Lawmaker lays out obstacles for Center Party

The Baltic Times, TALLINN
By Kairi Kurm
Oct 26, 2005

Official confirmation of the Tallinn municipal poll has been postponed due to MP Igor Grazin’s legal protest, putting off a decision on who will become the capital’s new mayor.
Grazin (above), who had been a candidate for the City Council as a member of the Reform Party, originally wanted results from the Kristiine borough cancelled, but the National Electoral Committee refused his request.

Specifically, the Reformist said a new law enforced by the Supreme Court in between the pre-election and voting period had been unconstitutional. The legislation forbid members of Parliament to hold seats in both the national and municipal legislatures simultaneously.

Although several MPs participated in the elections to garner votes for their parties, few of them were actually planning to leave Parliament to work in local councils.

Grazin’s other complaint is related to a billboard dairy-product advertisement, which resembled the Center Party’s logo. Outdoor political advertisements were banned before the elections.

“There was a violation in the separation of powers with judiciary intrusion into the legislative branch. During the casting of ballots, which lasted for a whole week, the Supreme Court threw doubt on the legitimacy of some candidates’ registration,” said Grazin.

By the time legislation changed, 150,000 people – or 25 percent of the voters – had cast their ballots, knowing it was okay to “sit on two seats,” he said.

“Another minor and rather comical issue is that, although there was a ban on visual propaganda in the streets, one party managed to present its political logo as that of a dairy product. On one side this is a serious violation, on the other there is a humorous aspect to it,” the reformist said.

Grazin told The Baltic Times that he did not take the advertisement too seriously, and it even made him laugh when he saw it for the first time.

In fact, he used the ad as a technical tool to get through court doors. He said that he could not go up against the Supreme Court with its own legislative policy, so he had to complain about the electoral committee’s decision instead since it permitted the outdoor billboard.

Peep Lillemagi, spokesman for the Reform Party, said that the party had not taken a stand in this matter, and that Grazin’s actions were a citizen’s initiative. “The Reform Party is interested in legitimate electoral results,” said Lillemagi.

If the Central Electoral Committee refuses to satisfy Grazin’s complaint, he may appeal to the Supreme Court.

Endorsement of the electoral results will then have to be prolonged until the Supreme Court has made its final decision.

Meanwhile, the Tallinn Electoral Committee refused to satisfy Grazin’s grievance on Oct. 20. The committee announced that there was no legal basis on which to cancel the electoral results in Kristiine and hold a re-vote.

After the electoral results’ final endorsement, Minister of Economic Affairs and Communications Edgar Savisaar will announce whether or not he will accept the post of mayor of Tallinn. He is head of the Center Party, which won 32 seats out of 63 in the City Council (See story this Page).

According to Toomas Raag, spokesman for the Center Party, none of the scenarios can be ruled out. Although no formal negotiations had taken place, he said, politicians were, indeed, holding informal meetings and exchanging ideas.

Tallinn will be ruled by the current coalition of the Center Party and Res Publica until the electoral results have been approved and the city council’s new membership can start to work, Raag said.

Reformist Prime Minister Andrus Ansip has asked Savisaar to keep his post as minister. Ansip explained on national TV that he would like more party leaders to hold important ministerial positions, since it enables them to work more efficiently


Metal rules in Estonia

The Baltic Times, TALLINN
By Kairi Kurm
Oct 26, 2005

Estonia’s largest manufacturing industry is engineering and metalworking, comprising one-fifth of the country’s total industrial output and one-third of exports. Although the Baltic state is losing its price advantage to China, companies from Northern and Western Europe prefer Estonian producers for their flexibility and fast delivery.
The industry reported sales of 1.1 billion euros last year and employs over 30,000 people. Growing at an average rate of 10 – 12 percent per year, chance for future growth are good, say insiders.

“Industries in the West are interested in partners in Eastern Europe because their own growth rate is about zero. One way to be more competitive is to find a partner here,” says Aleksei Hobemagi, development director of the Federation of Estonian Engineering Industry. “Nordic companies sometimes want deliveries in one day and Finnish [companies] even in a few hours. China can not compete here.”

Ove Carlsson, manager of the system supplier Tarkon, also has no fear of competition from China. He said that big customers want to have suppliers in both – Asia and Europe.

But the competition is still stiff. Lavinton, a producer of expanded metal used in construction and metal production equipment, is more worried about an invasion of Italian and Polish companies. According to Ernst Paklar, manager of Lavinton, the market is too small for the Chinese volumes.

Estonia is an ideal base for manufacturing, as it imposes no tariffs on imported materials and semi-finished products. And then there’s the big incentive: reinvested profits are not taxed.

Estonian engineering and metalworking companies have invested properly in equipment over recent years, and several companies have acquired European quality certificates.

Carlsson, the Swedish manager of Tarkon, says that it was the cost-advantages of a decade ago that led the firm to purchase an Estonian producer of black boxes for Russian aircraft. The main difficulty in Estonia compared to Sweden, he says, is that it’s harder to find competent technicians in Estonia.

Indeed, throughout the industry, managers moan the dearth of qualified labor most of all. Juri Poldma, marketing manager of Paide Masinatehas, says that increasing wage pressure and a lack of skilled labor were the main reasons why the company, which manufactures metallic structures, had to put off increasing output. Paide Masinatehas exports 98 percent of its production, with Finland being the main consumer.

But efforts are underway to develop more skilled hands. Hobemagi says that European Union funds are being used to raise the level of students’ qualification in vocational schools, as well as to buy new equipment. He said that employees who once left the industry are returning – the number of employees has risen from 18,000 to 30,000 in just a few years –and that these days salaries are not an issue.

What’s needed next is the commensurate level of productivity to increase, says Hobemagi.

Galvex hits major development slide

The Baltic Times, TALLINN
By Kairi Kurm
Oct 26, 2005

Galvex, the U.S.-owned steel galvanizing plant in the Muuga port, has brought in professional management consultants to reinvigorate the company. It’s the largest foreign investment to date in Estonia, and could possibly lead to business with a foreign strategic investor. The Eesti Paevaleht reported this week that ownership of Galvex is now firmly in the hands of a group of investment banks, including Germany’s Hypovereinsbank, after the company failed to meet payments on loans. According to the paper, the syndicate immediately sold its equity stake, along with the debts, to Goldman Sachs and Deutsche Bank.

The latter two will restructure Galvex, established in Tallinn in 2002, and then resell it to Russia’s Severstal or Novolipetsk, Eesti Paevaleht wrote.

There is much speculation, however, that Severstal, Russia’s largest steel producer, will come out ahead. Galvex invested 65 million kroons (4.1 million euros) into Severstallat, Severstal’s Latvian subsidiary, which provides Galvex with steel and distributed galvanized output in Russia and Ukraine.

Last year, Severstallat provided 60 percent of the raw material used at Galvex.

Roberts Dlohi, marketing director at Severstallat, said that the company has never said it would buy Galvex. “But if we take into account global tendencies, one could presume it is the case. We could consider this, but at the moment it is not the case,” he said.

Dlohi added that it would be logical for a steel supplier to purchase Galvex due to the trends in the market.

Last year when one of the owners was selling a 45 percent stake in Galvex, a potential option was seeking a strong partner such as a major steel company. However in the end, Daniel Bain, an American shareholder, used his right of pre-emption to increase his share to 90 percent.

The remaining 10 percent of the company belongs to Center Re, an insurance subsidiary of Zurich Financial Services Group.

Recently, the company has been tightlipped about the extent of its cash-flow problems. The firm only announced that it was under restructuring and would attract working capital from Deutsche Bank and Goldman Sachs.

The investment banks have also appointed two new consultants as chairman of the board and CFO.

Dlohi said he appreciates the bank’s behavior, and has high expectations for its professional consultants.

“If you look globally, you see that such small standalone enterprises are integrated in a vertical supply chain. They must be integrated. If they don’t have raw materials for galvanizing steel they are in big trouble and suffer huge losses,” said Dlohi.

He said that working under capacity could be very costly for any metallurgical enterprise. Since raw materials such as iron ore and coke are in deficit, companies that have their own suppliers are more competitive on the market.

Meanwhile, raw material prices are unstable. Compared to 2004, they are down, though up on 2003, Dlohi said.

“The perspectives of Galvex are pretty good. The consumption of galvanized steel is higher than the supply. The prices in Russia are higher than in Europe because of strong internal demand. I see that Galvex was doing well and can do well in the future. We are completely open for the [next level of] cooperation,” said Dlohi.

Galvex invested almost 4 billion kroons in the Muuga plant when it opened three years ago. At full capacity the plant could produce up to 500,000 tons of galvanized steel annually.

Center Party takes Tallinn, Narva; Savisaar set to occupy mayor’s

The Baltic Times, TALLINN
By Kairi Kurm
Oct 19, 2005

Estonia made a small contribution to the history of electoral democracy last weekend as thousands were allowed to cast their vote from home, the first instance of online voting, while the poll itself propelled Edgar Savisaar and his Center Party back to power in the Estonian capital.

The left-of-center Center Party won 41 percent of the vote in Tallinn, while the right-wing Reform Party and Pro Patria managed 21 and 12 percent respectively.

The results give the Centrists 32 seats in the 63-seat City Council in Tallinn, while the Reformists, the Centrists’ allies in a previous city government, will have 15 seats.

But with 32 mandates, the Centrists are in a position to govern the city alone. Given legislators’ notorious tendency to switch party allegiances, it is possible that the Center Party will be able to muster some additional seats to give it an even larger majority.

However, Savisaar, who is currently economy minister, said the party did not want to rule the capital alone and was keeping all its options open to forming a coalition.

Prior to the poll, Savisaar said that, if victorious in Tallinn, he would like to return to the mayor’s post. However, after the Oct. 16 ballot he was more circumspect, telling the Baltic News Service that he first needed to talk with Prime Minister Andrus Ansip about the situation.

Several Reformists, including PM Ansip, spoke openly about their reluctance to join a coalition with the Centrists given the latter party’s overwhelming victory in Tallinn.

“If a single force has over 50 percent of the deputies’ seats, this isn’t very advisable,” Ansip told the Postimees daily. “We’ve made this step once and saw that it didn’t work.”

The Social Democratic Party and the People’s Union also rejected the possibility of a coalition with the Center Party in Tallinn. The Centrists invited the two parties to open coalition talks on Oct. 18, but in the words of SDP member Rein Org, “Our side of the desk will remain vacant.

The SDP did say, however, that it would accept an invitation if the Center Party admits its connection with a controversial curd snack advertising campaign ahead of the polls. The Centrists refused, saying negotiations could only be successful if no prior conditions were attached. Nationwide, the Center Party collected some 126,000 votes, or 25.5 percent of the total and slightly less than in the last round of municipal elections in 2002. The Reformists were second with 12.5 percent and Pro Patria third with 8.6 percent. The right-wing Res Publica, which did so well in national elections in 2003, managed to gain only 8.5 percent of vote across the country, a dramatic decrease from 15.2 percent three years ago. Turnout was surprisingly low, with only 47 percent of eligible voters bothering to cast their ballot. In Tallinn the number was only 43.4 percent. In 2002 turnout was approximately 53 percent. Two percent of all votes were cast online, an innovation that had met much resistance, particularly from the president?s administration, but that observers said was pulled off without a glitch. Many, however, can?t say the same about the elections overall. PM Ansip, for instance, voiced an opinion that the elections were not fair. Though political street advertisements were forbidden, a logo for a curd snack that was remarkably similar to the Center Party?s emblem was plastered across the capital. Many still insist that the ad was a deliberate ploy, but the Center Party has denied any association. ?People were frightened by slogans, ?If you do not give your vote to the Reform Party, Savisaar will come into power,?? Edgar Savisaar, chairman of the Center Party, said on national TV. Political scientist Rein Toomla told national TV that all the trashing of Edgar Savisaar, who was accused of ethics breaches and befriending the Kremlin, actually made the Center Party chief even stronger. Savisaar said his party could have actually done even better if preliminary results had not been published. Center loyalists who saw the inevitable victory did not bother to go out and vote, said the economy minister. The Center Party did, however, receive a lot of support from non-Estonian speakers, the elderly and less educated people (see story on Page 3). Enn Eesmaa, deputy chairman of the Center Party, said that support was equally high among all groups of people. ?There are several parties who promise a lot, but do little. People remember what has been done and promised,? Eesmaa told The Baltic Times. In Tartu, the country?s intellectual capital, the Reformists won 19 seats on that city?s 49-member council, while the nationalist Pro Patria Union came in second with 9 mandates and the Centrists in third with eight. Currently the Center Party governs Tartu together with the Reformists. The Centrists, who are roughly placed left of center on the political spectrum for their social programs, also did well in the northeastern part of the country. In Narva, the party received 59 percent of the votes, followed by Res Publica with 15 percent, while in Kohtla-Jarve, Usaldus, a party related to the Center Party, received 67 percent of the votes. In Parnu, the fourth largest city, the results were more diversified ? 24 percent in favor of the Center Party, 20 percent for the Reformists and 14 percent for Res Publica and Pro Patria Union. In general, Res Publica lost the most votes compared to previous elections – 14 seats in the Tallinn Council and five in Tartu. Leaders of the party, however, consider the results satisfactory. The party received 9 percent of the total votes in Estonia, which is 5 percent more than predicted.

State-run Kredex fulfills vital financial role for exporters

The Baltic Times, TALLINN
By Kairi Kurm
Oct 19, 2005

Kredex, a state-run credit agency, may have to limit its short-term export guarantees to companies dealing with EU and OECD member states next year. The restriction is a result of the European Comission’s preliminary assessment of Kredex, which determined that some of the agency’s financial support mechanisms could be regarded as state aid.
Kredex’s export guarantees to Estonian companies had been halted from January until July 2005, but were allowed to continue until the end of the year.

Andrus Treier, CEO of Kredex, believes that the agency’s licence will be prolonged for the EU and OECD markets until EU officials have made a decision on the matter.

The export guarantee offered by Kredex enables an exporter to insure both short-term and long-term transactions, as well as cover political risks related to Estonian companies’ foreign direct investments. Treier said that, for years, there has been a lack of supply for long-term guarantees and guarantees to non-marketable areas. Thus, the agency was filling an essential market niche.

“The main aim of the state guaranteed scheme is to promote exports. Good exporters are big exporters. To become big, equal opportunities should be offered to small exporters,” said Treier.

Currently Euler Hermes is the only private insurance company registered in Estonia offering similar export guarantees. Frank Wille, a manager, said he hopes that Kredex would focus on assisting exporters with so called non-marketable risks in Russia, Belarus, Asia or Africa. Kredex’s statement that the private insurance market was not interested in guaranteeing the risks of small companies taking loans from banks, he stressed, was not true. But he remains optimistic in the matter and believes that Kredex and Euler Hermes could cooperate.

“Russia is such a huge market. There is enough room for everybody,” said Wille.

Not everyone agrees. Mart Mere, managing director of the insurance brokering company Marsh Kindlustusmaakler, says he does not support cooperation between a state agency and a private company. He also says that, generally, private insurance companies are less willing to cover risks in the East. Euler Hermes is one example.

As an insurance broker, Marsh Kindlustusmaakler intermediates products of all insurance companies, including Euler Hermes and Kredex.

“It does not affect our business if Kredex receives a licence from the European Commission. They are our joint partners. They are necessary, but we can do without them,” said Mere.

He agreed with Wille that there was no reason to fear that small companies would not receive export guarantees from private insurers if Kredex were to be out of the game. “Usually the premium rates offered by private insurers are lower than those of Kredex,” said Mere.

According to Treier, private companies insure entire export deliveries, while through Kredex, it is also possible to insure only riskier transactions. “The rate is higher, but in general it comes cheaper,” said Treier.

Kredex’s guarantee premium is between 0.3 to 0.7 percent of the guaranteed credit and sometimes higher, but not more than 1 percent. The guarantee coverage is 90 percent for business risks and up to 100 percent for political risks.

Tambet Made, board chairman at the non-profit export development organization Estonian Trade Council, supports Kredex’s export guarantee services. “It is very positive, and they should continue forever. They have been of much help for Estonian companies,” he said. “The Estonian market is small, and we will never have a proper amount of private insurers. So the service should be provided by a state foundation.”

Kredex is currently guaranteeing exports of 100 companies against the risks of 400 buyers. Last year Kredex guaranteed 0.9 percent of Estonian exports – to the tune of 648 million kroons (42 million euros).

The goal is to boost that to 1 – 2 percent, as is common in most countries. In Slovakia, the state credit agency covers 10 percent of total exports. Only in Latvia, Lithuania, Malta and Cyprus do no such state guarantee organizations exist.

The agency posted earnings of 3 million kroons last year. So far this year, Kredex has lost more money in claims than it has received in premiums. The aim is to reach the break-even point over the long term, explained Treier.

Hekotek was the first company to receive a long-term export guarantee to Russia. The company sold equipment to a Russian company, and with a Kredex guarantee the buyer has five years to repay the loan to Hansapank.

Heiki Einpaul, chairman at Hekotek, said the process itself had not been easy, since it was the first case. It took a long time, and the conditions were not flexible enough, he said.

Still, he supports Kredex on all markets. “I haven’t found a serious alternative so far,” he said.

Treier stressed the importance of state systems, especially in terms of crisis situations. The 2001 attacks on New York’s World Trade Center showed how vulnerable the private insurance sector was, he said.

Kredex’s own vision is to become a self-sustaining fund that acts in the public interest by decreasing market failures and directing the credit market. The European Investment Fund shares the risks taken by Kredex in guaranteeing bank investment loans to the extent of 50 percent from the guaranteed amount. Besides export guarantees, Kredex offers loan and housing guarantees.

“One important aspect in providing the state guarantees is that it should not distort the private markets. This is the reason why the activities are limited and state aid rules applied in the EU,” said Treier.

Without leaving home, Estonians submit their electronic vote

The Baltic Times, TALLINN
By Kairi Kurm
Oct 12, 2005

For the first time in history, citizens voted in the local government elections without leaving their home – in fact, they could do it at the office or even a coffee shop for that matter. All the mobile voter needed was an ID card and a PC hooked up to the Internet.
By the evening of Oct. 12, the final day of voting, 9,317 people had successfully cast their vote electronically. And Prime Minister Andrus Ansip was one of them.

“I decided to vote electronically in order to try the new thing. E-voting gives a good opportunity to plan my schedule better, since I am not in my hometown on the day of election,” said Ansip. “The whole voting process took just a few minutes and it was very simple and comfortable.”

Estonia’s newest leap into the information age did not come easy. President Arnold Ruutel vetoed legislation on the system twice, though he was eventually overruled by the Constitutional Court. The president was primarily concerned with the ability of online voters to change their vote.

Tarvi Martens, manager of the e-voting project, told The Baltic Times that several countries had tried some sort of online voting. Yet previous attempts were conducted at polling-station computers, she said, and did not take place at the national level. In Switzerland, national polls are conducted through the Internet, but not throughout the whole country, and voters’ passwords are sent by post.

“In Estonia passwords come with the ID card, e-voting is conducted throughout the entire country, and the results are taken into account. In this way, it is unprecedented,” said Martens.

The IT solution for casting votes cost about 4 million kroons (255,600 euros). In the future, the same software can be used for conducting national polls.

E-voting may also be implemented for the next national parliamentary elections in 2007.

Politically, the People’s Union had been the only party against e-voting. Tiit Tammsaar, the party’s deputy head, told The Baltic Times that e-voting was not quite in accordance with the constitution.

“Normally during elections a voter goes into a polling booth, stands there alone and makes a decision by himself. How do we ensure that during e-voting, even with an ID card, a boss does not stand next to the voter? Or an even simpler case –‘You don’t know how to handle this, let me help you,”’ said Tammsaar.

He said he suspected that other countries would have tried e-voting long ago if they found it confidential.

According to TV 3, some incidents of fraud were reported in northeastern Estonia. ID cards were being collected from employees of the Narva Bussiveod bus company and the water company Narva Vesi in order to be illegally used for e-voting under another name.

Incidents with collecting ID cards were also reported in Kohtla-Jarve.

Justice Minister Rein Land warned people not to give their ID cards to others, especially with the PIN codes, which represent a digital signature.

E-voting’s creators considered such scenarios during development. As a result, they provided for the opportunity to “re-vote” as much as necessary during the pre-election period, after which all previous votes will be deleted (exactly what President Ruutel objected to).

A voter who was illegitimately influenced can cast the vote anew once the “dubious influence” is gone. Should the person go on voting throughout the advance polling days, the electronically cast ballot will be deleted.

The aim of e-voting is to bring more people to the polls. Martens said that other countries could also implement an online system if they had a population register and ID cards.

Estonia currently has one of the highest mobile penetration rates in the EU, as well as one of the highest levels of online banking users in the world.

Aspen pulp mill highlights Estonian advantages

The Baltic Times, TALLINN
By Kairi Kurm
Oct 12, 2005

Estonia’s most recent foreign investment is also proving to be one of the country’s largest. Estonian Cell, an aspen-pulp mill, will begin operation in the small northern city of Kunda next year. The project costs 2.4 billion Estonian kroons (153 million euros) and will provide 75 people with jobs.

Ownership of the mill is split between the Austrian group Heinzel, Larvik Cell from Norway and the European Bank for Reconstruction and Deve-lopment.

Riia Ratnik, a member of the management board of Estonian Cell, said that investors described the local investment climate using keywords such as “high technology, low costs, lots of wood and clever people.”

These, however, are not the only reasons to invest in Kunda. Ratnik also mentioned the proximity of Kunda’s harbor, good water supply, as well as competitive energy and gas prices. Estonian Cell will consume about 2.6 percent of the energy produced annually by Estonian Energy, which is about 200 GW, and 2.3 million cubic meters of water from the Kunda River.

The production will require half of Estonia’s annual 800,000 cubic meters of chopped aspen resources, which currently goes toward exports. Estonian Cell has so far signed long-term contracts with two timber suppliers.

At full capacity, the pulp mill will produce 140, 000 tons of aspen pulp, which is used in the production of high-quality paper and tissue.

According to Roar Paulsrud, one of the owners of Estonian Cell, the company will increase the value of wood by at least 20 times. Paulsrud developed the idea of establishing an aspen-pulp mill in 1999 as he bought aspen from Estonia through his Norwegian company Larvik Cell.

Easterners fill labor gap

The Baltic Times, TALLINN
By Kairi Kurm
Oct 05, 2005

For the last few years the tendency to hire people from abroad has increased, particularly among blue-collar workers from Russia and Ukraine, as a growing number of highly-qualified Estonians find better paying jobs in the West.

According to a recent study by Turu-Uuringute AS, 14 percent of Estonian companies are already hiring people from abroad or planning to do so in the near future.

Research conducted among 1,000 companies on behalf of the Estonian Labor Market Board shows that employers are primarily interested in cheap labor from Russia and the former Soviet republics for manufacturing. They are also searching for top-and medium-level managers from Finland. In addition, senior specialists are being hired from Germany, England and Switzerland to fix the machinery in production.

Estonian managers complain that young people want to study at universities, while others do not have proper training.

Of the companies questioned, 6 percent are considering employing imported workers in the near future and another 5 percent have already used this possibility. One-third of the companies hired foreign laborers for over a six-year period.

Foreign labor is not only cheaper, but of good quality as well. Eighty-three percent of respondents were satisfied with their experiences with foreign laborers.

Erko Vanatalu, spokesman of the Estonian Labor Market Board, commented that the situation is paradoxical in that there’s an issue of unemployment and a lack of employees at the same time.

“It requires a political decision, whether we should train our people or bring them back from abroad,” he said.

Harri Taliga, chairman of the Confederation of Estonian Trade Unions, said, “The Estonian government should think about how to keep Estonians on the job market and train them instead of bringing cheap labor from abroad. The government’s approach is: ‘Why train them – they go abroad anyway.’

He said the country’s wage policy needed major improvements. “People should receive a dignified salary,” he said.

Janno Jarve, deputy secretary general of labor policy at the Ministry of Social Affairs, said the government had not discussed that matter yet. He added that it was a question of migration and culture and a public debate should be held.

Currently Estonia’s job market is open to the EU, and five EU countries – Ireland, England, Denmark, Netherlands and Sweden – have opened theirs to Estonia. In May next year another round of countries might open its market for the free movement of labor.

Estonians have left for the EU to work mainly in such areas as construction, healthcare and public transportation. According to some speculation, about 6,000 – 8,000 people are working abroad.

Taliga said that Finland should consider opening its market since they would receive more taxes than they currently do, while Estonians work under the agreement of free movement of services. He said the Estonian job market was not attractive to EU employees due to poor earnings. Estonian minimum wage is fourth from the bottom in the EU followed by Latvia, Lithuania and Slovakia.

Only the top management can be paid decently, said Taliga. And given the lack of managers, foreign owners often bring in professionals from their own country.

Mentality is also playing a role in the changing labor market. Tarmo Kriis, chairman of the Estonian Employers’ Confederation, said that Estonian workers were not interested in doing jobs that foreigners do. “Estonians do not want to be trained in certain areas where work is hard,” said Kriisa, referring to welders as an example.

Several welders have quit their local jobs to find higher wages in Finland, Sweden and Germany, said Taliga. In his opinion, welders from the East are low-paid.

“Each country has its quotas, and according to that permits are granted,” said Jarve. On certain occasions the government prioritizes giving working permits to laborers from third countries. As an example, welders have in the past been hired for extraordinary tasks to renovate electric power stations.

Toivo Vare, head of a medium-size metal industry Lapi MT in the south part of Estonia, said that eight out of their 10 welders left the company to work abroad, and he was looking for ways to get new employees from a Russian job agency. “There aren’t any [welders] in Estonia. The few that advertise themselves in newspapers ask for 15 euros per hour. In Russia the wages are smaller, and the employees are good,” he said.

Jaanus Pauts, spokesman for Elcoteq Tallinn, said that their company, which has 3,900 employees, has continuously drafted workers from its foreign operations to guarantee similar quality and keep up the seasonality of orders. Currently Elcoteq Tallinn has hired 50 people from Hungary.

Pauts said that the shortage of employees in Estonia and the European Union could be felt. Still, now it is simpler to hire employees within the EU.

Makarand Divekar, head of the tissue department at Horizon Pulp and Paper, said that they had not had problems finding people for management positions; rather, it’s finding laborers the past two years that has proven difficult.

“We have a very open policy. If we can get (employees) from outside, we’d definitely consider it,” he said.

The company is currently planning to double its number of employees due to expansion. “It will be difficult. Kehra has a small population. There are better jobs in Tallinn and these are better paid,” he said.

Managers of such companies as a printing company Print Best, furniture producer Viisnurk, IT company Microlink and construction material producer Aeroc told The Baltic Times that they had no need for foreign labor.

The government’s aim is to create 4,000 new jobs annually and bring the current labor participation rate up from 63 percent to 70 percent. Out of Estonia’s population of 1.4 million, some 600,000 are working. The government wants to boost this to 623,000.

Most jobs have been created in the service and industry sector, while more people are leaving the agriculture sector. Some 10,200 people annually leave the job market due to retirement, death and other reasons, said Vanatalu.

The unemployment rate has been decreasing since 2002. The percentage of registered unemployed is 3 percent. Unemployment subsidy of 400 kroons (26 euros) per month is paid for nine months (270 days) only, and healthcare is provided for 10 months. Later the unemployed will only get first aid, but training and other active labor market measures are still provided to them.

The total share of unemployed in Estonia, according to research, is about 9 percent, which is still lower than the usual 10 percent rate, said Vanatalu. A robust economy and European Union funds have helped create more jobs, he added.

For 2004 – 2006 Estonia is to receive 500 million kroons of EU structural funds to improve the quality of human capital.