No. 7




The Free Movement of Labour Force – Bane or Boon for Estonia?

11 June 2003


RiTo No. 7, 2003

  • Epp Kallaste

    PRAXIS Center for Policy Studies, assistant to Project Manager

  • Kaia Philips

    University of Tartu, Chair of Statistics, docent

Concerns involving the free movement of workers in Estonia are different from the ones in current EU member states. It is not an influx that is feared but rather an exodus of younger people due to a preponderance of highly qualified people and a resulting shortage of staff and drop in competitiveness.

The main contributor to an outflow is the disparity in incomes between Estonia and the EU. The disparity is greater now than it was during previous enlargements and thus migration flows could be greater than in the past as well.

The net loss of Estonian workers to foreign markets in the case of transitionless EU entry is widely predicted to be around 1-4%. Since Estonians have free access to only five employment markets in the EU, emigration may not reach that level. Sweden, Denmark, the UK, Ireland and Holland have announced they will not seek a transition period. Since the forecasts remain modest, it will not affect the labor market or salaries significantly. But it could affect some fields more than others so that salary rises prove inevitable and a shortage of qualified personnel results. Health care is such a field; it has a shortage of workers in many European countries. To a smaller degree we can expect the departure of younger and more qualified workers from Estonia, which will likely not create significant problems in the labor market. Rather there may be advantages in such emigration, since upon returning, people will be more skilled and their value on the market will be greater. It is important to promote the return of Estonians to Estonia.

Full article in Estonian