Wednesday

7th Dec 2016

Euro accession offers little comfort for Estonia's unemployed

Estonia's success story in joining the eurozone on 1 January is in stark contrast with other embattled eastern-European economies, but the price is being paid mostly by its youngest and Russian-speaking citizens who cannot find a job.

"I didn't think it would be that hard finding a job. I feel that with little kids it's almost impossible," said 26-year old Egle Molder, a trained secretary and mother of two.

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  • Tallinn - Estonia is feeling the effects of budget cuts (Photo: Valentina Pop)

"Basic services - like education and social assistance - are very flawed in Estonia.The government hasn't taken any steps in changing the kindergartens or making the day care centres available for middle income people," she noted.

The toll taken on social services – such as unemployment benefits and daycare for children – is the flip-side of the budget cuts which allowed Estonia to meet the deficit and public debt criteria required for joining the euro.

Registered unemployed - 11.7 percent of the country's 1.2 million people – are divided into two categories: those who previously had a job and paid their social contribution get 50 percent of their salary for the first 100 days and then 40 percent for the following 170 days.

Those who never had a job with paid benefits – like Ms Molder – only get a fix aid of 1,000 kroons (€64) a month for 270 days – then nothing. Health insurance, however, is paid for so as long as they show up at the local employment office.

According to International Labour Organisation statistics, the unemployment rate in Estonia is close to that of Spain, coming to almost 20 percent.

"It's still one of the key issues for the government to work on," Ylo Kaasik, chief economist with the Estonian central bank, told this website.

"The Estonian labour market has been very flexible – we have seen very fast job destruction and we hope that job creation will be rapid as well. The new law on employment contracts made it easier for companies to fire, but it should also be easier to hire now," he said, suggesting that labour market recovery will take "several years."

Mr Kaasik is however optimistic that unemployment indicators will do down again this year, as the number of unemployed people who have started to work again has been steadily increasing since the end of 2009.

The two sectors that were hit hardest by the crisis are construction and industry. "The real estate boom is very unlikely to reoccur, so there is a need for a structural shift – new jobs need to be created in other sectors."

Activity in factories has started to pick up again, with growth "mainly export-driven, as domestic demand is still sluggish," he said.

But for the country's younger people, such as Ms Molder, employment perspectives are even less rosy. According to Eurostat, the EU's statistics office, youth unemployment in Estonia was 39.8 percent in the first quarter of 2010, double the EU average.

Siim Sarapuu, head of the Tallinn employment office, says the jobless have increased tenfold in recent years – from 3,500 registered unemployed in 2007 to 38,000 in March this year. Since spring, however, the rate began to decrease, reaching 31,000 in August.

"Our employment office staff has doubled from 60 to 112 due to the tenfold increase of unemployed in the past 3 years," he told EUobserver earlier this month.

Around half of the job-seekers entering Mr Sarapuu's office are Russian-speaking, reflecting the high unemployment rate within this ethnic group. A quarter of Estonia's 1.2 million population are Russians.

In a country where Russian settlers were given free apartments and other perks in Soviet times, adapting to the new reality and learning the Finno-Ugric language can be a challenge, especially for older Russian-speakers.

"The main problem for Russian speakers in getting a job is that they don't speak Estonian, while for the young Estonians, it is difficult to get jobs if they don't speak Russian, particularly in the services sector," Mr Sarapuu said.

"We offered language courses, but we no longer do so. After some 200 hours of courses we evaluated the outcome and it was basically a waste of money.

"However, we do inform them how to study the language by themselves," he added, noting that free language courses are offered in the office for immigration, as part of the programmes related to acquiring Estonian citizenship.

EU ministers approve 'Juncker plan' extension

The agreement to prolong the EU investment plan until 2020 to raise up to €500 billion will have to be confirmed by the parliament amid questions about its impact and functionning.

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