Estonia’s Way to the Economic Crisis and the Lessons to Be Learned: the Aspect of Labour Cost
The purpose of the article is to assess the bases of Estonia’s economic policy within the context of economic crisis and the development of gross wage in general and by areas of activity before and during the crisis.
The author analyses the alleged economico-political reasons of the success story of Estonia’s development, Estonia’s economic policy within the context of the economic crisis and its actual perspectives, and the general developments relating to gross salary and sectoral differences in Estonian economy until the time of the economic crisis and during the crisis. He finds that Estonian economic policy gives no reason to speak of a strategy of catching up with developed countries. Becoming a member of the European Union did not stabilise Estonia’s economic development. The processes which so far supported the economic growth have taken a backwards turn, that is, hindering the economic development. The depth of the economic recession showed that the earlier development had been based on unsustainable factors.
Estonia is on the way of assuming the position of the producer of intermediate products dictated to us by companies of developed countries. Economic growth depends primarily on external demand for outsourcing and services because, due to the high debt burden of households, domestic demand cannot bring about a significant growth. The hope to achieve a new success with the earlier economic policy after the economic crisis is ungrounded in the changed circumstances and domestic situation. The precondition for success would be a radical change in the economic policy which primarily means priority development and implementation of the bases of innovative knowledge-based economy. Even if a start is made now, creation of a sustainable basis of growth may take a dozen years or so.