Opportunities for Cooperation between Estonia and ... - Valitsus

longer supports the viability of such investments. As a result, many Finnish
companies have wound up, or are winding up, their business operations in
Estonia.
Although the situation in Estonia has changed in many sectors and income
levels have risen, it is still too early to talk about any actual levelling-out of
labour costs. During 1995–2006, the Finnish economy grew at an average
annual rate of 3.8% and the Estonian at 6.6%. If the same trend continues,
wages will increase by 50% in Finland and 100% in Estonia by 2015. It would
mean that the ratio of average incomes will stretch to 64%. Even though
these average figures are speculative, they suggest that the differences are
not levelling out any time soon.
As in the past, the differences in labour costs and wages between Estonia and
Finland will boost economic growth and convergence in both countries. The
two economies cannot be said to be integrated until incomes and the cost of
labour are equalized.
Recommendations:
• An Estonian-Finnish working group should be established to prepare a
joint strategy for solving labour problems and issues related to the ageing
of the population. Both governments and the labour market organizations
should be represented in the working group.
• An Estonian-Finnish labour market survey should be carried out to
determine the need for additional labour and evaluate the potential for
importing qualified labour from third countries.
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