According to the European Commission, Estonia now has so-called unemployment trap where people can receive equal amount to minimum wage by applying to various unemployment benefits, and this is keeping them away from the labour market, writes Eesti Päevaleht.
"Such people are not motivated to work which is why the state should think what to do to attract them back to work,” said a representative of the Commission. Labour issues dominated European Commission this year’s recommendations to Estonia. It said that low wages paid in Estonia are keeping people away from the labour market, that the employers’ expectations and that actual skills of workers are in a mismatch and that areas with high unemployment have too little entrepreneurship.
Too many low-paying jobs : analyst
Marje Josing, head of the Estonian Market Research Institute EKI said in comment that Estonia’s problems are not high social benefits, but too many low-paying jobs.
„There are jobs where people are offered minimum pay for 8-hour workdays and that do not motivate people. Often such jobs are offered in remote rural areas where people have transportation costs. Not surprisingly, people are seeking jobs in Tallinn or even in Finland. The state should create jobs which pay decent wages and the European Commission has reminded us that,” said Josing.
Incentives to work required : Commission
The European Commission advised that Estonia improves incentives to work through measures targeted at low income earners, improving skills' and qualification levels by expanding life-long learning measures and systematically increasing participation in vocational education and training, stepping up efforts to improve energy efficiency, in particular in residential and industrial buildings, and better balancing local government revenue against devolved responsibilities and improving the efficiency of local governments and ensuring the provision of quality public services at local level.
The Commission also advised that Estonia take action within the period 2014-2015 to reinforce the budgetary measures for 2014 in the light of the emerging gap of 0.3 percent of GDP, pointing to a risk of significant deviation relative to the Stability and Growth Pact requirements. In 2015, Estonia should significantly strengthen the budgetary strategy to ensure reaching the medium-term objective and remain at it thereafter.
Besides Estonia should complement the budget rule with more binding multi-annual expenditure rules within the medium-term budgetary framework and continue to enhance the efficiency of public spending.