Chamber makes 11 proposals for how to increase competitiveness of Estonia's economy

Chamber makes 11 proposals for how to increase competitiveness of Estonia's economy. Photo: Tairo Lutter

The Estonian Chamber of Commerce and Industry earlier this week sent a communication to Prime Minister Kristen Michal with 11 proposals which, according to the chamber, would will help increase the competitiveness of Estonian companies, reduce administrative burdens and costs for companies, and make the work of the public sector more efficient and reduce related costs.

The first of the proposals is to raise the threshold for the audit and review obligation by at least 50 percent. The Finance Ministry has proposed to raise the thresholds in terms of sales revenue and assets by 25 percent. The chamber, together with the Association of Estonian Accountants, is of the opinion that the thresholds should be raised by at least 50 percent, as the country has seen more than 50 percent inflation since the entry into force of the latest amendments and the availability of the audit service has deteriorated. Current restrictions make it difficult for companies to find auditors, which often leads to delays in annual reports.

The second proposal concerns increasing the flexibility of labor laws. The chamber proposes amending the Employment Contracts Act to restore the previous regulation of weekly and daily rest periods, where employees working on a schedule have at least 36 consecutive hours of rest per week, while the EU minimum requirement is 35 hours. Based on a judgment of the European Court of Justice, the continuous rest period for those working on a schedule in Estonia is currently at least 47 hours and for other employees at least 59 hours per week. Meanwhile, the EU minimum requirement for employees working on a schedule is 35 hours, and at least 13 EU member states have stuck with the minimum requirement.

Furthermore, employers and employees must be given the possibility to enter into flexible working time agreements, where working hours are not set out in the form of a specific number, for example, 30 hours a week, but in a certain range, for example, 30-40 hours a week. In addition, the Employment Contracts Act must be amended in such a way that it is allowed to enter into a fixed-term employment contract without a valid reason, the chamber argues.

The cap on tax-free expenses incurred by businesses for promoting employee health should be raised from 400 euros to 1,000 euros a year, as increases in the consumer price index and healthcare costs have made the existing limit insufficient.

According to the chamber, family doctors should be granted the right to conduct health check-ups. In certain regions of Estonia, such as Hiiumaa, access to occupational health physicians is problematic. Smaller companies in peripheral areas find it difficult to send their employees for health check-ups within a reasonable time frame and at a reasonable cost. The chamber proposes granting family doctors the authority to provide occupational health services, especially in workplaces with lower occupational hazards, such as office workers.

Bureaucracy must be reduced when executing orders for the attachment of wages. Currently, the employer must provide bailiffs with a free debt collection service on the basis of a salary attachment notice, which is difficult and takes a lot of time, especially in a situation where there are several attachment notices per employee. The chamber recommends changing the system in such a way that bailiffs reimburse the employer for the costs or make the necessary calculations themselves in order to reduce the burden and costs for employers.

In order to develop business, the motivation of municipalities must be increased. According to the chamber, municipalities have no financial motivation to develop their business environment, as their main source of income is personal income tax. The chamber proposes to change the arrangement of the distribution of the receipts of income tax on natural persons so that half of the portion of the tax going to municipalities would go to the municipality of the place of employment and the other half to the municipality of the place of residence.

The chamber considers it necessary to abolish the alcohol register, whose data duplicates data contained in other registers. The abolition of the register would reduce the administrative burden on businesses and public sector costs associated with the management and development of the register.

The Chamber of Commerce and Industry emphasizes that tax stability in the coming years is extremely important for businesses. The introduction of new taxes or increases in existing taxes before the repeal of the security tax law must be avoided to ensure business confidence, including investment confidence. The chamber is seriously concerned in this context that various ministries plan to introduce new taxes in the coming years. For example, the Ministry of Climate is discussing a packaging tax and a waste fee, and the Ministry of Regional Affairs and Agriculture is looking for ways to increase the tax revenue of municipalities.

The chamber also proposes that public sector workers should have a minimum of 28 calendar days of annual leave, similar to private sector workers. This change would allow public bodies to increase efficiency and reduce costs.

There is a need to reduce the number of staff involved in policy-making. The chamber proposes a 10 percent reduction in the number of staff in public sector organizations involved in policy making, administration, management, grant distribution and monitoring next year, and 10 percent in 2026.

«We primarily refer to organizations under central government, such as ministries, various agencies and inspectorates, organizations involved in the distribution of grants, and social insurance funds. As an exception, the number of employees should not be reduced in organizations related to internal and external security, as well as in the medical and education sectors,» the chamber says.

The chamber also recommends establishing a principle that all requirements for audits, safety requirements, and regulations for mandatory oversight be subject to a periodic review, for example, every two years. This would ensure that the requirements are up-to-date and proportional, and reduce unnecessary restrictions on the freedom to do business.