Estonian economy needs labor market, education reform - analyst

Photo: Mihkel Maripuu / Postimees

The Estonian economy is in need of structural change for which reforms have to be implemented and support for the establishment of businesses has to be increased, a bank analyst says.

Now is the time to pay more attention to economic structural changes in the longer term, Nordea Pank's chief analyst Tõnu Palm said at a press conference on Tuesday. "Estonia is financially well balanced, the debt level is under control, and only the current account will stay negative for a while," he said. That's why the focus now ought to be trained on measures to raise prosperity substantially in the next 10-12 years and ensure more equal distribution of wealth in society.

"There is no hope of success without smart investments and labor market and educational reforms to support the growth of enterprise, value added and globalization," Palm said.

"Development of export-oriented enterprise calls for reforming the labor market and fostering the growth of employment in export-oriented branches. If export does not grow it is not possible to increase consumption in the long term," the analyst added.

In Palm's view the state also ought to give preference to education and enterprise over things like roads in investment. "Investing in concrete and asphalt does not change the structure of the economy," he said. "But for young people not to leave Estonia more interesting and better paid jobs are needed."

In the analyst's opinion more extensive use should be made of measures like the state business support agency Enterprise Estonia to attract more young people to enterprise. "Good ideas must be grown in Estonia, aiming at the international market, and at the same time retaining ownership of those companies," he said. State investments in new businesses would help invigorate the economy, on the one hand, and on the other mean future revenue for the state, he observed.

The state should think more like the private sector in order to increase its income, Palm said. "Investing now in Eesti Energia, for example, it will be possible later on to take dividends and share them out among the people," he said.