OREANDA-NEWS. On September 24, 2008, at the conference Ariplaan 2009, organised by the newspaper Aripaev, Prime Minister Andrus Ansip said that it is a flexible labour market that will take the economy to a new rise, which is why a new Employment Contracts Act must urgently be enforced and people guided towards lifelong learning, reported the Official website www.valitsus.ee.

Also, the supporting of export and research and development activities must continue, as well as the strict budget policy and a simple and transparent tax system.

According to Prime Minister Andrus Ansip, there are great tensions on the Estonian labour market. At the estimate of Ansip, the regulation of the Estonian labour market does not comply with the needs of the modern economy.

“The greatest problem for Estonia is the lack of a qualified labour force and the inflexibility of the labour market,” said the head of government, speaking at the conference. The Prime Minister promised the participants of the conference that in three years, the funding for lifelong learning will be doubled. Investments into the infrastructure of education have also greatly increased.

With its labour market flexibility indicator, Estonia is in 163rd place among 181 countries in Doing business 2009. “This evaluation is clearly devastating,” Ansip said. The evaluation of the European Commission has also been uniform: “The main challenge for Estonia is to very quickly decrease the rigidity of the labour market. To do that, a new Employment Contracts Act is needed”.

According to the Prime Minister, the new rise of the Estonian economy must be derived from export. “Export from Estonia has constantly been increasing,” said Ansip, stating that export has increased by five per cent in the first half year. Estonia’s largest trading partners in the first half of this year were Sweden (17 per cent increase), Lithuania (13 per cent increase) and Russia and Finland (12 per cent increase).

“State support for the increase of export has grown by 195 per cent,” said the head of the government. In the period 2004-2007, EEK 613 million was allocated for investment support for companies, and other export refunds amounted to a total of MEEK 648. For the years 2008-2011, the investment support for companies has increased to EEK 1.84 billion and other export refunds to EEK 1.88 billion.

At the estimate of the Prime Minister, the bases for the good health of the Estonian economy are still the strict budget policy, simple tax system and efficient state. “We can make the Estonian state even more efficient than it is,” the Prime Minister said. However, Ansip does not think it is possible to significantly reduce the expenditure of the Estonian public sector as this would mean the state would become non-existent. The expenditure of our public sector compared to other European Union Member States is very small (only 33.7 per cent of GDP).

The Prime Minister noted that the Estonian reserves have increased mainly over the past two years. The surplus of 2007 was EEK 7.8 billion, in 2006, EEK 7.4 billion and in 2005, EEK 3.2 billion.

At the end of his speech, the Prime Minister also pointed out the rigid structure of the budget. “The budget must be more flexible,” said Ansip, according to whom budget growth will automatically be used for support.

The expenditure of the Ministry of Social Affairs makes up 43.9 per cent of the expenditure of the state budget. At the same time, the Ministry of the Interior uses up 7 per cent, the Ministry of Education and Research 7.1 per cent, the Ministry of Economic Affairs and Communications 8.4 per cent, the Ministry of Defence 5.7 per cent, the Ministry of Agriculture 5.4 per cent and the Ministry of Culture 2.6 per cent.