OREANDA-NEWS. May 05, 2008. At the seminar organized by the British-Estonian Chamber of Commerce, Prime Minister Andrus Ansip said that the greatest challenge faced by Estonia during the period of structural changes in the economy is to increase the flexibility of the labour market, contribute to developing the skills of employees and reduce the taxation of the labour force, lowering the income tax down to 18 per cent by the year 2011. The Prime Minister confirmed that the postponement of the lowering of the income tax is not an option, reported the Official website www.valitsus.ee.

At the seminar “How to invest successfully in 2008. Pan-Baltic vision,” organised by the British-Estonian Chamber of Commerce, Prime Minister Ansip stressed that although the general level of education among Estonians is very high, our educational system must take the needs of the labour market into account more than it has so far.

In the European Union, the average percentage of the population with a higher education is 22,8 of the whole population, whereas in Estonia, this number is 33,3. Finland (34,6%) and Denmark (33,5%) are ahead of us. At the same time, only 7 per cent of the population participated in lifelong learning.

According to the Prime Minister, Estonia must increase the number of people participating in lifelong learning, and through that, the flexibility of the labour market as well. To support the development of skills above their current level, the government will increase the funding of in-service training both this year and next. This year, the funding of active labour market measures will also be increased by nearly two times.

According to Ansip, the government is aiming at increasing the productivity of Estonia by the year 2010 to 80% of the average of the European Union, and increasing the export capacity of Estonian companies. In addition to education, research and development activities also play a significant role in increasing productivity.

The Prime Minister said that Estonia has already achieved a lot in this field. Expenditures on research and development, as a ratio to GDP, have increased in Estonia from the years 2001-2006 at the fastest rate among European Union Member States, reaching 1,14% in 2006.

And the rate of economic growth in Estonia has also been one of the fastest in the European Union. The Prime Minister stressed that in order to successfully benefit from investments into research and development, and increase expenses, we must significantly increase the number of specialists with Doctoral level degree working in universities and businesses.

At the speech given at the seminar, Ansip confirmed that the general status of the Estonian economy and the investment climate are still good. Regardless of the more modest proceeds than forecast and the increase in expenses of local governments, the budget of the current year will still grow by 13 billion EEK  compared to last year. “It is the largest budget growth over the years,” said Ansip. According to the spring forecast, the budget for 2009 will grow by another 7 billion EEK.