Emigration from Estonia will stop only after employers start to regard wage costs as an investment, according to Rainer Aunpu, CEO and owner of Smart Valley OÜ. The following are excerpts from his column that was published in today’s Äripäev.
Until employers believe that it’s OK to pay 600 euros in net monthly wages to a full-time family father, wage emigration will not stop. Things would change if we were in a major crisis, but Estonia is at present in the phase of stable development that does not favour radical changes.
On the state level, ruling parties seem to lack motivation to do anything to radically stop emigration. No politician on power is not ready to commit a political suicide in the name of the country’s development even if they have ideas that they believe in.
I am not blaming politicians because they are acting as is natural and expected from them. What is important is to understand that the solutions that we need are mainly political. One problem is the old thinking of Estonia’s best-known and recognised entrepreneurs. They namely believe that costs must not be increased notably before increasing income.
The reason is that they built up their current successful businesses by privatising former state enterprises, without having to make any major investments. People who are used to earn money without having to invest will naturally teach everyone else the same approach.
The problem is that this model is no longer working. There are no free assets, no privatisation and banks that lend money based on gentlemen’s agreements. These times are gone. It’s time to start truly investing in people. The key is to pay decent salaries and teach employees to use their salary well.
When people have enough money and no longer need to fight for survival, they can start to realise their potential as an employee or an entrepreneur. The wage costs of the employees of this company amounted to 4.7% of the company’s turnover in 2012. This shows the attitude of our employers to the companies’ most expensive asset.
I recommend to transfer wage costs to the investment line in the balance sheet. Then many entrepreneurs would not see wage increases as a major problem. Perhaps such an approach could even appeal to the state and it could start paying support for wage investments.