Enterprise minister: Estonian resources before foreign labor

Photo: Joakim Klementi

Minister of Entrepreneurship and Information Technology Rene Tammist (SDE), who has been in office for a little over one month, says that a hundred euros in salary support can motivate local governments to attract and maintain jobs.

You have promised to come up with proposals for developing the e-state. Please elaborate.

As a ministerial candidate, I said it is my goal to improve e-state user experience. We have the solutions now. One important change is development of invisible e-services. It would be most convenient if the state could operate out of sight, in a way that would not require people to apply for services, support or permits. We are mapping events in people’s lives that would cause them to communicate more with the state. For example, the birth of a child that immediately requires people to register the child’s name, apply for benefits or a kindergarten place. The state could be proactive here by sending the new parents congratulations while also asking for the child’s name, the bank account for benefits etc.

Why haven’t these things been done before?

There have been no serious obstacles. Our regulation and x-road solutions would allow it. It’s time to take a step forward in inter-agency cooperation.

Another thing – my vision is to shape the e-state into a platform, like Android or iOS, on which companies could build applications. Our data would have to be as open and public as possible for that. An amendment that expects the public sector to share its data with the private sector has been in effect for six years but has been used very little so far. I would also like it if the public sector would allow its private counterpart to link information systems. LHV bank and the tax board have an application where taxes can be paid with a single click when employees are paid their salary. It would be good if the source code of our e-services was public and open to improvements by software developers.

You’ve said that startups should have it easier. Why startups in particular?

I would not like to contrast startups to traditional business. We need to understand we are in global competition. A lot of countries would like to see successful Estonian startups move there. Our startup environment should be the best in the world. We need to make efforts to maximize the number of startups that would want to do business here. One such initiative is the tax unit fund that would make it possible for startups to put back labor costs. The state would pay for their labor costs to a certain point that would allow them to place invested capital into business development.

You want to pay local governments €100 per private sector job once a year. Est-For Invest’s pulp mill was supposed to create 200 jobs that would have given the local government €20,000 a year. Not exactly a fortune.

Perhaps not, but it’s a start. The important thing is to have financial stimulus for local governments to be interested in jobs.

Can paying a local government €10,000 a year for 100 jobs really create political support entrepreneurs need to build something there?

It is one way to motivate local governments to take an interest in jobs. Rural municipalities must also be motivated to try and keep existing jobs. I have worked in a field where I’ve had to communicate closely with local governments (Tammist headed the lobby group Estonian Chamber of Renewable Energy – U. J.). I’ve learned that if both sides want to reach an agreement, an agreement will usually be reached. Adding a financial stimulus provides additional motivation.

Perhaps local governments want to get €100 per worker but just don’t have the people the company needs.

We have proposed salary support for the unemployed and inactive people, like stay-at-home moms or graduates who have not found employment. If they lack the necessary skills, we have also proposed training support. We first need to look at our own untapped resources. Salary support has brought over 600 people to the labor market in East Viru County. It is one solution.

Employers usually need specialists, not just workers. We probably cannot expect the salary support instrument to turn people who have been away from the labor market into such specialists?

The unemployment insurance fund has solutions to allow working people to access additional and retraining. Very little use has been made of these possibilities. We are short some 8,000 people in the ICT sector. These are mostly high-paying jobs and people could educate themselves in this area if they wanted.

Your message to entrepreneurs: look for Estonian resources before asking for better conditions for importing foreign labor?

Yes. That is one message. We have a free labor market of 500 million people. The government has made certain concessions when it comes to labor from third countries, exempting ICT and startup workers and top-level specialists from the quota and allowing workers with temporary residence permits to stay in the country longer.

Employers have suggested cutting Estonia’s army of public officials by 3,000. Would that be realistic?

It is a very specific goal that requires analysis. I believe we should take steps to counter overregulation. On the one hand, it is a question of whether we have concrete goals, like in the UK for example, where you have to abolish two regulations for every new one you create or the Netherlands that aims to horizontally cut regulation by 25 percent. It would be good if Estonia had such a horizontal target. Activity licenses for example. We have a number of such licenses the rationality of which is questionable. Do we even need them?

Is the public sector too big by 3,000 people?

I cannot say. It needs to be considered: whether steps to counter overregulation can be used to cut the number of public sector workers. I cannot tell you how they arrived at that figure.

What do you think about the idea to abolish social tax?

I believe it is premature. The idea of a social tax ceiling intrigues me though. We will analyze whether it could be done and starting where.

What could be the realistic range?

The idea is so raw that…

A social tax ceiling has been talked about for years.

While that’s true, I have only been in politics for a month. I need to be sure ideas would pay off before I can publicly propose them.

Why is it that whenever someone wants to build a factory many see it as an attempt to get rich at others’ expense, not as something that can give back to society?

I believe that people who want to protect their living environment are doing it for the right reasons. We should not ridicule them for it. I see no other solution than talking to people, involving them in the decision-making process and generally doing things as openly as possible. I believe a large part of locals can be persuaded in the end. I cannot perceive default mistrust in entrepreneurs. Perhaps people have been forced to fight for their rights in the past.

Where is the e-residency program today? Some seem to believe it will not take off.

The project has taken off this year. It has generated more tax revenue this year than in all the previous years combined. Proceeds easily cover everything the state has spent on e-residency. Questions, like what the program is giving Estonia are, of course, justified. We are working on e-residency 2.0 with various partners. We hope to have it by early December.

Banks still don’t like e-residency.

On the contrary, they like it a lot more than they like non-resident clients.

E-residents have undergone background checks and make for easier clients for banks. Talking to agencies that monitor banking transactions, e-residents make up the positive end of the spectrum of non-resident clients. The program has a future, we just need to aim it better. It is one of the best calling cards Estonia has as shown by studies. It has worked well as an idea.

Will you be running in the elections?

I will.

Where?

We have not yet decided that, but I’m sure we will announce it in the near future.