Quota Full! Don’t Come!

The Government has decided to leave top specialists out from the calculation of the immigration quota and extend the time of short-term employment to one year. The Chamber’s proposal to exempt from the quota employees employed with trustworthy employers, was not taken into account. Furthermore, the proposals of the special working group to exempt from the quota employees with two-year residence permit and aliens who are paid at least the 1.5x average Estonian salary, were not taken into account. In the Chamber’s opinion, the immigration quota will be filled in the nearest future and with that the state is sending a message that there is no more place for specialists and entrepreneurs in Estonia – do not come!

Editorial of Mait Palts, Director General of the Chamber in the April issue of Teataja

So we find ourselves in a situation in the inevitability of which no one doubted, although thought it would not happen. By now the better part of the immigration quota allocated for this year (1,300) has been fulfilled and the remaining part has been covered with the already submitted applications. Entrepreneurs who start applying for the residence permit for a foreign employee they expect to employ, will most probably come back from the Police and Border Guard Board’s office with the unfortunate recommendation not to submit an application, because it will most probably not be reviewed due to the fact that the law will not allow the employee to come to Estonia. No matter how high the salary paid to the employee or no matter how good the specialist. There is nothing to do, the door is shut.

However, if you still want to bring an employee legally, find an outplacement company who will arrange things for you, through Poland for example. There is no such quota there (as is the case elsewhere in Europe) and foreign employees are welcomed, no matter if they stay in Poland or move on from there. There is no salary criterion there as we have. I would like to point out that when employing people from third countries, employers are  required to pay at least the average Estonian salary (no matter what or how much the person actually does). It has never been possible to hire an employee from a third country without paying them at least the average salary, and it is not possible today. However, it is possible when hiring an employee from the EU. Thus, when hiring someone from Ukraine, an employer must pay at least 1,200+ a month, but an employee from Bulgaria could be hired by paying them only the minimum wage.

It is difficult to understand why do we do that and establish such restrictions. I would like to set out some statements from the analysis of the International Monetary Fund, which analyses the impact of the influx of foreign employees on countries and economies.

Statement 1. Immigration of foreign employees increases the GDP of the target country. Calculations of the IMF reveal that if the share of foreign employees among the adult population increases by one percent, in long-term perspective it will increase the level of GDP by up to two percent. Increased GDP comes primarily from the increased productivity and to a lesser extent from the increased number of people of working age.

Statement 2. Influx of both qualified and unqualified labour force may increase productivity in the labour migration target country. The IMF emphasises that the principle of complementation applies in the labour market. This means that the groups of employees of different skill levels complement each other, which will result in labour market synergy and it will have a significant impact on the entire labour market. One example would be the situation where allowing foreign child-minders to the labour market means that mothers can return to work earlier and the rate of their labour market participation will increase.

Statement 3. Increase in the share of foreign labour force among employees will increase the average income per capita among the poorer (90 percent) as well as richer (10 percent) part of the population. There is no reference to the fact that increase in the share of foreign labour would increase the Gin coefficient.

International studies have revealed that the success of local workers on the labour market and their salary level is only marginally influenced by the influx of foreign labourers. The positive influence on the economy is higher if involving foreign employees helps improving problems on the labour market. If the foreign top specialists help increasing the more science-intensive part of the economy, then the influx of foreign labourers of lower qualification gives the locals the opportunity to move on to more productive work. However, our politicians do not want to understand that. Unfortunately.

See the Chamber’s proposal (in Estonian) that the Government did not take into account for solving the quota problem.