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Collective Bargaining

Around a third of employees are covered by collective bargaining in Estonia and by far the most important level for collective bargaining is the company or organisation, with unions negotiating with individual employers. However, the minimum wage is set after negotiations between the union confederations and the employers at national level.

The framework


Legislation provides for collective agreements at three levels – national, industry and company/organisation. In practice the most important level is company or organisational level bargaining, although there have also been a number of important national agreements. The minimum wage is also set through national negotiations.


The 2015 Statistics Estonia survey shows that 18.6% of employees in organisations employing five or more are covered by collective agreements. Coverage is much higher in the public and voluntary sectors than in the private sector. Just 16.3% of those working in companies are covered by a collective agreement, compared with 20.7% of employees of central and local government, and 38.1% of those working in non-profit associations and foundations. For the majority of employees in Estonia, working conditions, and in particular pay, are fixed in direct discussions between the employer and the individual worker.


Collective agreements are required to be registered in a national database, although not all are, as some companies are reluctant to provide the information. As of December 2018, there were 631 current agreements on the database of the social ministry, with 19 signed in 2017.[1] However, this number should be treated with caution, as it is not clear how far the database is kept up to date.


The key level of collective bargaining is at the level of the company or organisation, both in the private sector – in as far as bargaining takes place at all – and in the public sector. For example, the terms and conditions of employees in local government are set through negotiation between each individual municipality and the unions. Where an employer signs a collective agreement, it applies to all employees, irrespective as to whether or not they are union members.


Unusually in Estonia, employee representatives can sign collective agreements when there is no union present (see next section).


The number of industry level agreements and their coverage has fallen in recent years, and in 2019 only two such agreements remained current – covering transport and health care. The health care agreement which runs until the end of 2020 was signed on 30 November 2018 and the transport agreement, which runs until the end of 2019, was signed on 19 September 2016. By law, industry level agreements can easily be extended to other employers in the industry. All that is necessary is the agreement of the two parties. In practice transport and health care are the only industries where agreements have ever been extended to non-signatory employers in this way.


In January 2018, the main union confederation EAKL and the main employers’ association ETTK reached agreement on good practice in relation to the extension of collective agreements. This stated, among other things, that only agreements between affiliates of these two main bodies and only agreements reached by the largest organisations in the industry concerned should be extended.


The figures from Statistics Estonia show the decline in collective bargaining coverage in recent years. Between 2009 and 2015, overall coverage fell from 32.5% to 18.6%. A separate study from the University of Tartu, looking at industrial relations in Estonia over the period 2007 to 2016, found that at company level “the number of collective agreements has gradually decreased since 2007, except in 2012 and 2014”.[2] 


At national level there are a number of tripartite bodies bringing together the unions, employers and government such as the bodies covering unemployment and health insurance. Tripartite negotiations have in the past been important in developing Estonia’s system of industrial relations but agreements have also been concluded on labour market policy. In recent years high-level tripartite meetings have not taken place, but in 2018 the government agreed to reinstate the practice of regular meetings of the three parties, holding the first meeting with EAKL for the unions and ETTK for the employers on 22 May 2018. The government was represented by the prime minister, the minister of labour and the minister of the interior. Subsequent meetings have followed.


Who negotiates and when?


At industry level negotiations take place between the unions and employers’ associations, although as stated these are rare, and have essentially been limited to the transport industry and health care.


At company level negotiations take place between the union in the organisation and the employer. The law also allows elected employee representatives to undertake collective bargaining, where there is no union present and where there are no union members at the workplace (see section on workplace representation). The database of collective agreements maintained by the Social Ministry shows that this option has been taken up in a number of companies.


Agreements normally last for one or two years.


The subject of the negotiations


Collective agreements cover pay, working conditions, including working time, health and safety, arrangements for lay-offs and guaranteed pay and the arrangements in case of redundancies.


There is a minimum wage in Estonia, which is set by law following negotiations between the union confederation EAKL and the main employers’ association, ETTK. Once settled, the agreement is extended by the government to all employers and employees in Estonia.

[1] Kollektiivlepingute andmekogu Sotsiaalministeerium (Database of collective agreements Social Ministry) http://klak.sm.ee/leping?pageSize=10 (Accessed 23.07.14) 

[2] Industrial relations in Estonia: recent developments and future challenges by Uku Varblane Olena Nedozhogina Kerly Espenberg,  CASS, November 2016 https://skytte.ut.ee/sites/default/files/skytte/industrial_relations_in_estonia.pdf

L. Fulton (2021) National Industrial Relations, an update (2019-2021). Labour Research Department and ETUI (online publication). Online publication available at http://www.worker-participation.eu/National-Industrial-Relations.