BONJOUR L'ESTONIE

The growth of wages and salaries slowed down in the 2nd quarter

According to Statistics Estonia, in the 2nd quarter of 2008, the average monthly gross wages and salaries were 13,306 kroons and the hourly gross wages and salaries were 78.26 kroons. The growth of wages and salaries that had remained around 20% in the last five quarters slowed down in the 2nd quarter. Compared to the same quarter of the previous year, the average monthly gross wages and salaries were by 15.2% and the average hourly gross wages and salaries were by 17.7% higher.

In the 2nd quarter of 2008 the consumer price index increased 11.4% and taking into account this fact the growth of real wages was only 3.4%. The growth of real wages was so small last in the 4th quarter of 2004 (3.3%).

Compared to the 2nd quarter of 2007, the average monthly gross wages and salaries increased the most in fishing, forestry and education (51.7%, 29.2% and 21.4%, respectively). The average monthly gross wages and salaries increased the least in financial intermediation ; transport, storage and communication and in construction (9.8%, 12.1% and 12.2%, respectively).

Compared to the 2nd quarter of 2007, the average hourly gross wages and salaries increased the most in forestry, fishing and hotels and restaurants (41.8%, 40.7% and 23.7%, respectively). The average hourly gross wages and salaries increased the least in manufacturing ; transport, storage and communication and in real estate, renting and business activities (14.3%, 15.1% and 15.1%, respectively).

The average gross wages and salaries were 12,769 kroons in April, 12,968 kroons in May and 14,160 kroons in June.

The decline in construction production continued

According to Statistics Estonia, in the 2nd quarter of 2008 compared to the same period of the previous year, the total production of Estonian construction enterprises in Estonia and in foreign countries decreased 6%. The decline in construction production that had started at the beginning of the present year continued in the 2nd quarter, too.

In the 2nd quarter of 2008 the production value of construction enterprises amounted to 9.7 billion kroons, of which the production value of building construction was 6.4 billion kroons and the production of civil engineering totalled 3.3 billion kroons. Compared to the same period of 2007 the volume of building construction decreased 12%, but the volume of civil engineering increased 10%. It was mainly caused by the decreased volumes in dwelling construction on domestic construction market. Although the volume of civil engineering grew, its influence on the construction activity was small, accounting for only a third of the total volume of construction.

Contrary to the domestic construction market which is on decline stage, the construction volume in foreign countries increased about 2% compared to the same period a year ago. The growth was caused by the building construction.

Estonia invests 105 million kroons into timber processing equipment

Juhan Tere

Investments into timber processing equipment in Estonia will be subsidised with 105 million kroons during the years 2007-2013, writes the National Broadcasting.

The objective of the subsidies is to improve the competitiveness of enterprises that process wood as raw material and help them implement new products, processing technologies and methodologies, thus more fully use the forest resources.

Minister of agriculture Helir-Valdor Seeder signed a relevant regulation on Monday, determining the conditions for receiving investment subsidies in giving added value to forestry products in accordance with the Estonian Rural Live Development Plan for the years 2007-2013.

Have s-e-x - Estonia is shrinking !

by Robin Gurney

I have said it before but it needs saying again, Estonians need to have more s-e-x.

According to Eurostat’s latest figures it seems that Estonia’s population is set to decline by 7.2% by 2035 and by a whopping 15.4% by 2060.

Look guys and girls, recruitment problems in Estonia are tough enough now already so…
… please, for the sake of your country :

MAKE SOME BABIES

You can read the figures here in the Eurostat Population Projections 2008-2060 (pdf)

Estonia faces GDP fall, bad loans rising-c.bank

TALLINN - Estonia's economy faces contraction this year and bad debt is on the rise, though the bank system is so far safe, the central bank said on Wednesday.

It also called on the government to consider postponing election promises of tax cuts in order to pursue a balanced budget next year. Estonia's top banks are all Nordic-owned and include Swedbank (SWEDa.ST: Quote, Profile, Research, Stock Buzz), SEB (SEBa.ST: Quote, Profile, Research, Stock Buzz) and Nordea (NDA.ST: Quote, Profile, Research, Stock Buzz).

The central bank said in a statement that the economy was following a path of a speedy decline in domestic demand, especially in investment growth.

"Therefore it is possible that real growth will be negative this year," said the bank. Estonia's GDP grew 7 percent in 2007. The Finance Ministry has forecast a 1 percent fall in GDP this year. New central bank forecasts are due on Oct. 22.

Tough times in Estonia’s last up to 5 years, experts say.

Sandra Taimre
sandra.taimre @ aripaev.ee

Economic experts say that the cooling economic growth should speed up a little next autumn but the tougher times in Estonia last up to five years.

According to the experts’ estimates, the unemployment is expected to grow in the near future but at the same time the prices should decrease. Estonian Ministry of Finance published a new forecast of the economic growth, which is more modest than the one drawn in the spring. The experts say that one of the results of more difficult times could be decline among working population in Estonia, ERR News writes. 

The picture in unemployment has been surprisingly good so far but at the same time, the unemployment reacts with certain delay, economic analyst Villu Zirnask explained.

Banker Indrek Neivelt doesn’t believe the unemployment would become huge. “I don’t think that the classic economic theories work in here as we have a large labor market next to us, Finland, or Sweden or some go to Ireland and England. It’s not likely that the unemployment would grow significantly but that means that people are leaving,” he said.

Zirnask noted that Estonia should get over the tough times, when everything goes downhill, next year. But reaching the 5-6 pct economic growth again takes more time.

Ain Hanschmidt, the member of the supervisory board of the ferry company Tallink, said that there is no reason to panic since Estonia has been in worse situation before and survived them fast.

The experts say that the salary increase will slow down because the companies are not able to pay the employees more money.

Estonia falls into technical recession

Estonia is the first of the Baltic States to technically fall into recession, according to official data compiled by Statistics Estonia.

The research shows that the country’s economy contracted by a seasonally adjusted 0.9% in Q2 of this year, following a 0.5% fall in Q1. Furthermore, Estonian’s GDP is now falling at an annual rate of 1.4%, according to Capital Economics.

Capital Economics projects that Latvia will soon join Estonia in recession. "The Latvian economy grew by just 0.2% year-on-year in Q2. This appears consistent with a contraction in seasonally adjusted GDP of 1.5%, the first quarterly fall since 1998. But it’s only a matter of time before Latvia joins Estonia in recession," the company said. 

The economic group blames the bursting of the Baltic property market bubble and a sharp decrease in consumer spending, for the financial meltdown.

The latest research from Knight Frank shows that average property prices in Estonia and Latvia depreciated by nearly 11% and 6% respectively in Q1 2008. 

Lithuania remains the most stable Baltic property market, with prices remaining stable.

Tallinn’s most famous nightclub could go bankrupt

Toomas Hõbemägi

Tallinn’s No. 1 gayclub Angel has found itself deep in financial trouble and is losing money.

Eesti Päevaleht writes that the club that belongs to brothers Peeter and Priit Rebane ended last year with a loss of more than EEK 660,000. The club’s total loss is about EEK 2.5 mln.

The club’s auditor pointed out that the net assets of Heavenly Service Ltd that owns and operates the club are negative by EEK 570,000. Under the commercial law, companies whose net assets make up less than half of their equity must be liquidated or file for bankruptcy.

The company owes about EEK 265,000 in taxes with interest.

Priit Rebane, one of the shareholders of the club, said that he is not actively involved in running the club. “This is a question to the club’s managers,” he said.

Siim Kumari who took over as CEO of Heavenly Service last September said that the problems occurred long before. “Our situation has been improving and we are making a profit this year,” he said.

However, his optimism may be ill-founded since the company is claimed EEK 630,000 by Meifort Baltic Invest Group that was the general contractor in the construction project. The latter has already filed a debt claim in the court.

Member of Tallinn city council : working in Russia is prestigious

Sandra Taimre
sandra.taimre @ aripaev.ee

Member of the Tallinn city council Oksana Laasi said that working on advertizing and marketing in the second largest city in Russia, St. Petersburg, is once in a lifetime opportunity and prestigious.

Oksana Laasi will soon be working as a deputy director in St. Petersburg direct investment agency. Laasi told dv.ee that currently she’s applying for a visa and arranging documents, aripaev.ee mediates.

According to her, finding such position is not possible in Tallinn. Such opportunity comes only once in a lifetime, Laasi added.

An Estonian citizen working in St. Petersburg city government isn’t a problem. “St. Petersburg direct investments agency-this is not city structure but a company that is owned by the city. Therefore it is not banned to hire foreigners,” Laasi said.

Banks keep closing offices and move into shopping centres

Toomas Hõbemägi

Estonia’s largest banks are downsizing their office networks and are opening new outlets in shopping centres instead.

Riho Unt, board member of SEB, told Eesti Päevaleht that SEB is opening a branch office in Priisle shopping centre in September. “Since more and more customers are living near shopping centres it is cost effective to open new branches in malls,” he said.

Unt said that one reason why fewer customers have been visiting bank branches is the rapid development of online banking. “We have more customers in our online bank than visiting us in our branches,” he explained.

Unt said that two thirds of consumer credit contracts issued by SEB are signed online. “Also almost all bank transactions are made through the online bank.”

This week SEB will close its offices in Liivalaia street and Peterburi road in Tallinn as well as one office in Tartu and one in Jüri. At the end of September the bank will close another office in Pärnu and one in Tallinn.

Also Hansabank has closed five branch offices this year. “We have replaced some offices where we have seen fewer customers with Hansa24 automated banking centres where one can make bank transactions 24 hours a day,” says the bank’s press spokesperson.

Tallinna Vesi to appoint a new CEO

Sandra Taimre
sandra.taimre @ aripaev.ee

On the 1st of September the supervisory council of AS Tallinna Vesi will hold a meeting in order to appoint Ian Plenderleith as the new CEO of the water company.

Upon the approval of the Supervisory Council, Ian Plenderleith will take over the CEO's role from Roch Chéroux, who has been managing the water company since  July 2006 and will become a senior managing director within United Utilities International division, the company announced on Tallinn Stock Exchange. 

It was a difficult decision to make because I really love the country, the company and the team I'm working with, and I have invested a lot of time and energy to turn around the company. But in a career, it is natural to move on to the next level, and new challenges from time to time, “ Chéroux said.

Tallinn cruise guide : Introduction and basics

By Jessie Hewitson

Tallinn, the capital of the smallest of the Baltic States, sits on the north coast of Estonia. It's a very walkable city, which is handy for cruise-ship tourists and the large number of day-trippers who catch the ferry from Helsinki.

The highlight of Tallinn is the UNESCO World Heritage-listed Old Town, conveniently located right by the port. It is a magnificently well-preserved network of cobbled streets, pastel-coloured medieval houses and narrow alleyways dating back to the 14th century.

The city is also an exciting mix of old and new. There's an evident respect for history, and it's one of Europe's best-preserved medieval cities - yet Estonia is one of the most internet-savvy countries in Europe, with Tallinn one of the best-connected Wi-Fi cities, and home to Skype, the free internet telephone service.

When low-cost airlines discovered Tallinn, in 2004, so did the stag and hen parties - much to the bewilderment of older Estonians. The New York Times recently dubbed it the Las Vegas of the Baltics – though as soon you arrive you'll see that the culture and history of the Baltic city easily sets the two places apart.

Anyway, it isn't too hard to lose the drunk, rowdy – and, quite possibly, costumed –revelers by avoiding the bars and restaurants in the obvious tourist spots. And only the most civilised stag or hen would be found in one of the city's many churches or numerous museums.

Arriving

The Port of Tallinn – where cruise ships dock – is only a 10-minute walk from the Old Town.

Nordea not to expand in Estonia due to the economic situation

Sandra Taimre
sandra.taimre @ aripaev.ee

Nordea Bank announced that due to the poor economic situation in Baltic countries it would not open any new bank offices in Estonia and Latvia before 2010, arileht.ee quotes Berlingske Tidende.

In Estonia and Latvia we have slowed down our speed in opening new offices and we’ll wait at least until 2010 when the economic climate should improve, Thomas Neckmar, head of new European markets at Nordea, said.

However, the bank will continue in their old tempo in Lithuania, where they have not noticed such slowdown in economy.

In spite of all, the Neckmar does not believe Nordea’s loan operations would be hurt seriously by Baltic countries. We has a decent loan policy and therefore I don’t believe the economic fall would influence us that much, Neckmar said.

According to Berlinsgke Tidende, Nordea will open in Estonia and Latvia two new offices this year, in Lithuania seven or eight.

Nordea has altogether 20 offices in Estonia.

Developer chooses architects for new housing in Tallinn Hippodrome area

Toomas Hõbemägi

Estonian businessman Jaan Manitski who owns the Tallinn Hippodrome has chosen QP Arhitektid to develop the architectural solution for the new housing area.

Postimees writes that Manitski plans to move the current hippodrome to Saku municipality just outside Tallinn and develop the area into a housing estate.

Manitski said that the housing development would begin only after the new hippodrome centre is completed in Saku municipality.

Tallinn Hippodrome that was founded 80 years ago was acquired by Norfolk Ltd which is co-owned by Manitski in 1994. Since then the new owner have invested tens of millions of kroons in the project.

Padar : state budget deficit is not excluded

Sandra Taimre
sandra.taimre @ aripaev.ee

According to the Minister of Finance, Ivari Padar, it is difficult to find solutions to the EEK 13 bln state budget cuts and deficit is not excluded, ERR News writes. 

During the last ten years, there have been four budget deficits in Estonia, Padar said in an ETV morning programme. “There is nothing extraordinary in case we go to deficit. It happens and the correct logic in planning state finances is that during the good times we collect reserves and during bad times these reserves are being used,” Padar noted.

According to Padar, additional EEK 4 bln has to be cut form the state budget and in case the government makes no tax policy decisions, he sees no opportunities to avoid minus in next year’s budget.

British real estate developer left plenty of debts behind in Pärnu

Sandra Taimre
sandra.taimre @ aripaev.ee

British real estate developer OÜ Churchills has finished operating in Pärnu and the company’s owner Lee Cornel Williams has disappeared with the clients’ money.

OÜ Churchills, which according to the Commercial Registry was established in 2005, mediated real estate in Estonia for Great Britain citizens. By now, the office on Rüütli street in Pärnu is closed and so is the company's web page in Internet. The owner Lee Cornel Williams apparantely knows nothing about company’s business operations anymore, aripaev.ee quotes Pärnu Postimees.

William, however, is constantly being requested in the British real estate forums. People are sharing their concern about their money and their hope of receiving it back becomes smaller every day. 

German entrepreneur Dieter Vogtschmidt, who also has lost his money through business with Williams, explained that probability to receive back money or real estate from Williams is close to zero. 

Growth in rental offers pushes prices down

Sandra Taimre
sandra.taimre @ aripaev.ee

Despite the increase in cost of living there are more apartment rental offers and the rental prices are lower than earlier.

The fall in rental prices is due to the big supply : while during the boom, there were about 250-600 apartments for rent in Tallinn, then now the figure reaches 2,000, Postimees writes.

Ober-Haus analyst Rain Rätt explained that there are three reasons for such situation. First, the maintenance expenses of an apartment have gone up sharply, second, price decrease and third, apartment owners’ unreal price expectations.

Hauster Real Estate’s management board member Mihkel Oiderma said that the current rental market is diversified : apartments at similar prices can be found with furniture and without. “We can say that our rental market is still quite raw, we have lack of traditions and univocal standards,” he added.

Winner of Tallinn’s new city hall tender earns EEK 500,000

Sandra Taimre
sandra.taimre @ aripaev.ee

Tallinn city government announced in collaboration with the Union of Estonian Architects a tender for the new city hall building. The winner of the tender earns EEK 500,000, postimees.ee writes.

The international design contest is carried out in two phases. The winner receives EEK 500,000, second place EEK 300,000 and the third place EEK 200,000.

The contest costing EEK 3.5 mln will be complete next year.

According to the plans, construction works of the building will begin in 2010 and it will be established next to the large conference and entertainment centre Linnahall.

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