Newspaper: it’s time to prepare for painful decisions

13.06.2012, 09:30

Äripäev writes that Estonia seems to reached a point where businessmen, employers and employees should prepare for new downsizing and cutbacks.

It’s deja vu and the end of summer 2008 all over again. Back then, businessmen such as Jüri Käo understood that  company revenues were about to plummet and for the first time said it was time to cut wages. Salaries were cut or frozen practically in all sectors including the public sector.

There are signs that the second quarter will be even worse than the first. After two good months at the start of the year, growth of company revenues has markedly slowed down.

Crisis in Southern Europe as well as the developments in the economy of China and US are likely to affect Estonia’s exports.

Even Finland, Estonia’s main export partner, is expected to go into recession in a couple of months.

Such a situation is affecting the confidence of businesses and consumers and many are already postponing spending plans.

Many companies in Estonia are already dusting off plans to cut spending and postponing investments.

Businessmen are already looking for solutions, try to cut back on costs or postpone spending.

As four years ago, the crucial time is when managers return from their summer holidays.

Sales results of July and August will decide how deep the cutbacks will be.

But unlike in earlier times four years ago, businessmen and employers are unlikely to propose a general wage cut.

Instead, they understand that a successful employer values good employees and finds a way to keep them happy salarywise.

It’s no secret that at the time of falling revenues practically the only way to increase wages of some employees is to lay off other employees or cutting fixed costs.

Äripäev believes that even in tough times, the objective should be to ensure that living standards keep growing. This means that salaries must also go up.

We believe that employers should actively seek ways to increase wages. At the same time it is important that new employees who enter the labour market have realistic wage expectations.

Although employers are demanding higher productivity and better skills, it is clear that good wages must be earned.

One problem that is haunting the economy is lack of workforce. The measures are well known: higher birth rate, attracting Estonians who have left for work abroad back home, keeping senior citizens in the labour market and migration of foreign labour.