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Estonian unions and current crisis Harri Taliga May 29, 2009 Unions 2009 • Union density rate – below10%, declining • 1,5 (?) confederations: – EAKL Confederation of Estonian Trade Unions re-established in April 1990 (first TUC in 1919) – TALO (Estonian Employees’ Unions’ Confederation) – split from EAKL in 1993-1994 • February 2009 – Teachers and univeristy teachers unions left TALO EAKL • EAKL has 19 affiliates in: – industry – transport – private services – health care – state and local authorities EAKL (2) • Central office – 11 employees • 6 regional offices – 7 employees Central office: • President • Secretaries: organising, legal issues, wages/negotiations, international • PR-manager • lawyer Social dialogue • 1992 April – first tripartite agreement • 1992-2003 – 17 tripartite agreements – – – – – – Minimum wage State unemployment allowance Basic income tax exemption Participatory democracy Guarantee fund Principles of new Employment Contract Act Social dialogue (2) • Spring 2008 – tough tripartite negotiations on new Employment Contract Act • April 23, 2008 – delegations signed agreement on the Bill – amendments only on tripartite approval – enforcement one year after adoption • Government broke its word Bipartite negotiations • Unions – employers – National: confederations – Branch: sectoral federations/associations – Company: union and employer • Unions – government – Civil servants’ salaries – Teachers’ salaries EAKL – Employers’ Confederation • • • • December 1999 – memorandum February 2001 – unemployment insurance March 2001 – social partnership August 2001 – principles of increasing minimum wage for 2002-2008 • September 2003 – principles of new Labour Contract Act • Agreements on minimum wage (2002 – 2008) Collective agreements 2008 • Total coverage – 28% • 1 national agreement • 2 sectoral/branch agreements – public transport – health care • Energy, railway, mining covered by company agreements Unions’ achievments • Protection of unions’ rights in Employees Representatives Act (12. 2006) • National minimum wage agreements – 2007: increase by 20% – 3600 EEK – 2008: increase by 20,8% – 4350 EEK – 2009: no increase - 4350 EEK • ESF money for social partners’ capacity building (2008 – 2014) Priorities for unions • • • • Organising and recruiting members Increasing representativity Increasing bargaining capacity Increasing ability to take industrial actions – 2004 – 2007 EAKL and affiliates organised 1416 strikes, demonstartions, picket lines every year – 2008 – warning strike of EMSA Priorities for unions (2) • Promote European social model – strong industrial relations – partnership and workers’ participation – higher labour and social standards – social inclusion – fight against any discrimination Challenges for Estonian unions • Reluctance of the state to engage in social dialogue – no real interest in social partners’ involvement – attempts to limit (by amendments to legal acts) the unions’ influence and to push unions out from the dialogue GDP growth • • • • 2000–2007: 8,7% p.a. in average 2008: –3,6% (preliminary) 2009: –8,5% (MoF) vs –12,3% (BoE) 2010: –2,5% (MoF) vs 0,2% (BoE) GDP growth 1996-2008 14,0% 11,7% 12,0% 9,7% 10,0% 8,0% 6,0% 5,7% 9,2% 7,7% 7,8% 7,1% 7,5% 6,7% 10,4% 6,3% 4,0% 2,0% 0,0% -0,3% -2,0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 -4,0% -6,0% -3,6% Increasing unemployment • • • • 2000–2007: 9,3% p.a. in average 2008: 5,5% 2009: 12,2% 2010: 15,6% Employed and unemployed 1998-2008 680 100 89,9 660 655,3 83,1 80,5 656,5 646,3 80 640 67,2 66,1 90 70 66,2 63,6 620 60 607,4 606,5 594,3 600 595,5 50 52,2 585,5 579,3 580 572,5 40 577,7 40,5 38,4 30 32,0 560 20 1998 1999 2000 2001 2002 2003 Employed 2004 2005 Unemployed 2006 2007 2008 Inflation • CPI – 2000–2007: 4,1% p.a. in average – 2008: 10,6% – 2009: 0,7% – 2010: – 0,6% Wages • Nominal wages – – – – 2000–2007: 12,5% p.a. in average 2008: 14,4% 2009: – 4,4% 2010: – 2,3% • Minimum wage – 2000–2007: 14,2% p.a. in average – 2008: 20,8% – 2009: 0,0% Euros MINIMUM VERSUS AVERAGE WAGE 2000 - 2009 900 800 700 600 500 400 300 200 100 0 34,1 % 28,3 % 33,3 % 31,9 % 31,7 % 33,6 % 35,2 % 40% 35% 30% 30,0 % 25% 20% 278 89 118 159 172 192 278 230 15% 10% 5% 0% 2000 2002 2004 Minimum wage 2005 2006 Average wage 2007 2008 Minimum vs average 2009*) Statutory minimum wages per hour, 2009 in EUR 0,71 Romania 0,96 1,4 Latvia 1,48 1,64 Slovakia 1,7 1,73 Czech Republic 1,93 2,1 Portugal 2,71 3,41 Malta 3,67 3,78 Greece 4,05 7,2 Belgium 8,41 8,47 Ireland 8,65 8,71 Luxembourg 9,49 0 1 2 3 4 5 6 7 8 9 10 Statutory minimum wages per hour, 2009 in PPS 1,54 Romania 1,62 2,29 Lithuania 2,35 2,41 Estonia 2,41 2,42 Czech Republic 2,71 2,95 Portugal 3,21 4,07 Slovenia 4,43 4,57 Malta 5,02 6,86 UK 7,41 7,95 France 8,17 8,22 Luxembourg 9,03 0 1 2 3 4 5 6 7 8 9 10 Policy of the Government • Autumn 2008: unrealistic 2009 budget bill – adopted in December – GDP increase +2,6% – Spending 98,5 billion kroons (deficit –0,8%) • February 2009: – Public spending cuts – 6,6 billion kroons – Join Euro in mid-2010 Policy of the Government (2) • April 2009: – Additional cuts – 8,5 billion kroons – Enforcment of the new Employment Contract Act, but without of agreed increase of the unemployment insurance benefits – Euro is not the goal, but additional benefit Income tax changes 2004 Monthly basic Income tax rate exemption 1400 EEK 26% 2005 1700 EEK 24% 2006 2000 EEK 23% 2007 2000 EEK 22% 2008 2250 EEK 21% Unions response • Cuts are not creating economic growth • Support of the domestic demand needed – Redistribution of the income tax: • basic exemption up to 5000 EEK/month • income tax rate up to 26% • Joining Euro at any costs not acceptable Unions response (2) • Social insurance reserves to be used according to their purpose • Enforcement of the Employment Contract Act – only on agreed in spring 2008 conditions – alternative – new agreement Thank you for your attention! www.eakl.ee