Mart Laar has a certain image, a furrier kind of Kalevipoeg, lying in wait to rescue Estonian politics just when his country needs him most. When he comes out with a policy statement, people tend to pay attention. When he says that he's got a practical solution to counteract the others' impotent squabbles, it merits a closer look.
In today's Riigikogu session, he came out with a ten-point plan to fix the economy and, in particular, the unemployment situation in Estonia. The original text is here (search for Mart Laar to get the relevant paragraphs; I don't think there's an English version anywhere yet). Here's a short summary:
1) Stop stalling and pass the enterprise support bill immediately. This is a program for 5.7 million kroons' worth of credit guarantees (not actual money), to be given out to small, export-oriented businesses. There have been some complaints that it excludes large companies, but overall it seems like a Good Idea(tm). Laar also mentions some sort of "business internationalization project", which includes an idea to create an international financial center in Estonia. Maybe the MPs know what Laar is talking about with that one, I certainly don't.
2) Initiate a program of loan guarantees for heat insulation on apartment buildings. Supposedly this program was initially proposed by Marek Strandberg of the Green Party. It's the rough equivalent of the "weatherization" project in Barak Obama's stimulus bill. Heating costs have been a big cause of worry and discontent among the population this winter, especially in Tallinn (where the utility companies have a monopoly) and especially in Soviet tower blocks. At the same time, insulation is a big, expensive job, and many homeowner associations find it hard to convince low-income and elderly residents that it is worthwhile.
3) Increase investment by allowing banks to decrease capital reserves to 12% of liabilities, if the extra liquidity is disbursed inside the country. Elegant in the sense that it increases the amount of money in the system without printing new kroons, but imposing less regulation on banks is what sir Humphrey Appleby would have called a courageous policy. Then again, if our major banks go under, it'll be Sweden's problem, so that's OK. Laar also suggests working out a way to put 20% of pension fund holdings into the economy, instead of the 1% currently mandated. Which is a good idea, in that most pension funds are buggered anyway, and local entrepreneurs are not likely to be, on average, any worse of an investment than global securities - but Laar better have a plan of action somewhere to achieve this.
4) Ease the payroll pressure on companies. Do not increase unemployment insurance premiums. Lose, or at least delay, unemployment benefits for people leaving their jobs voluntarily. Set a cap on social tax, to attract highly-skilled labour back to Estonia. This is roughly in line with the general policy of attracting investment first. The lack of corporate tax means the state needs to tax payroll fairly heavily, and that's been a complaint from both employers and workers; around 40% of the total cost of hiring someone is tax.
5) Institute an investment attraction package, giving foreign companies incentives to buy land, create infrastructure and train workers. Um, duh; tell us how, in detail.
6) Lose supertax on employee training. This is an odd point in Estonian tax law: since there's a flat income tax, all kinds of employee benefits are automatically treated as an attempt at a tax dodge, so it actually costs the employer more to pay for a company car or a gym membership than increasing the employee's salary by the same amount. Interestingly, employers still do it. But making training cheaper is definitely a good thing for labour efficiency.
7) Cover companies' retraining expenses if they commit to maintaining a workforce; extend the state-guaranteed student loan program to professional training. It was worded awkwardly (what the hell is a koolitusosak?), but I think I'm reading this right. The student loan program is a fixed, low interest; I pay 5% on my college loans, in kroons, which is a hell of a good rate for a short-term loan on a small amount. Student loans are also relatively simple to get, and they're not too big so most people don't have a problem repaying them. So this point sounds about right.
8) Increase the opportunities for microloans to new businesses, and increase the public's awareness of them. Microloans are generally quite clever and useful, but this point needs more details. I'm guessing this would be a job for KredEx, but I suspect a lot of people don't even know KredEx exists.
9) Use EU funds earmarked for retraining to streamline the professional training system; involve the employers; decreace the bureaucracy in state tenders; let the Ministry of Education run training programs, and bring more universities on board. Again, good but vague.
10)Create a program to fight unemployment among the youth. Got a detailed mission statement for the program somewhere? Hell, the last effective program of this kind was the real estate boom; all the unskilled school-leavers went into construction.
Laar's speech leaves an overall impression that he needed to have 10 points for the entire thing to look good. Needz moar specifics. Otherwise though: good ideas. Now go and make it happen.
Liberalism is not nice
1 week ago