
  • Companies can fire people with less notice, and at a lesser cost. Anyone who's worked for the company for less than a year gets 15 days' notice; under 5 years - a month, under 10 years - two months, over 10 years gets you three months.
  • The cost of downsizing an employee is 1 month's pay. If they worked in the same company for at least 5 years, they get an additional month paid for by the state, and if they worked there for at least 10 years, the state pays for two months.
  • Unemployment insurance payouts for downsized employees are 70% of the last salary for the first three months, then 50% for the rest of one year. After a year, you just get the regular unemployment benefit, which now rises from a flat 1000 kroons per month to half of the minimum wage. Which is still not really enough for survival.
  • If you quit, rather than being fired, you get 40% of your salary for a year (previously you got nothing). But only if you've contributed to the unemployment insurance fund for at least 4 out of the last 5 years.
  • There's no extra pay for working after 6pm or on weekends (though that doesn't mean the death of overtime - there's still a 40-hour work week in effect). The graveyard shift gets you time-and-a-quarter, up from the previous 20%.

The upshot is that companies will have an easier time getting rid of unproductive or unnecessary workers, while employees will generally have more financial stability after getting canned. There is still a limitation, you can't live off benefits indefinitely (the absolute minimum will buy you a month's worth of rice and ramen, at best), but overall I can see how it would be beneficial to the economy.

Unlike the controversial French laws, this one isn't so much intended to give companies the confidence to hire new staff, as allow them to restructure and increase the efficiency of their process. This has been the principal complaint about the Estonian workforce - that its salary expectations had been growing out of sync with rises in productivity. The other problem was the sheer lack of manpower in key areas; so in the context of the financial crisis, this legislation does at least seem like a step in the right direction. It places additional demands on the budget, but it actually gives both employers and employees more confidence in the areas that count, while encouraging people to improve their skills and efficiency.

Then again, I'm a 24-year-old IT specialist who's never applied for any state benefit. I'm not the one they're all worried about.


Louis said...

is this the law where it is easier for estonian companies to bring in foreign labor also? I hope so! dirty foreigners like me need jobs too :)

Kristopher said...

Ah, the economy™. It just gets hard to view it as more than the sum of its parts, if the rank-and-file are always asked to sacrifice on a pari passu basis whenever it becomes even moderately more difficult.


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