FES BRIEFING ESTONIA Trade Union Monitor April 2022 POLITICAL, ECONOMIC AND SOCIAL FRAMEWORK POLITICAL CONTEXT The political development in Estonia in the second half of 2020 and in 2021 was defined by two major factors. First, an agreement to form a new government for 2021–2023 was signed by Kaja Kallas, the chairwoman of the Reform Party, and Jüri Ratas, the chairman of the Center Party, on 25 Jan­uary 2021. Thus, the government coalition of three parties set up after the 2019 elections to the Riigikogu(parliament) was replaced. And second, continuous efforts to prevent COVID-19 from spreading, vaccinate the population, strengthen the healthcare system and support the entrepre­neurship to reboot the economy. The focus of the high level tripartite social dialogue on la­bour and social policy issues with participation of the gov­ernment, trade unions and employers continues to be on sharing information and exchange of views instead of con­ducting tripartite negotiations aimed at reaching agree­ments as was the practice in 1991–2003. Three further tri­partite meetings took place during the reporting period: dis­cussing measures to end the economic crisis and the use of the Just Transition Fund(October 2020), fighting the COV­ID-19 pandemic as well as planning and allocating the EU funds(March 2021), the need to increase the flexibility of the regulation for temporary use of workforce from third countries and the possibilities to extend the social protec­tion coverage – first of all of the sickness and unemployment insurance schemes(November 2021). The amendments to the Collective Agreements Act dis­cussed and agreed earlier between social partners and gov­ernment representatives came into force in November 2021. The need for the bill resulted from the decision of the Su­preme Court of Estonia to bring the regulation for extension of sectoral and national collective agreements, concluded between employers’ associations and trade union federa­tions or confederations, in conformity with the constitution­ally protected freedom of entrepreneurship while ensuring social partners’ capacity and responsibility to negotiate working conditions and make them legally binding for the whole industry or the entire economy. The amended law guarantees the right to extend collective agreements for so­cial partner’ organisations that meet specific representation criteria defined in the aforementioned legal act. The parliament adopted amendments to the Employment Contracts Act in November 2021, based on the tripartite agreement as of April 2021. The new regulation does es­tablish an opportunity for retail sector employers to con­clude so called variable hours agreements with part-time employees. These amendments provide retail shops an op­tion to let their employees work for up to 8 hours a week more than the hours agreed in the employment contract, hours that are not considered overtime and not paid extra. This provisional scheme was agreed for 2,5 years during which its’ effects will be assessed and analysed for further consideration. ECONOMIC AND SOCIAL SITUATION The Estonian economy showed strong growth within the decade(2010–2019) while the GDP decreased by 2,6 per cent in 2020 due to the negative impact of the COVID-19 pandemic – much less compared to the 10 per cent fall ex­pected by the Eesti Pank, the Estonian Central Bank, in mid-2020. Strong recovery at 8 per cent GDP growth in 2021 makes the Estonian economy one of the fastest re­coveries in Europe. The rapid positive changes in the econ­omy in 2021 were explained primarily by a sharp rise in hours worked and more intensive utilisation of the equip­ment. However, high energy prices and inflation as well as supply-side limits will slow the GDP growth down to 2,8 per cent in 2022. The moderate wage growth at 2,9 per cent in 2020, when the monthly average gross wage reached 1,448 Euro, accel­erated to 7,8 per cent in third quarter of 2021(compared to 2020 Q3) while the average gross wage was 1,553 Euro. 1