Shedding the skin of subcontractor

Photo: Eero Vabamägi

Enterprise Estonia (EAS), that recently unveiled its new strategy, will support companies’ efforts to bring in foreign specialists as local education is keeping Estonia a subcontractor, says the agency’s supervisory board chairman Erki Mölder.

- Will you be continuing with the Welcome to Estonia slogan and the boulder motif?

Media coverage has shown that people were not happy with how it turned out. We don’t feel we need to change things in terms of our strategy. We have three main targets: more export, foreign investments and tourism.

We also have three horizontal topics: supporting innovation, business analysis of sectors and value chains and promoting Estonia’s reputation. The Estonian brand supports all three main targets. Criticism that has hit the brand means that EAS needs to change because society’s expectations are different.

- What could be the solution to the dilemma where we have labor shortage but would also like to see more foreign investments?

Labor shortage is one of the most serious factors holding back the Estonian economy. This has nothing to do with EAS, but we are investing in the wrong kind of education as a society. We are training people to do simple work and settling for simple jobs.

- What do you mean by that?

We are trapped as a country of simple work and subcontracting. Our average salary is far behind the European average. But if we simply hiked salaries by a few dozen percentage points, companies would find they cannot compete. This is where we need innovation that would allow us to develop new products. That takes time. We need people to develop the products we could sell under our own name. Innovation is the key to boosting our competitive ability.

- How can we make that change in a situation where schools cannot find enough mathematics teachers?

We made the wrong choices in our education system 10-15 years ago. If there are not enough people with necessary skills in Estonia, companies will have to import them, and that is something we can support. But it is clear the state has set a limit here.

- Does this mean that top specialists who determine the fate of companies will be foreigners, while local people will be left with cleaning and playing the bayan?

If a foreign specialist works in Estonia for three years, some of their skills will rub off on our people. The question is who owns the company. Estonian owners will see tax revenue generated by foreign specialists remain in Estonia. If a company cannot bring a specialist to Estonia because residence permits are numbered, there is little EAS can do.

- Where should Estonians look for talents?

In forestry, it’s mainly Finland and Sweden. Talking about companies like Transferwise, we need to look at countries that have a lot of startups and financial services.

- Where should EAS aim its strategic export support?

Our network of trade representatives gives us the possibility to negotiate on behalf of companies and support their interests by clusters or through innovation. For example, when the industry or individual entrepreneurs tell us there is a considerable food products market in Japan.

- Does this mean the Asia-heading could help us boost export?

We see a lot of potential for growth in Asia. The number of Asian tourists is growing rapidly in cooperation with Finland. We’ve also seen major foreign investments from there.

- The newly created State Support Services Center recently sent out a press release that indirectly criticized EAS in that the new center promises to distribute support without excessive bureaucracy. How are things in terms of bureaucracy at EAS?

They will have to try, but I do not believe they will find it possible to operate with less bureaucracy without increasing the number of mistakes. We have said in our new strategy document that we need to boost export. Trading among ourselves will not boost our prosperity.

Secondly, we must increase our ties to the outside world by bringing in more foreign investments. Foreign capital is currently more willing to risk than its Estonian counterpart: they bring more complex, higher-paid jobs and new technology.

The third topic is tourism regarding which we find ourselves in ever-greater competition. Our neighbors have stepped up their efforts to attract more international tourism. And tourism is nothing other than export.

The world has changed since the 1990s when everyone was talking about globalization and liberalization. Many leading countries have turned to protectionism, and we need to play along as a small country or risk getting pushed out of the sweet spots in the value chain. This would mean cheaper jobs and lower salaries. We need to play according to the same rules as other countries.

Erki Mölder. FOTO: Photo: Eero Vabamägi