DEVELOPMENT

are weakest include Estonia’s manufacturing industry,
professional, scientific and technical activities (research
and development, engineering activities, legal activities,
etc.) and activities related to real estate, where our labour
productivity level is only one third of the levels of most
of the reference states. At the same time, manufacturing
industry is considered to be the core of an economy that
also creates demand in other fields of activity. And the
experience of states with high income levels shows that
states cannot reach very high income levels without passing
through a stage in which manufacturing is a sector
with very high productivity.
4.4.4
Level and dynamics of Estonia’s manufacturing
industry
Based on the Eurostat database, the productivity of manufacturing
industry is characterised in Table 4.4.3, where
the states are compared based on value added per worker.
In addition, the table shows the growth of productivity,
between 2000 and 2010, as a percentage, and in Euros
per worker.
In 2010, the value added per worker, produced
in Estonia’s industry, was €19,900, which is the lowest
among the reference states. For instance, the productivity
of Estonia’ manufacturing industry was 4.5 times
lower than in Denmark and 3.6 times lower than in Finland.
However, the level in Slovakia surpassed Estonia
by only 8% and the level in the Czech Republic by 23%.
As a positive aspect, Estonia was a state where labour
productivity increased 1.76 times, in the period from
Country 2000 2005 2010
Productivity growth
2000–2010
Thousands
of € %
Ireland 132.2 157.2 179.0 46.8 35.4
Switzerland a.p. a.p. 111.0
Denmark 50.4 62.7 89.0 38.6 76.6
Netherlands 62.2 75.1 82.6 20.4 32.8
Austria 56.6 67.1 75.5 18.9 33.4
Finland 70.6 74.0 71.5 0.9 1.3
EU 27 47.1 52.8 9.6* 22.2*
Slovenia 17.4**** 24.9 31.3 13.9***** 79.9****
Hungary 12.4 21.1 26.7 14.3 115.3
Czech
Republic
Table 4.4.3
Productivity in manufacturing industry from 2000 to
2010 (value added per worker in thousands of Euros),
and its absolute and relative increase
10.7** 16.8 24.4 13.7*** 128***
Slovakia 7.4 14.5 21.5 14.1 190.5
Estonia 7.2 12.2 19.9 12.7 176.4
Source: Eurostat
Comment: years of origin for the data * 2003–2010 ** 2001 ***
2001–2010 **** 2002 ***** 2002–2010
2000 to 2010, which was the second best result after
Slovakia. Especially noteworthy was the comparison
with Finland, where productivity increased by only
1.3% in the same period.
As a result of this large increase in productivity,
Estonia’s relative productivity gap has decreased somewhat,
but the pace of the productivity growth is still
insufficient to significantly reduce the gap during the
next few decades. This is very clearly demonstrated by the
productivity growth from 2000 to 2010. In the absolute
terms, the produced value added growth per worker in
Estonia during this time period totalled €12,700. Based
on Estonia’s very low initial position, the absolute growth
of productivity lagged behind Ireland (growth in the same
period of €46,800), Denmark (€38,600), the Netherlands
(€20,400), and surprisingly, also Hungary (€14,300),
the Czech Republic (€13,700) and Slovakia (€14,100).
Therefore, a general conclusion can be drawn that the
productivity of manufacturing is still very low in Estonia,
and with this pace of growth, it will not be able to catch
up with the average in the European Union within the
next few decades. If Estonia continues to maintain this
level of absolute growth, we will be able to catch up to
Finland after forty years; catching up to the calculated EU
average would take a century; and we would not be able
to catch up to many states in even a hundred years, if they
continue their current rate of growth (Ireland, Denmark,
Netherlands).
A more precise idea of the productivity of the subbranches
of Estonia’s manufacturing industry is provided
by Table 4.4.4, in which Estonia’s indicators are compared
to some other small countries, and the EU average. In
the interest of providing a better overview, the productivity
data has been modified so that, for all the countries
involved in the comparison, the level of Estonia’s productivity
was calculated as a percentage of the corresponding
country’s productivity in the given branch of the industry.
All the branches of industry in the comparative states, in
which Estonia’s productivity percentage is higher, or over
100%, have been shaded in the table. The table shows
that, in many branches of manufacturing industry, the
productivity of Estonia exceeds the levels in Slovakia
and Hungary, and also in a few fields of activity in the
Czech Republic and even Slovenia. Of the various areas
of activity, Estonia’s level of productivity is highest in the
wood industry, where productivity is 74% of the European
Union average, followed by the paper industry 58%,
publishing 57% and building materials 52%.
However, comparisons with the remaining states
provide to the productivity levels of Estonia’s branches
of manufacturing industry a very critical assessment.
For example, in comparisons with Ireland’s productivity
levels, the branches of Estonia’s manufacturing get indicators
from 4% (pharmaceuticals) to 62% (paper industry).
Compared to the Netherlands, Denmark and Finland,
the productivity levels of various branches of industry
in Estonia also fall between 15% and 50%. Estonia has
come closest to achieving the productivity levels of the
old European Union Member States in the wood, paper
and building materials industries. In these branches of
industry, Estonia has already achieved 66% or 50% of the
level of the old EU Member States.
176
Estonian Human Development Report 2012/2013