The needs of Estonian economy can be supported by combining national reforms with reasoned migration policy

Toomas Mattson | 6/17/2015 | 11:15 AM

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TALLINN, 17 June 2015 – The National Audit Office prepared an overview of the migration policy choices faced by Estonia, which indicates that the state can use both employment reforms and other national reforms as well as migration wisely and in suitable proportions as levers for improving the outlook of its economic development. The goal is to have enough people with the skills and knowledge required for economic development in our state. If Estonia wants to be successful in the international competition for attracting people who have the capacity to generate income, it has to guarantee for such people a suitable working and living environment that proceeds from a broad view of the world.

According to forecasts, the number of working-age people or people aged 20-64 in Estonia will decrease by ca 50,000 in the next five years, i.e. by 2020, and by as much as 165,000 by 2040. At the same time, the number of people aged 65 and over will increase by ca 24,000 by 2020 and by more than 88,000 by 2040.

As someone has to maintain our pension and health insurance system as well as our state and society as a whole, we all have to figure out how to generate the income that can be used to meet society’s demands in order to preserve the standard of living and guarantee the economic development of Estonia. The implementation of reforms will make it possible to bring a bigger share of the inactive part of the population to the labour market and to increase productivity, but the initiation of reforms in the nearest future will only generate results in the distant future and their impact may not be sufficient. This means that although a rather sizeable part of the state’s need for workforce can be covered internally in Estonia, it’s unlikely that domestic sources can provide the entire workforce needed for the development of Estonian economy.

Another means for increasing the income of the state and society in addition to internal reforms is to smartly use the skills and knowledge that can be offered by the people who come to work and live in Estonia from other parts of the world. The overview by the National Audit Office indicates that Estonia needs a more active and successful approach in this area.

The majority of immigrants from outside the European Union come to Estonia within the scope family and learning mobility. According to the Estonian Population Register and the Police and Border Guard Board, 39,000 people migrated to Estonia from 2005-2013, 14,000 of whom were predominantly Estonian citizens who returned home and ca 25,000 were foreigners. The share of return migration and EU citizens in immigration has increased in recent years and the share of third countries has decreased respectively.

The people who migrate to Estonia are mostly young. In 2013 ca 65% of immigrants were younger than 35 and ca 45% of all migrants fell into the 20-34 age group. The average age of migrants has remained around 30-31 from 2005-2013.
Whilst the reasons why migrants from the European Union have chosen to move to Estonia are unknown, one-half of immigrants from third countries came here within the scope of family migration, one-third came here to work and one-sixth came here to study.
This means that the majority of immigrants are family and student migrants, who do not enter the labour market. The majority of immigrants come to Estonia within the scope of family migration, i.e. to join their family members who live in Estonia. 33% of working-age family migrants work regularly.

In order to integrate family migrants as immigrants who were not chosen on the basis of their skills, the central objective is to provide access to jobs that require an average level of skills and do not call for high (academic) qualifications, but for experience and vocational education. Since Estonia needs both highly qualified workers as well as people with a less developed skill set, immigrants who are not employed can be regarded as an unused resource. Although finding work is also one of the most important preconditions to immigration, the state has not given any special attention to the employment of family migrants, although developing a separate programme for them might be beneficial. At present, family migrants only have access to the same labour market services as the rest of the population.

At the same time, the number of foreign students who come to study in Estonia has increased and one-fifth of them stay in Estonia to work permanently (they have worked in Estonia more than half the time within 18 months of completion of their studies). The biggest number of people who start working in Estonia are citizens of nearby countries of similar cultural backgrounds (Latvia and Lithuania).The position of students from third countries on the labour market is in many ways worse than that of EU students (fewer of them find jobs, they work for shorter periods of time and also earn less).

Although significant work has been done to attract foreign students to Estonia and their number has increased considerably, it is necessary to think systematically about ways to encourage students with skills and knowledge needed by Estonia to enter the labour market.They could be offered more traineeship opportunities during their studies to allow them to learn about the Estonian labour market and give local employers the experience of working with foreigners.

A foreign student may also be beneficial for Estonia after graduating and leaving Estonia if they maintain their connections and develop them further.

The present immigrants are not a burden on the Estonian social system, i.e. we have no benefits tourism. The excessive use of social benefits is often seen as a threat associated with immigration; this is not the case with Estonia. On average, immigrants receive fewer benefits than local people.

For example, subsistence benefit was paid to 2.7% of the Estonian population in 2013 and only to 1.5% of immigrants. The share of foreigners registered as unemployed who received unemployment benefits (unemployment insurance benefit or unemployment benefit) was considerably smaller than that of Estonian people. A little more than a third of the foreigners registered as unemployed from 2010 to 2013 received unemployment benefits. Almost half of all registered unemployed persons in Estonia received unemployment benefits in the same period. The majority of the social benefits paid to immigrants (77%) are related to children and family, not coping problems.

The data of the OECD also confirm the results of the National Audit Office’s analysis of the use of social and unemployment benefits by foreigners in comparison to the local population. The OECD has found that people of foreign origin tend to receive less social support in Estonia than the locals. The OECD average in the comparison of indicators was 2.0, but the same indicator in Estonia was 0.2, i.e. more than two times smaller.

The state would rather see workers with high-level knowledge and skills coming to Estonia, but very few of them have moved here due to the present organisation of immigration. The goal set by the state for itself in recent years is immigration by top specialists, but the people who arrived in Estonia from third countries within the scope of labour mobility from 2005-2013 were mostly skilled workers. Approximately one-third of labour migrants mainly start working in areas requiring high qualifications in Estonia. The fact that labour migrants mostly enter areas of activity requiring lower levels of skills, where wages are also lower, is also confirmed by the data on wages. According to the salary criterion effective since 2013, the top specialists who come to Estonia within the scope of labour migration must be paid salaries that equal at least two times the average wages in Estonia. The analysis by the National Audit Office indicated that less than 16% of labour migrants earned at least as much from 2005-2013. This means that the majority of labour migrants don’t come here for highly paid jobs that require a higher level of knowledge and skills.
If the state wants the labour migrants who come here to be mostly top specialists, it needs to decide which internationally used measures that promote labour migration could be employed in Estonia, how to attract people with the necessary skills to Estonia and how to guarantee their adaptation.
A system for analysing labour market needs must be created to assess which skills are missing from the labour market and how many people with such skills are required. Considering the speed at which the economic environment and society change, the need for specialists can mainly be forecast for the shorter or, in some cases, the mid-term. A coordination for monitoring and forecasting the need for workforce and for developing skills is being developed under the leadership of the Ministry of Education and Research, but its estimated launch period is 2014-2020, which is why no results can be expected in the next couple of years.

The present practice indicates that the capacity of Estonian society and the state to receive, adapt and integrate immigrants is lacking. The limited accessibility of public information and services in foreign languages causes difficulties for immigrants, as do the insufficient preparedness of kindergartens and schools, and society’s and employers’ attitude towards people of foreign origin. These factors make Estonia less attractive for qualified workers.
The majority of general education schools and kindergartens are not sufficiently prepared to deal with the children of new immigrants. Parents have experienced the reluctance and unwillingness of schools to admit pupils from foreign countries. 10-15% of the children of the people who took part in the survey of the performance and educational opportunities of new immigrant pupils from outside the European Union have received various support measures (e.g. preparation class, assistant teacher, support person, special study materials, individual assistance with studies). However, both pupils and teachers confirm that four-fifths of new immigrants need additional support in their studies.
The passive or almost non-existent role of local authorities in the provision of services to foreigners has also been pointed out. The main obstacle is the lack of information about services in English. Local authorities also cooperate very little with other institutions (universities, entrepreneurs, state authorities, etc.).

In the context of Estonia, the accessibility of relevant, up-to-date and objective information and contacts is particularly important, as almost half of the Russian-speaking population of Estonia are fully locked in a field of information in Russian. At the same time, a considerable number of new immigrants speak Russian, which means that poor access to information may lead to weak connection and communication with the state. This in its turn makes adaptation and integration less likely to succeed.

The state created an information portal for immigrants last spring, but it is still in its initial stages. There are also plans to create an adaptation programme in 2015, but it’s still unknown how these measures can be implemented in reality and which results they will yield.

When the adaptation programme is developed, it must be kept in mind that it should be as practical as possible for all immigrants. It’s thereby important to observe how people who have arrived here within the scope of different types of migration should be handled: labour migrants with higher and lower qualifications, student migrants, family migrants, incl. the spouses and children of labour migrants. Another thing that must be considered is how to use the programme to guarantee the most effective connection with society so that integration would not remain a theoretical issue, but would also cover the practical side (e.g. how to establish contacts with local networks or, the labour market).

A survey commissioned by the Unemployment Insurance Fund was carried out in 2011 to ascertain the interest of employers in foreign workforce. The results indicated that 6% of companies had used foreign workers by the time of the survey. The results also indicated that 12% of companies were interested in hiring foreign workers in the future. This means that the share of Estonian companies that consider using foreign labour is relatively small. The reasons for the lack of interest highlighted by companies included no need for foreign workers, cultural differences (incl. the language barrier, attitude towards work), the high salary expectations of foreigners, society’s low preparedness to bring in foreign workers and the lack of information about how to recruit foreigners.

The overall attitude of society towards immigrants often also determines the preparedness and interest of employers to hire foreign workers. Compared to other countries, the prevailing attitudes among Estonian people are considerably more negative.

The OECD tolerance index of minority groups is the lowest in Estonia: the average in OECD countries is over 60%, but in Estonia, the index was just 27%. The generally low tolerance of Estonian people is also reflected in the low tolerance of immigrants: the results of the European social survey indicated that Estonian people are considerably less tolerant towards immigrants (24%) than European people on average (38%). Tolerance was even lower than in Estonia in three countries (Slovenia, Lithuania, Greece) whilst in Finland, 67% of people held a tolerant position.

The attitude of society may support or obstruct the adaptation of immigrants, which is why further steps must be taken to promote equal treatment and tolerance. The amount of problems is the biggest in the area of work, but there is also significant room for development in media coverage as well as in the awareness and skills of officials and educational and youth workers to address this topic.

The people who emigrate from Estonia tend to be young, low paid and without permanent jobs. There is no extensive emigration of people with higher education. According to the Population Register, ca 60,000 people have emigrated from Estonia from 2005-2013, which is ca 21,000 more people than have immigrated. The poor quality of data and the lack of data about the emigration of many people must be considered when emigration is studied.
Analysis of the data indicated that young and working-age people emigrate the most. For example, retirement-age people comprised 2-3% of emigrants in 2013; the rest were working-age or children. People aged 20-39 stand out clearly with their high level of emigration when emigrants are compared to the age composition of the entire population.
The analysis by the National Audit Office indicated that three quarters of emigrants received no regular income from work within a year before leaving. Those who earned income usually received considerably less than the Estonian average. For example, the average gross income in Estonia in 2013 according to the Tax and Customs Board was 730 euros, but the same indicator among emigrants was 453 euros. The rate of unemployment was also higher among emigrants than the average in Estonia. 11% of emigrants had higher education.

Whilst migration balance of most European countries is positive, i.e. there are more immigrants than emigrants, then in Estonia, it has been negative throughout the years – Estonia has kept the status of a donor country. The data of Statistics Estonia indicate a change in the migration balance trend in recent times, i.e. the different between the quantities of emigrants and immigrants is becoming smaller. Whilst 2639 people immigrated to Estonia and 6321 emigrated in 2012, i.e. the migration balance was -3682, then the figures in 2014 were 3904 immigrants and 4637 emigrants, and the migration balance was -733. Emigration in 2014 was ca 30% smaller than in the previous three years.

The state has no effective levers to curb emigration, and the free movement of people is also one of the fundamentals freedoms in the European Union. This means that reducing emigration requires dealing with its reasons. Emigration is mostly related to the better standard of living, working conditions and career opportunities outside Estonia. Reducing the impact of these factors requires considerable development of Estonian economy and society, and broader convergence with the other members of the European Union. It is therefore necessary to focus on the general internal reforms that improve the standard of living.

It is also necessary to decide how to increase return migration and make it easier for return migrants to adapt to life in Estonia. The state can also develop a diaspora policy to maintain contact with emigrants and to promote the state’s economic and trade relations with their help if possible.

Background

The National Audit Office prepared an overview of the contribution of the present Estonian migration policy to finding the necessary workers from the viewpoint of economy and workforce, to emphasise the need to make decisions, and to give a summary of possible choices to the decision-makers.

The asylum policy and the topic of illegal immigration have not been discussed in the overview.


Toomas Mattson
Head of Communication Service, National Audit Office
+372 640 0777
+372 513 4900
toomas.mattson@riigikontroll.ee
press@riigikontroll.ee
www.riigikontroll.ee

 

  • Posted: 6/17/2015 11:15 AM
  • Last Update: 8/15/2015 10:59 PM
  • Last Review: 8/15/2015 10:59 PM

The needs of Estonian economy can be supported by combining national reforms with reasoned migration policy

National Audit Office

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