Estonian government is going against EU labor policy

Estonian Union leaders: Estonian government is going against EU labor policy

Kalle Liivamägi, ROTAL chair and Sander Vaikma, EEAÜL chair.

today at 10.41

https://news.err.ee/1609686605/union-leaders-estonian-government-is-going-against-eu-labor-policy

Kalle Liivamägi and Sander Vaikma. Source: Authors' collection.

Estonia's trade unions are calling on the government to restore substantive tripartite negotiations at national level, and are seeking public support for the development of collective labor relations and the conclusion of collective agreements in both the public and private sectors, union leaders Kalle Liivamägi and Sander Vaikma write.

Their proposal is to withdraw draft amendments to the Employment Contracts Act from parliamentary proceedings.

Social dialogue at the national level has come under threat in Estonia. The government which took office in March 2025 has apparently taken on the view that the tripartite talks, between the state, employers, and trade unions, which were restored at national level in 2019, are an obstacle to Estonia's economic development.

Amendments to the Employment Contracts Act

A vivid example of the government's changing attitude is its twisted approach to the draft amendments to the Employment Contracts Act, where it did not take into account proposals from the social partners. Although the Estonian Trade Unions Confederation (EAKL) took part in the preparation of the bill, it only learned of the significantly altered final draft through the media. The original purpose of the amendments was to make employment relationships more flexible, while also ensuring job security.

Social partners agreed that flexible working hours could only be applied to certain target groups (students, pensioners, etc.) by agreement with the employee.

The draft bill from November 2024 also reflected the social partners' position that flexible working time contracts could be applied to other employees, if such an option was agreed upon in a collective agreement. The government excluded the option of concluding flexible working time agreements via collective bargaining from the final version of the draft, however, without informing the social partners of this.

In this way the government wants to make flexible working time applicable to employees in both public and private sectors but without being interested in developing and promoting collective bargaining. All this comes in a situation where the proportion of collective agreements concluded in Estonia is among the lowest across the EU. The EU minimum wage directive, conversely, supports the creation of a basis for the conclusion of collective agreements.

Recently after it became viable to restore meetings between social partners, the government and the prime minister, a few times a year on major issues, Prime Minister Kristen Michal stated that there was no need for such meetings after all and that three-way talks could continue only at the level of the Minister of Economic Affairs and Industry.

That minister, responsible for the economy and labor relations, Erkki Keldo, is of the opinion that collective agreements are a relic of the 19th and 20th centuries and so play no significant role in modern society. In a meeting with the EAKL board, Keldo reiterated his position that he is not in favor of concluding collective agreements in the public sector.

It cannot be ruled out that the government intends to, or has already, instructed the management boards at state-owned enterprises to avoid assuming any obligations via collective agreements too. Some companies owned by the Estonian state have been attempting for years to evade entering into collective agreements in fact.

In considering the economic setbacks, growing economic uncertainty, and lack of trust, Estonia's high inflation rate, with some of the highest prices in Europe, a decision like that diminishes the trade unions' ability to resist unwanted changes.

The trade unions therefore call on the government to restore substantive tripartite negotiations at the national level. We are seeking public support for the development of collective labor relations and the conclusion of collective agreements, in both public and private sectors. Our proposal is to withdraw the draft amendments to the Employment Contracts Act from Riigikogu proceedings, and to start thorough tripartite negotiations on the matter.

The Trade Union of State and Local Government Institutions Employees (ROTAL) and the Estonian Energy Workers' Trade Union Federation (EEAÜL) have also informed the Secretary General of the European Public Service Union (EPSU), Mr. Jan Willem Goudriaan, about the situation that has developed in Estonia. He shares the concerns of the Estonian trade unions with regard to the regression in labor relations and the conclusion of employment contracts, and he has condemned the course taken by Prime Minister Michal's government in swimming against the current of EU labor policy and so harming the interests of Estonian workers.

If the current direction continues, the EPSU leader does not rule out submitting complaints to the European Commission, which would lead to the handling of Estonian labor policy at the EU level.

Both ROTAL and EEAÜL are calling on the government to change its course, to withdraw from the Riigikogu draft bills that lack the approval of social partners, and to return to the negotiating table to seek progress in labor relations through tripartite negotiations — progress which would benefit the Estonian state, employers, and employees, and would ensure the development of Estonia's economy.

Why are collective agreements needed?

A collective agreement, be it concluded in an institution, company, or sector, sets up the working conditions and relationships agreed upon between the employees and the employer(s). This makes it essentially a contract which applies to all employees. It may be argued that labor relations are regulated by the Employment Contracts Act and individual employment contracts.

At the same time, it is vital not to forget three key points: The law only sets minimum working conditions and guarantees for employees; the law leaves many issues to be agreed on by the parties; and, generally, the employee is inevitably the weaker party in employment relations, a situation which would be alleviated by conducting collective bargaining. It is also simpler for the employer too, to agree on working conditions for all employees through a single round of negotiations.

Employers have further increasingly started to ask what benefits they themselves gain from a collective agreement.

The answer is simple but fundamental: First, a collective agreement allows all working conditions and relationships in a company or sector to be established. Equally important is that a collective agreement guarantees industrial peace. It is worth stressing that this industrial peace is not limited to the trade union's obligation not to declare a strike, but also incorporates constructive relations between the employees' representative organizations, and the employer.

It would be an oversimplification of things to curb the employer's interest in a collective agreement solely for material gain. It should always be recalled that labor relations also have an intangible value. Constructive employment relationships, which take into account the interests and needs of both partners, are of the greatest benefit to all, and the key to a company's success. Even a poor peace is still preferable to a "good" war.

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Editor: Kaupo Meiel, Andrew Whyte