Estonia on bottom of Europe by labour market freedom

20.05.2008, 09:02

MP Kalev Kukk writes that Estonia is among the bottom four European countries by regulation of its labour market.

Kukk writes in Äripäev that the recent 2008 Index of Economic Freedom published by The Heritage Foundation ranked Estonia on the bottom of Europe by labour market regulation. On a scale of 1 to 100, Estonian labour market score was 50.3 while Denmark had 99.9, Switzerland had 82 and Ireland had 80 points.

“Even recent reports by the European Central Bank emphasise the need for Estonia to increase the flexibility of its labour market, while neglecting to mention any similar problems in Latvia or Lithuania,” writes the MP.

“Since The Heritage Foundation ranked Estonia 12th worldwide by economic freedom even by such dismal labour market score, Estonia could have been as high as fifth worldwide if its economic freedom score had been at least average and Estonia would have been among free, instead of mostly free country,” writes Kukk.

The Heritage Foundation wrote about Estonia’s labour market that the regulation of labour relations is inflexible, reduces employment opportunities and slows down productivity growth. Employee-related non-payroll costs are high and making employees redundant is relatively difficult and costly. This is a risk for companies that would like to hire more people and expand. Working time restrictions are rigid.

Kukk ends his column by saying that he hopes that the new draft employment contract act will help increase the flexibility of the Estonian labour market and improve its overall economic freedom ranking.