Estonia introduce a new ‘National Action Plan’ to deal with economic crisis

The government have committed to not introducing any new tax measures in the 2009 budget. This means that our current tax revenue is the same as Estonia, Lithuania, Latvia and Slovakia. It therefore makes sense to examine what fiscal measures these countries are adopting to tackle the economic crisis, given that they have as much room for manoeuvre as we do.

Estonia have just announced a new ‘national action plan’ aimed at reducing unemployment and supporting job creation. The new fund managed by the Department of Social Affairs (over burdened with increase in welfare payments due to increase in unemployment like our department) and the ‘Unemployment Insurance Fund’ aims to spend €45m to help create over 5,000 jobs.

It is part of a wider tri-partite (government, unions, employers) agreement reach in March 2009. Some of the new measures were part of this agreement aimed at tackling the job crisis. But, new measures such as introducing apprenticeship schemes for unemployed workers has been added to the original agreement. They have also introduced a wage subsidy for employers. Employers who hire an unemployed person will a receive 50 per cent subsidy to pay their salary. It can be no more than the minimum wage and can only last for a year. The Estonia Trade Union Confederation are concerned that employers will sack existing workers to hire those on the subsidy scheme, whilst the Employer Bodies have welcomed the move.

Either way, a coherent strategy by all social partners is being rolled out to deal with the job crisis, and they have less money to spend than we do.

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