Businessmen: cheap subcontracting keeps wages down, nation poor
10.02.2012, 09:52Many Estonian businessmen find that Estonia’s problem is that its industry is still geared towards fulfilling low-cost subcontracting orders that keeps wages low and does not allow the nation to become wealthier, writes Äripäev.
„Low wages is no advantage,” says banker Indrek Neivelt, answering the question whether it is Estonia’s advantage with rich nations. Neivelt who runs a bank in St. Petersburg says that it is not surprising that Estonians are seeking work abroad since the country’s wages are lower not only in comparison with Finland, but also Russia.
Jüri Mõis, businessman and former colleague of Neivelt, adds that this is a global problem that if you pay people little, they cannot cope. „Some may be doing very well, but most people will be doing very poorly. The formula is that when the majority are doing badly, you can pay them low wages. The problem in Estonia is that there is too much simple and low-cost work.”
Heido Vitsur from the Development Fund adds that wages are related to the cost of doing the simple assembly work. „If you look at the export sector, you see that we are exporting cheap assemblies. Cost is set globally and employers pay as little as they can”.