Statement by Trivimi Velliste

Page 1:Second Session of the 16 Baltic Sea Parliamentary ConferenceLabour and social welfare in the Baltic Sea regionStatement by Mr Trivimi Velliste,Vice President of the Baltic Assembly,Chairman of the Estonian delegation to the Baltic AssemblyExcellencies!Honourable Colleagues!Ladies and Gentlemen!It is a real pleasure for me to address this distinguished audience in thefascinating and impressive capital of Germany. I would like to speak about avital issue of labour and social welfare in our region. In my presentation Iwill touch upon several aspects of labour market trends and challenges bothin the Baltic States in general and more specifically in Estonia. I would liketo cast some light on the trends of labour force migration, including returnof labour force, and on labour efficiency. Finally, using Estonia as anexample, I will take a look at the political measures for balancing the labourmarket.On the agenda of our parliamentary cooperation more and more issuesappear that transcend national boundaries and whose resolution requiresregional approach. Labour market, human resources and migration cover awhole range of issues that affect us all. Therefore, it is important to discussit with our European partners and new European neighbours.Page 2:Europe’s population, including the entire Baltic Sea region, is aging and thesize of our labour force is decreasing. At the same time, in other continentsof the world which are heavily populated - for example, Asia - the numberof inhabitants is rapidly increasmg and there is a high proportion of youngpeople who will be the future labour force.This means that all countries in the Baltic Sea region have to join theirefforts in solving problems related to strengthening families, raising thestandard of living and improving the quality and efficiency of humanresource in order to be competitive in the global labour market. Investmentin human resource and new technologies is the comerstone ofcompetitiveness in all EU member states. Therefore, doing so is one of themain long-term tasks for every single country in the Baltic Sea region.In recent years the Baltic States have taken pride in their very rapiddevelopment and increase in living standards. Nevertheless, in order tocontinue this harmonious and sustainable development it is essential that wejointly consider main problems and trends in the labour market, predictmovement of labour force as well as invest in human resource. Withoutpeople nothing else has meaning. People truly are our greatest asset and thecrucial factor in a long-term perspective. This is why the Balticparliamentary and govemmental cooperation bodies have earmarkeddevelopment of human resources as one of the most significant prioritiesfor regional cooperation. We clearly understand the imporance ofstrategically selected and timely investment in this resource which will bethe key factor for future development both of the Baltic region and theBaltic Sea region as a whole.wwPage 3:The defined goals of the Baltic Sea regional cooperation are to increase therole of the region and the competitiveness of the Baltic Sea area on theEuropean and world level. We really appreciate that education, socialsecurity and sustainability will be among main priorities of the Council ofthe Baltic Sea States.Ladies and Gentlemen,Accession of the Baltic States to the European Union has created manychallenges for the Baltic labour markets. Without a doubt, Baltic labourmarkets are very strongly influenced by developments in the rest of theEuropean Union. Free movement of labour from the new EU membercountries, including the Baltic States, is an issue related to EU's basicfreedoms. It is a social, economic and political issue which brings aboutchange in the structure of the national labour force, causes the drain ofhighly qualified workers, depletes the labour force in certain spheres of thenational economy and facilitates the rapid growth of salaries, whichsometimes is not conducive to labour efficiency, creates social tensions andthreatens the sustainability of the social welfare system in our countries.Growing industrial costs and lack of innovations diminish internationalcompetitiveness of enterprises. The trends and tendencies referred to aboveare characteristic of all three Baltic States. That is why we should workshoulder to shoulder in order to overcome challenges which stem from theEU pniaciple of open doors.Before joining the European Union, there was much talk in the Baltic Statesabout a large number of labour force moving abroad after accession. Forexample, in Estonia according to a poll conducted at the time before EUmembership, 42% of the working age population was interested in workingPage 4:abroad, although, only 3% had any serious intentions of actually doing so.The majority of them were interested in working abroad either temporarily,or from time to time. Actually, the number of those eventually going abroadproved to be quite manageable in Estonia - it is estimated that about 20,000Estonians presently work abroad, which is about 3.3% of the workingpopulation, Although this number may increase, it must also be kept inmund that many Estonians have already returned home.If we look at this issue from a theoretical perspective, the internationalresearches have shown that sooner or later about 20 percent of all emigrantsreturn to their homeland, while in Europe the percentage reaches about 30.As to Estonia, it has been predicted that, in the next few years, an average of11.2 thousand people will ireversibly leave our labour market due to variousfactors. At the same time, for rapid sustained economic development, it isnecessary to create about 3,800 new jobs every year, Most of them shouldbe created in the service and industrial sectors, while the number of workersin agriculture is continuing to diminish. Thus, we will require about 15thousand additional workers every year, primarily technicians, qualifiedspecialists, and specialised managers.It is a clear fact of life that after having become EU members the BalticStates face the emigration wave. I have so far presented figures aboutEstonia but in other Baltic countries these figures are even higher. Jt isassessed that at least 300,000 people have left Lithuania and about 86,000Latvians work abroad. An opportunity to eam a higher salary is a main butnot the only reason why people are leaving the Baltic States. Often acombination of factors causes people to emigrate: low domestic wages,difficulties in one’s private or professional life, poor working conditions,lack for opportunities for advancement, weak support networks provided bythe government, local municipaliry, family or friends. Among furtherPage 5:reasons, on the other hand, there are remarkable social security and stabilityin the old EU member states, better opportunities for education, inchidinglifelong and career education and so on.It is wrong to assume that only unqualified labour is leaving our countries.For the most part émigrés are young people with good education. If we lookat the destinations where the Baltic labour moves, then we can clearly seesimilar tendencies for all three nations: Baltic people prefer to go to theUnited Kingdom, Ireland, Germany and the Nordic countries due to theirlanguage skills as well as due to fair and comprehensible administrativerequirements but also due to already established networks. In case ofEstonia we clearly see that Estonians often leave to Finland and Sweden dueto their cultural and geographical proximity. While many less skilled workersgo abroad for shorter periods, then in the case of highly qualified workers, itcan be assumed that they will stay there on a more permanent basis,although this is no firm mule.Of course, emigration form the Baltic States has both positive and negativeaspects. If we evaluate the negative side, then we can surely assert that itleads to the lack of labour force in specific professions and economicsectors, the rise of wages, but not of productivity, negative changes in theage structure, unbalanced regional development, endangered sustainability ofthe social system, decline in quality of services and goods, Brain drain iscertainly a loss of money invested in human resource.But, on the other hand, we cannot ignore positive aspects of emigrationeither. It brings about increase in employment and improvement of qualityof life, stimulation of domestic labour market, especially in such groups asstudents, young mothers, handicapped persons, people in pre-retirementwsPage 6:age. Those who will retwn, will bring back new skills, experience, newknowledge and new contacts which can be effectively used in our homebusiness.Dear Colleagues,As we know, in Latvia and Estonia, to a lesser extent in Lithuania, one ofthe macroeconomic problems is related to high inflation. Rise ofproductivity is a very important tool to curb inflation. For example,according to Eurostat, the productivity in Estonia is among the Jowest in theEU - in 2005 it was only 58.6% of the EU’s average.Tt is well-known that along with capital inflow, economic progress is alsoadvanced through labour force growth and higher labour productivity. This,in turn, implies investments into research and development. We take it forgranted, that a successful economy cannot be based upon a poorly qualifiedlabour. It is essential to invest into knowledge-intensive economy. TheBaltic States are in the process of redefining their economies from lowskilled and cheap labour market with low added value into an innovative,knowledge based economy. The entrepreneurs are expected to invest morein technologies, research and development (R&D). In 2004 Latvia wasinvesting in R&D just 0.42% of the gross domestic product (GDP), inEstonia it was 1 %, and in Lithuania - 0.76%, while the EU 25 average levelwas 1.86%. But we do promote innovative thinking. Also, modertechnology, as well as non-technological innovation, for example design, canincrease the productivity and make remarkable contribution to a knowledge-driven economy. Of course, it is also essential to promote the research oftop-level scientists.6Page 7:An important role in keeping labour force at home is played by employers.If wages and working conditions were satisfactory, then people would nothave a reason to leave. Ever more important is the motivating of workers.Also, the support provided by local administrations plays a major role. Forinstance, the development of infrastructures and the everyday environmentwould encourage people to stay in their homeland.A great way of balancing the labour market is to promote specialprofessional training and career counselling. For example, Estonia isplanning to establish a unified career counselling system, so as to provideappropriate support for the whole working population. In times of rapidchange, life-long professional training, as well as the opportunities forqualified re- and supplementary training are truly essential for maintainingcompetitiveness.Another important factor is, no doubt, the foreign labour force. Forexample, citizens of the EU countries may work and operate businesses inEstonia without any restrictions.Ladies and gentlemen,Apart from political tools such as efficient and sustainable labour forcemigration policy, sustainable development, social security, increase inwelfare level, comprehensive education system have to be implemented inorder to facilitate stable and secure labour market development in the BalticStates. That, in its turn, will contribute to the improvement of the wholelabour and welfare situation in the Baltic Sea region.Thank you for your attention!~