Among other things, the IMF delegation was interested in the development of Estonia’s tax system to assess how it could better support budget sustainability. Reforms to improve competitiveness were also discussed, including strengthening the investment environment, opportunities for using of artificial intelligence, and labour market policy. Special attention was given to energy policy and the impact of electricity price fluctuations on competitiveness.

Chair of the Finance Committee Annely Akkermann explained the situation regarding the sustainability of Estonia’s state budget.

“Due to the rapid growth in defence spending and changes in income tax, the general government deficit has risen to 4.5 percent, which will decrease gradually in the coming years and reach 2.8 percent of GDP by 2029. The goal for the coming years is to reduce the budget deficit,” Akkermann said. She pointed out that after the cancellation of a two-percentage-point income tax increase, Estonia’s tax burden fell from 36.6 percent to 35.2 percent. The national debt burden grew by EUR 1.7 billion, to 25.9 percent of GDP. The national debt burden will increase because of all the additional costs, and is predicted to reach 31.4 percent of GDP in 2029, and the interest costs will amount to 0.8 percent of the GDP, or EUR 417 million. High inflation has slowed down and currently stands at 4 percent.

According to Chairman of the Economic Affairs Committee Marek Reinaas, the meeting provided a useful comparative overview of the economic situation in neighbouring countries. He noted that the Estonian economy was on the rise, which was evidenced by 2.4 percent economic growth. “To support a technology-intensive growth cycle in Estonia’s economy, we are creating an attractive investment environment, a supply of clean energy, and diverse access to capital for businesses that meet the economy’s changing needs,” Reinaas explained. To resolve energy-related challenges and achieve more affordable electricity prices, it is necessary to invest in the construction of wind farms to ensure that 70 percent of the energy portfolio consists of non-dispatchable green energy.

Chair Annely Akkermann, Deputy Chair Andrei Korobeinik, and members Aivar Sõerd, Mart Võrklaev and Riina Sikkut from the Finance Committee, and Chairman Marek Reinaas and member Urve Tiidus from the Economic Affairs Committee participated in the meeting with the IMF delegation.

During its visit, the IMF delegation will get an overview of the current state and prospects of Estonia’s financial sector, as well as changes in anti-money laundering policy and practices. As in previous years, the focus is on the readiness of Estonia’s financial supervisory authorities to take additional steps to ensure financial stability if it should prove to be necessary.

The delegation of the International Monetary Fund (IMF), which is visiting Estonia until 9 June, will discuss Estonia’s economic situation and necessary economic policy measures with representatives of the public and private sectors. The visit takes place in the framework of the IMF’s annual economic policy consultations.

The IMF delegation will meet with members of the Government and the Riigikogu, as well as with leaders and analysts from Eesti Pank (Bank of Estonia), and representatives of ministries, local governments, government agencies, and the Financial Supervision Authority. They have also planned to have meetings with the representatives of commercial banks, professional organisations and private businesses.

Head of the IMF delegation Vincenzo Guzzo will present the conclusions of the visit at the press conference on Tuesday, 9 June at 11 a.m. The Minister of Finance and the Governor of the Bank of Estonia will also give comments at the press conference.

The IMF discusses important economic policy issues with all member states. The outcome of the consultation is a public report reflecting the IMF experts’ assessment of Estonia’s economic policy.

Photos (Erik Peinar, Chancellery of the Riigikogu)

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Link uudisele: The committees of the Riigikogu discussed Estonia’s economic situation and economic policy measures with IMF representatives

“We have only just embarked on the road to introducing nuclear energy and many questions are still to be answered; we look forward to great public interest and wide participation in discussions in the society. When deciding to build a nuclear power station, we must be sure that the society agrees and that it actually reduces the price of energy,” Jevgrafov said.

Member of the Committee and the Chairman of the Nuclear Power Support Group Mario Kadastik called it possibly the most important Bill of this Riigikogu. “Nuclear energy must form part of our security of supply. Considering the current events in the Strait of Hormuz, we cannot count on gas,” he warned.

The Minister of Energy and the Environment Andres Sutt also took part in the sitting, stating that the function of the national nuclear regulator with all the rights and obligations this entails would be created at the Consumer Protection and Technical Regulatory Authority (CPTRA). The Bill provides a gradual permit system for the construction of the power station, with steps such as preliminary assessment, building permit, testing permit, operating permit, and decommissioning permit. The nuclear regulator is to begin its work on 1 January 2027.

Member of the Committee Rene Kokk advocated for the establishment of a separate institution of nuclear regulator. “I am not opposed to the nuclear regulator operating under the CPTRA at first; however, seeing how the CPTRA is constantly being burdened with new tasks, the state should be prepared to establish a separate regulator,” he stressed.

The Bill also sets out the principle that the founder and operator of the power station is fully responsible for the safety of the object and for the expenses incurred at the end of its life cycle. A national decommissioning fund is to be established for this eventuality; the operator is to collect funds there during the operational period of the power station for its future decommissioning costs and the final storage of waste. The Bill also sets out the principles of nuclear safety, physical protection, emergency readiness, and implementation of international control measures.

The Economic Affairs Committee proposed to the Board that the Nuclear Energy and Safety Bill (856 SE) be entered on the agenda of the plenary sitting on April 8 and to conclude the first reading of the Bill.

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Deputy Chairman of the Economic Affairs Committee Aleksei Jevgrafov asked at the Committee sitting whether the geographical indication could also be used by a producer whose products were manufactured in several different locations. “Often, a product is not manufactured entirely on-site, but raw materials come from one place, the product is assembled in another place, packaged in a third place, and so on,” he explained. According to Minister of Justice and Digital Affairs Liisa Pakosta, who attended the sitting, this is not an obstacle—in order to obtain a geographical indication, it is sufficient if at least one stage of production takes place in the region.

Under the new regulations, the protected designation may be used by all producers who operate in the designated region and meet the established requirements. The application to obtain a geographical indication must be submitted to the Patent Office. The Consumer Protection and Technical Regulatory Authority will be responsible for monitoring whether the products meet the specifications—for example, whether a specific Haapsalu shawl is authentic.

At its yesterday’s sitting, the Economic Affairs Committee made a proposal to the Board of the Riigikogu to include the Bill on Amendments to the Geographical Indication Protection Act, Trade Marks Act and State Fees Act (813 SE) in the agenda of the plenary sitting of 7 April and to conclude the first reading of the Bill.

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The Chairman of the Finance Committee Annely Akkermann, members of the Committee Maris Lauri and Mart Võrklaev, and the Chairman of the Economic Affairs Committee Marek Reinaas outlined the factors affecting the state budget, the planned changes in taxation, the state of the economy, and the measures to ensure energy security. The high volume of defence investments is temporarily increasing the deficit of the current account. Next year, the state defence expenditure will increase to 5.3% of the GDP.

“This year, the budget deficit will decrease to 1.0% of the GDP thanks to increased taxes; however, the rapid increase in defence expenditure and changes in the income tax next year will take it to 4.0% of the GDP,” Akkermann admitted. She added that the deficit would be reduced step by step each year, reaching 2.8% of the GDP by 2029. State revenue is predicted to decrease by EUR 780 million due to the introduction of the uniform EUR 700 income tax exemption and the cancellation of the planned 2 % increase in income tax. The tax burden in Estonia will fall from 36.6% to 35.2%.

According to the State Budget Bill, the planned general government deficit will be 4.5% of the GDP next year, which will remain within the limits of the exemption granted by the European Union for rapid increases in defence spending. Next year’s debt burden will grow by EUR 1.7 billion to 25.9% of the GDP.

The Ministry predicts a 5.4% increase in prices this year. Akkermann referred to an analysis by the Ministry of Finance, which said that the inflation would slow down to 3.5% annually in 2026, when the increase in the prices of food and services slows down and the impact of the tax measures diminishes. 

Due to the significant increase in the budget deficit, next year’s debt burden will grow by EUR 1.7 billion to 25.9% of the GDP.

The national debt burden will increase because of all the additional costs and is predicted to reach 31.4% of the GDP in 2029, and the interest costs to 0.8% of the GDP, or EUR 417 million.

The Chairman of the Economic Affairs Committee Marek Reinaas pointed out that the economy was slowly recovering according to the forecast. “Economic growth is an inevitable requirement in tidying up the budget. I am happy to know that the economy is on its way up,” Reinaas said. “The upward curve of the economy promises a 1% increase in the GDP for this year and 2.5% for the next.”

“The Estonian economy has all it takes for a new technology intensive growth cycle. Keeping the investment environment attractive, offering clean energy, making capital accessible to businesses and changed needs in a flexible way all ensure that Estonia has a successful economy,” Reinaas explained. “To solve challenges related to energy and achieve a more affordable price of electricity we are investing into building wind farms because the Expert Panel on Competitiveness created at the Economic Affairs Committee sees this as unavoidable to ensure that uncontrollable green energy makes up 70% in our energy portfolio,” Reinaas explained.

The IMF monitors the economies of its member countries, including Estonia, in the context of the economic policy consultations that generally take place once a year. The common name “Article IV consultations” derives from Article IV of the IMF’s Articles of Agreement. IMF’s national cooperation partner in Estonia is Eesti Pank (Bank of Estonia), which publishes summaries of the missions on its website.

The mission team specifies the objectives, scope, details, timing, and expected results of the Article IV cycle. It engages in discussions on recent macroeconomic, fiscal and financial developments, prospects, risks, and policies. The mission team is interested in feedback from the Riigikogu committees on their analytical and policy agenda before the Article IV consultations.

As this is an interim mission of the IMF, the team will not prepare a summary statement and there will be no press conference at the end of the mission. However, the interim mission is important because it usually prepares the first version of the Article IV report, which is supplemented with additional topics and economic policy messages during the mission. The outcome of the consultation is a report reflecting the IMF experts’ assessment of Estonia’s economic policy. The IMF discusses important economic policy issues with all member states.

The IMF mission is headed by Vincenzo Guzzo; he is accompanied by Bingjie Hu and Carlos de Resende, and energy expert Hugo Rojas-Romagosa.

Photos (Erik Peinar / Chancellery of the Riigikogu)

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Members of the press, You are welcome to attend the press conference where Chairman of the Economic Affairs Committee of the Riigikogu Jaak Aab and members of the Expert Panel on Competitiveness Ülo Kaasik, Priit Vahter, Kadri Männasoo and Uku Varblane will give an overview of the contents of the report and its recommendations.

The press conference will be held today at 12 noon in the Conference Hall of the Riigikogu. The press conference will be webcast live.

The report shows that changes in business models multiply the positive impact of digitalisation, and artificial intelligence also has a great potential in increasing productivity. The report also focuses on energy, highlighting new incentives to invest in Estonia brought about by the green transition, underlining the need to think about energy efficiency when valorising green electricity, and setting out that 60–80% share of renewable energy will ensure the lowest price of electricity. At the same time, Estonia’s productivity is held back by education drop-outs, mismatches between jobs and skills and excessive labour turnover.

The members of the Expert Panel on Competitiveness are Deputy Governor of the Bank of Estonia Ülo Kaasik, Professor of Applied Economics of the University of Tartu Priit Vahter, Tenured Professor of Applied Econometrics at Tallinn University of Technology Kadri Männasoo and Head of Research at the Foresight Centre Uku Varblane. Numerous experts and stakeholders, like other universities and research institutes, representatives of employers and employees as well as public authorities were also involved in the work of the Expert Panel.

The video recording can be viewed later on the YouTube channel of the Riigikogu.
Photos can later be found in the Riigikogu photo archive (author: Erik Peinar / Chancellery of the Riigikogu).

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Link uudisele: Report of the Expert Panel on Competitiveness completed

Members of the press,

You are welcome to attend the press conference where Chairman of the Economic Affairs Committee of the Riigikogu Jaak Aab and members of the Expert Panel on Competitiveness Ülo Kaasik, Priit Vahter, Kadri Männasoo and Uku Varblane will give an overview of the contents of the report and its recommendations.

The press conference will be held on Tuesday, 25 June, at 12 noon in the Conference Hall of the Riigikogu. The press conference will be public, and it will be webcast live.

The report shows that changes in business models multiply the positive impact of digitalisation, and artificial intelligence also has a great potential in increasing productivity. The report also focuses on energy, highlighting new incentives to invest in Estonia brought about by the green transition, underlining the need to think about energy efficiency when valorising green electricity, and setting out that 60–80% share of renewable energy will ensure the lowest price of electricity. At the same time, Estonia’s productivity is held back by education drop-outs, mismatches between jobs and skills and excessive labour turnover.

The members of the Expert Panel on Competitiveness are Deputy Governor of the Bank of Estonia Ülo Kaasik, Professor of Applied Economics of the University of Tartu Priit Vahter, Tenured Professor of Applied Econometrics at Tallinn University of Technology Kadri Männasoo and Head of Research at the Foresight Centre Uku Varblane. Numerous experts and stakeholders, like other universities and research institutes, representatives of employers and employees as well as public authorities were also involved in the work of the Expert Panel.

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Link uudisele: Invitation: Report of the Expert Panel on Competitiveness completed

Priit Lomp, member of the Economic Affairs Committee, and Chairman of the Committee until this week, explained that his motivation in convening the Expert Panel had been a concern for the wellbeing of the economy, but also his wish to enhance the role of the Riigikogu in leading the processes in real life. “On behalf of the Economic Affairs Committee, but I also hope that on behalf of all the other members of the Riigikogu, I express my gratitude to the members of the Expert Panel – Kadri Männasoo from the Tallinn University of Technology, Priit Vahter from the University of Tartu, Uku Varblane from the Foresight Centre, and Ülo Kaasik from the Bank of Estonia, and also to all their colleagues in these institutions – for having provided the input for this massive collection of materials and having helped to illustrate it with examples, statistics, and recommendations. I would also like to thank other partners and associations of entrepreneurs who have provided their input and criticism, and have asked difficult questions,” he said.

Lomp emphasised that the end goal of economic policy was not to have the best economy but to achieve a broad improvement of general wellbeing. “As policy shapers, we need to have the skills and the courage to influence the business environment, physical infrastructure, specialisation, and know-how and talents much more than before, as all these have a huge impact on the competitiveness. The question of competitiveness has been brought even more to the forefront by the fact that several components of our success over the last decades, such as cheap labour and energy, access to affordable raw materials from Russia and Belarus, are now lost to us,” he said.

Lomp also gave a brief overview of the topics analysed by the Expert Panel, which include lack of qualified labour, level of digitalisation and automation in Estonian businesses, concerns for economy and resource productivity, excessive bureaucracy and ambiguity of priorities and policies, considerable disparity in the price of capital in comparison to other EU countries, and the additional possible increase in costs with the implementation of the green transition. “The report compiled by the Panel and its partners is being polished as we speak and will hopefully be ready to go to print next month. This document, but also the initial input by researchers of the University of Tartu, should serve as the foundational material for every decision maker to make sure we are moving in the right direction,” he stressed.

Member of the Expert Panel and Deputy Governor of the Bank of Estonia Ülo Kaasik reminded the listeners that when we talked about the long-term growth of Estonian economy, we should not expect a sprint race. “In sports terms, we are dealing with quite a lengthy marathon where we should not sprint off immediately, especially in the wrong direction; instead, we need to choose the right pace and make sure it is within our abilities,” he said.

Estonia has many advantages that we should keep. “We have enjoyed an excellent business environment; studies show that our taxation system is the best in the world, we have flexible labour market, very agile and fast-growing ICT industry. ICT and the whole digital governance have definitely been an Estonian success story.” He added that our problem was the lack of transport connections to other countries – our geographical position and size being something Estonia could not change. 

Despite our innovative ICT, we continue to have problems with the low application of automation and digitalisation in business and industries on average. “We have come to realise that the level of digitalisation remains too low. Just like the application of AI is still in relatively early stages or applied in real life by relatively few people,” he stated. 

Kaasik referred to the study of the University of Tartu, which showed that increased automation in businesses has increased the productivity by an average of 22 percent. “What’s more – if this automation goes hand in hand with organisational renewal, it has been twice as effective and businesses have experienced a nearly 40 percent increase in productivity. Indeed, our suggestion when aiming to support businesses in giving more attention to the digitalisation-automation side is not to focus on whether they have implemented digitalisation or some technical application software in their manufacturing process, and instead look at the leadership quality in general: how to best use the data, implement AI, carry out innovation in the organisation more broadly,”  he explained.

The Deputy Governor of the Bank of Estonia also touched on the lack of qualified labour, costs related to the green transition, scientific innovation, need to ensure affordable power, excessive bureaucracy, and high price of funding entrepreneurship. 

The third speaker was the founder and CEO of defence industry company DefSecIntel Solutions Jaanus Tamm, who also serves on the councils of the Estonian Defence and Aerospace Industry Association and the Defence Estonia Cluster. He thanked the authors of the report on competitiveness and felt assured that it would serve as a basis for useful discussions. “Last year we were also the Defence Business of the Year, so I know a thing or two about this industry. I will share my experiences and perspectives, talk about this report and what is going on in the economy,” he began. 

“We have over 120 companies in our Association, ranging widely from manufacturing plants to food producers and other service providers for the Defence Forces. But we also have quite a large group of companies, numbering several dozens, who are working with smart solutions today. And it is solutions like these, as the report says, that are lacking in Estonia”. The builder of drones and tracking devices explained that with the deterioration of the global security situation, demand for smart solutions had increased very rapidly. “Today, we can insert ourselves into supply chains and decision-making processes because we move faster. And we have our own products. If we remain in wait for product development in large defence companies, we would probably never reach the production stage. Then we would come here and whine a bit. Instead, today we come here and share our experiences,” he said.

Tamm lingered on several topics discussed in the report, including the bureaucratic burden. If anyone wished to build plants linked to the defence industry or an industrial park, the bureaucracy would probably take three years. “However, today we need these things immediately. What we do is to produce these abroad. We are producing in Ukraine, which is okay because we make contributions there,” Tamm said, adding that it was easier to build plants both in Finland and Latvia.

Tamm highlighted that our defence industry was part of our defence capability and Estonia’s defence industry could become the next stage in our IT success story. For the industry to receive a new impetus, however, we would need to produce more here. “After all, it is a big difference whether you produce a module for builders of asphalt factories, or whether you produce a whole factory. Whether you produce a track for a tank or an engine for an airplane, or whether you produce a whole plane or a drone,” he said. “As an entrepreneur, I am optimistic and positive, or I would not be an entrepreneur, I would not be doing this. And I believe that together we would be able to launch the next chapter in the IT success story of Estonia and give a new impetus to the economy through the smart solutions of Estonia’s defence industry.”

During the debate, Maris Lauri (Reform Party), Jaak Aab (Social Democratic Party), Liisa-Ly Pakosta (Estonia 200), Urmas Reinsalu (Isamaa), and Mario Kadastik (Reform Party) took the floor.

Verbatim record of the sitting (in Estonian), presentation by Ülo Kaasik, summary of recommendations by the Expert Panel.

Photos (Author: (Erik Peinar / Chancellery of the Riigikogu)

Video recording will be available to watch later on the Riigikogu YouTube channel.

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Link uudisele: Riigikogu discussed improving competitiveness as a matter of significant national importance

Deputy Chairman of the Committee Lauri Laats added that not only must it be safe to live in Estonia, but the people’s freedom of speech had to be protected as well and web hosts should not be forced to conduct surveillance activities. “People must be able to express their views even when they do not agree with the opinion of the majority. Therefore, it is necessary to be very careful in defining the terrorist content, and at the same time sufficiently strict so that Estonia would be protected from provocations coming from any regime,” Laats pointed out.

The Bill on Amendments to the Information Society Services Act and the Penal Code will bring the Estonian national law into conformity with the European Union Regulation that has the main aim of improving cooperation with web content mediators, incl. web companies, NGOs, associations and news portals to enhance the removal of terrorist content online. The content of a post is considered terrorist if it incites or glorifies the commission of terrorist acts. It also includes promoting the activities of groups or the dissemination of detailed instructions to commit terrorist acts. The regulation only applies to public websites. Web hosting service providers are obliged to remove terrorist content or block access to it. The rules have been agreed upon by the European Union, and they are supported by hosting service providers, like Google, Facebook, Twitter and YouTube. Cooperation between states is organised by the Europol.

The Penal Code will also be amended to ensure that persons can be prosecuted not only for incitements made in public but also, for example, in moderated forums and groups.

The Economic Affairs Committee decided to send the Bill on Amendments to the Information Society Services Act and the Penal Code (224 SE) to the first reading at the plenary sitting of the Riigikogu on 18 October with the motion to conclude the first reading.

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Link uudisele: The Economic Affairs Committee resent the Bill on terrorist web content to the plenary

Another important issue that will be discussed is the economic consequences of the coronavirus pandemic. “Before the war broke out, it was predicted that the European economy would experience a long-term and strong growth. Therefore, we now have to recover from two crises at the same time, the impact of which on different industries and businesses is very complex and depends on many factors, including the ability to adapt to supply chain disruptions and the availability of supplies,” Michal admitted.

The meeting will take place at 10.30 a.m. at the Riigikogu, and it will be attended by head of the Bundestag delegation Klaus-Peter Willsch and members of the Bundestag Bernd Westphal, Lena Werner, Maik Außendorf, Carl-Julius Cronenberg and Malte Kaufmann. From the Economic Affairs Committee of the Riigikogu, Chairman Kristen Michal, Deputy Chairman Sven Sester, and members Jüri Jaanson and Riho Breivel will participate in the meeting.

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The Act also makes amendments to the Electricity Market Act and the Natural Gas Act that will enable fixed price contracts for a specified term on more favourable conditions for consumers. The Government, the Ministry of Economic Affairs and Communications as well as market participants have pointed out the need to increase the flexibility of the contracts among various measures to mitigate the energy price crisis. In connection with the amendments, the provisions in the Law of Obligations Act are also amended in the interests of clarity.

During the debate, Jüri Jaanson took the floor on behalf of the Reform Party Faction.

56 members of the Riigikogu voted in favour of passing the Act and 22 voted against.

The Riigikogu passed eight other Acts

The amendments introduced with the Act on Amendments to the Land Valuation Act, the Land Tax Act and Other Acts (406 SE), initiated by the Government, update the criteria for calculating the value of land and bring the land tax into conformity with the principles of the market value of land. The amendments do not concern the current tax exemption on the land under homes.

The Act makes changes to the principles of mass valuation of land. In the future, the Land Board will carry out mass valuation mainly on the basis of the data contained in national databases. In the future, the value zones on the basis of which local governments calculate the value of each particular plot of land will no longer be determined upon mass valuation of land. Instead, the taxable value of each plot of land will be determined as a result of valuation.

The last mass valuation of land in Estonia took place in 2001, and in nearly 20 years, the value of land has increased by seven times on the average. The taxable value obtained as a result of mass valuation of land is the basis for determining land tax, the payments for tolerating utility networks and the use fee under different usufruct contracts.

According to the Act, the next mass valuation of land will take place in 2022, and after that, valuations will be carried out every four years. The results of the mass valuation of land will be implemented from 2024.

The Act reduces the maximum land tax rates that local governments can impose. For example, the maximum tax rate will be 0.5 per cent of the taxable value of the land instead of the current 2.5 per cent on residential land and forest land, and 1 per cent on commercial land. The lowering of the maximum tax rates will prevent land tax from becoming too high. In order to ensure a smooth transition to the new price level for the taxpayer, a 10 per cent limit is imposed on the annual increase in the land tax amount.

The tax exemption on the land under homes is fully extended on the lands where one of the intended purposes is residential land. For example, if there are business premises on the ground floor of an apartment building and the intended purpose of the plot of land is therefore partly commercial land, the apartment owners residing in the same building cannot enjoy tax exemption to the full extent.

The Act provides that, in the future, changes to land tax rates will have to be established at least six months before the beginning of the taxation year. At present, land tax rates are established by 1 February of the taxation year.

As the value of land has increased after the last mass valuation, the payments for tolerating utility networks will also increase by 3.5 to 4 times on the average once the new taxable values of land will be implemented. The payment for tolerating will change gradually during three years, in 2024–2026, each year by one third of the difference between the new and the present payment for tolerating.

During the debate, Andres Metsoja took the floor on behalf of Faction Isamaa.

72 members of the Riigikogu voted in favour of passing the Act and 9 voted against.

The Act on Amendments to the Study Allowances and Study Loans Act and Amendments to Other Associated Acts (420 SE), initiated by the Government, reforms the doctoral studies so that doctoral students would be starting researchers who do research at universities or with their employers. In addition, the conditions of the state-guaranteed student loan are made more favourable for students and the granting of the basic allowance in vocational educational is made more flexible.

The new regulation is intended to ensure new generations of young researchers and to create an industrial PhD that promotes cooperation between research institutions and companies. In addition, career options for doctoral students will widen and the current rigid academic career model will become more diverse and flexible.

In respect of doctoral studies, amendments are made as a result of which the majority of doctoral students will be contractual research staff at universities, research and development institutions and companies. Their work will essentially be research and development in the area related to their doctoral thesis in accordance with the study and research programme of the doctoral student.

The working conditions and environment of doctoral students will be transformed to enable the tasks related to doctoral studies to be specified and remunerated clearly and uniformly in order thereby to increase the effectiveness of doctoral studies. The Act eliminates the doctoral allowance, which is replaced by the remuneration of junior research fellow.

The employment contract relationship enables to ensure social guarantees to doctoral students, such as the annual paid leave, the possibility to receive sickness benefit, and the application of occupational health requirements.

The conditions for completion of doctoral studies are changed. In the future, the exact duration of a student’s doctoral studies will be agreed on in his or her study and research programme, which will generally remain between three and eight years and which is the current maximum period of study.

The regulation relating to the state guaranteed study loan is amended so that the conditions for a study loan would become more favourable to students. The number of the sureties required upon securing a study loan is reduced to one instead of the current two. The possibility to secure a study loan with a mortgage placed on an immovable situated in Estonia remains in place.

Compared to OECD countries, in 2016, Estonia had an average of eight people with a doctoral degree per 1000 working-age people while the average indicator for the OECD was ten people and the indicator for Finland was 12.6 people. Although the number of doctoral theses defended and the proportion of academic staff has increased somewhat, the number of doctoral graduates in Estonia still remains low and insufficient to change the economic structure and to meet the needs of society.

81 members of the Riigikogu voted in favour of passing the Act.

The Act to Implement the European Union Cohesion and Internal Security Policy Funds for 2021–2027 (487 SE), initiated by the Government of the Republic (487 SE), initiated by the Government, establishes a national regulation for the achievement of the results planned in the Operational Programme for the Investment for Growth and Jobs and the European Territorial Cooperation and the European Union Cross-border Cooperation programmes under the Cohesion Policy of the EU budget period 2021–2027. The implementation of the external support provided for the implementation of the objectives in the areas of EU migration, external borders and internal security is also regulated.

The Act provides for the implementation system institutions and the procedure for the designation of the institutions, as well as the powers to establish the conditions for the granting and use of the support. The Act regulates the informing of the public about the granting of the support, the control and audit of the granting and use of the support, the monitoring of the performance of the projects and the specifications for filing and processing challenges.

The Act has been drafted based on the directly applicable EU Regulations regulating the use of the supports. The Act is proposed as an implementing Act for these EU Regulations.

During the debate, Riina Sikkut took the floor on behalf of the Social Democratic Party Faction, Paul Puustusmaa on behalf of the Estonian Conservative People’s Party Faction, Andres Metsoja on behalf of Faction Isamaa and Jürgen Ligi on behalf of the Reform Party Faction.

53 members of the Riigikogu voted in favour of passing the Act and 24 voted against.

The Act on Amendments to the International Sanctions Act and the Law of Ship Flag and Registers of Ships Act (492 SE), initiated by the Government, specifies the obligations of the persons having specific obligations in order to ensure, in the case of international sanctions, application of due diligence measures that are similar to the ones provided for in the Money Laundering and Terrorist Financing Prevention Act, taking into account the risks typical of financial sanctions. The Act is intended to ensure that persons having specific obligations would also handle the risks relating to financial sanctions systematically.

76 members of the Riigikogu voted in favour of passing the Act.

The Act on Amendments to the Population Register Act and Amendments to Other Associated Acts (494 SE), initiated by the Government, amends the Population Register Act, the Vital Statistics Registration Act, the Consular Act and the State Fees Act. The purpose of the amendments is to automate services, to change the system of issuing of data from the population register and to find solutions to the problems that have emerged in practice.

The main amendments in the Act on amendments to the Population Register Act, the Vital Statistics Registration Act, the Consular Act and the State Fees Act are related to the establishment of a legal framework to enable automatic decisions in certain proceedings under the Population Register Act and the Vital Statistics Registration Act (e.g., registration of place of residence and registration of birth) and changing the system of competences in issuing the data of the population register. Automatic entries are entries made without the intervention of an official. For example, in some cases, if the data on the place of residence are submitted in a safe online environment, it will be possible to make an automatic entry of registration of place of residence, which means that, in the case of certain data submitted through electronic services, an official will no longer have to intervene in the proceedings and the entry into the population register will be made automatically.

The problems that have emerged in the course of daily practice and the solution of which requires amendment of the Act will also be solved. For example, after the registration of the birth of a child, it will also be possible to submit applications on admission of paternity in a notarised form. At the same time, a legal basis is provided for paying a state fee for issuing data from the population register.

76 members of the Riigikogu voted in favour of passing the Act.

The purpose of the Act on Amendments to the Money Laundering and Terrorist Financing Prevention Act and Other Acts (507 SE), initiated by the Government, is to mitigate the risks of the money laundering, terrorist financing and financing of the proliferation of weapons of mass destruction committed in the area of virtual currencies.

The Act strengthens the competence of the Financial Intelligence Unit in the authorisation procedure and supervision of the virtual currency service and provides virtual currency service providers with requirements meeting the international standard. The share and equity capital requirement for virtual currency service providers is increased from 12,000 euro to 100,000 euro and, depending on the field of activity, to 250,000 euro. The Financial Intelligence Unit is given the right to check the background of its employees and officials.

The Act was drafted on the basis of the national risk assessment to solve the most time-critical problems in the area of virtual currencies. A comprehensive legal framework for virtual currency service providers will be established with the Crowdfunding and Other Investment Instruments and Virtual Currencies Bill, which is under preparation.

During the proceedings, the regulation concerning having a qualifying holding and supervision fee was omitted from the Bill and the deadlines for the entry into force and implementation of the Act were amended. The Act is planned to enter into force on 15 March. Virtual currency service providers will have to bring their activities mostly into conformity and submit documents by 15 June. The time of the extraordinary audit of own funds will be postponed from 15 August 2022 to 1 January 2023.

During the debate, Jürgen Ligi took the floor on behalf of the Reform Party Faction and Aivar Kokk on behalf of Faction Isamaa.

59 members of the Riigikogu voted in favour of passing the Act.

The Act on Amendments to the Creative Persons and Artistic Associations Act and the Work Ability Allowance Act (517 SE), initiated by the Government, makes amendments to the Act in order to continue the payment of the support for creative activity on mitigated conditions until the end of 2022 to creative people engaged in liberal professions.

Due to the conditions of the COVID-19 crisis, in 2020, mitigations were made in the application for the supports for creative activity and the mitigations were continued in 2021. The restriction to the effect that creative persons who had already received the support would not be granted the support again during two years was temporarily suspended. At the same time, the persons were temporarily allowed to earn income to the extent of up to one minimum wage in a month besides the support for creative activity. The Act extends the mitigations until the end of 2022.

Permanent amendments are also made to the conditions for application for and payment of the support for creative activity. For example, the definition of income, and the size of income that is taken into account when deciding on the grant of the support for creative activity are specified. According to the Act, application for support for creative activity is open to a creative person who is engaged in a liberal profession and whose income subject to income tax received in the month preceding the application for the support for creative activity and in each month over the period of the payment of the support for creative activity does not exceed half of the minimum remuneration. In addition, the Act specifies the bases for refusal to pay the support for creative activity where the Ministry of Culture pays the support.

In order to receive the support for creative activity, the creative person needs to have been active in the corresponding artistic field over the last three years, and published works. The Act provides for a mitigation to the effect that, if a creative person engaged in a liberal profession has been on parental leave, received parental benefit or been in conscript service within the past three years, the three-year period is extended by the period when the person received parental benefit or was on parental leave or in conscript service.

The Act also specifies the bases for termination of the payment of the support for creative activity. According to the Act, a support for creative activity paid without basis can also be reclaimed in a situation where the creative person does not meet the requirements for application for support for creative activity, in addition to the situation where false information has been submitted.

Support for creative activity is a support in an amount of the minimum remuneration paid over six months for people engaged in cultural activities who operate in irregular or non-standard forms of work and have temporarily lost their income. Besides ensuring the minimum wage, support for creative activity ensures health insurance and other benefits arising from regular social tax payments.

70 members of the Riigikogu voted in favour of passing the Act.

The Act on the Acceptance of the Amendments of 2018 to the Code of the Maritime Labour Convention of the International Labour Organization (471 SE), initiated by the Government, accepts the amendments that concern the effect of a seafarer’s employment agreement and the payment of wages to a crew member in a situation where the crew member is held captive as a result of an act of piracy or armed robbery against a ship.

According to the amendments, the operator has the obligation to continue to pay wages in a situation where a crew member is held captive as a result of an act of piracy or armed robbery against a ship. The operator must then continue to pay to the crew member the wages, remuneration and other entitlements, whether arising under the seafarer employment agreement, a collective bargaining agreement or any enactment. The operator’s obligation will continue to have effect until the crew member is repatriated or, where the crew member dies while in captivity, until the death of the crew member.

For national implementation of the amendments, the Ministry of Social Affairs has initiated a Bill on Amendments to the Seafarers Employment Act that will amend the Act according to the amendments to the Convention. The amendments concern the operators whose ships have a maritime labour certificate.

The Riigikogu ratified the Maritime Labour Convention on 23 February 2016, and it entered into force for Estonia on 5 May 2017. The amendments to the Maritime Labour Convention will enter into force for Estonia six months after Estonia will have notified the Director-General of the International Labour Office of its acceptance of the amendment.

59 members of the Riigikogu voted in favour of passing the Act.

Two Bills passed the second reading

The Bill on Amendments to the Fiscal Marking of Liquid Fuel Act and the European Union Common Agricultural Policy Implementation Act (495 SE), initiated by the Government, is intended to reduce misuse of diesel fuel marked with a fiscal marking used in the agriculture and fisheries sector and to increase the receipt of excise duty.

The current Act enables to perform only formal checking before sale and this does not ensure purposeful use of the reduced excise duty. Before sale, the buyer is required to inform the seller orally of the purpose of use of the fuel. Thus there are actually no restrictions when buying diesel fuel for specific purposes and it is available to everyone who, at the moment of buying, says that the purpose of use of the fuel is agriculture or fisheries. As a result of the amendment, diesel fuel for specific purposes will no longer be available to everyone but only to those who have the relevant right to buy it.

The Bill provides that, in order to buy and use diesel fuel for specific purposes, the right to buy diesel fuel for specific purposes will be needed and the grant of the right will be decided by the Estonian Agricultural Registers and Information Board. Thus, fuel subject to a reduced excise duty will no longer be sold to everyone who wishes to buy it. The right to buy will be granted only to legal persons and sole proprietors operating in the agriculture and fisheries sector. Before sale, the seller of diesel fuel for specific purposes will have to check whether the person has the right to buy.

The Bill on Amendments to the Seafarers Employment Act (472 SE), initiated by the Government, will transpose into Estonian law the amendments to the ILO Maritime Labour Convention adopted in 2018. The amendments concern the effect of a seafarer’s employment agreement and the payment of wages to a crew member in a situation where the crew member is held captive as a result of armed robbery or piracy.

The Seafarers Employment Act will be amended by adding a provision under which the operator has the obligation to continue to pay wages in a situation where a crew member is held captive as a result of an act of piracy or armed robbery against a ship. In such a situation, the operator will have to continue to pay to the crew member the wages, remuneration and other entitlements, whether arising under the seafarer employment agreement, a collective bargaining agreement or any enactment. The operator’s obligation will continue to have effect until the crew member is repatriated or, where the crew member dies while in captivity, until the death of the crew member. The obligation to pay wages will be applied to the operators whose ships must have a maritime labour certificate under the Maritime Safety Act.

The Bill will also regulate the effect of a seafarer’s employment agreement in the event of captivity of a crew member. A seafarer’s employment agreement will continue to have effect while a crew member is held captive as a result of an act of piracy or armed robbery against a ship, regardless of whether either party has given notice to suspend or cancel the seafarer’s employment agreement, or the deadline of the seafarer’s fixed term employment contract has passed.

The explanatory memorandum notes that, in Estonia, there are currently nine operators whose ships have a maritime labour certificate. According to the Transport Administration’s knowledge, the ships of Estonian operators have had no cases that could be regarded as piracy or armed robbery in foreign waters. According to the data of the International Maritime Organization, a total of 192 incidents of piracy and armed robberies occurred in the world in 2020.

Two Bills passed the first reading

The Bill on Amendments to the Employment Contracts Act and Other Associated Acts (521 SE), initiated by the Government, will transpose the relevant EU directive on transparent and predictable working conditions in the European Union, which lays down minimum requirements relating to working conditions that apply to every worker in order to guarantee an adequate degree of transparency and predictability as regards the working conditions. The proposed amendments will enhance the protection of both employees and officials in employment and service relationships and will help ensure that they are informed about essential working and service conditions at as early a stage of an employment or service relationship as possible.

In the Employment Contracts Act, amendments will be made to the set of data of which the employer must inform the employee in writing on commencement of employment. The employer will have the obligation to inform the employee of the training entitlement provided by the employer, the paid leave, the duration of the probationary period, the procedure for working overtime and compensation therefor, the form for cancellation of the employment contract and the obligation to provide justifications, as well as the institutions receiving the taxes and social contributions and the protection accompanying the payment thereof. In the event of changes to the data, information on the changes will have to be provided at the latest on the day on which the changes take effect.

It will also be provided that, in the event of an impediment to work, the probationary period will be extended correspondingly, in relation to the duration of the absence, for example in the event of temporary incapacity for work. The employee will be given the right to request suitable working conditions, for example, to request full-time work instead of part-time work and to receive a response to their request from the employer. In addition, the Bill will provide for protection against unfavourable treatment for the case when the employee invokes their rights or draws attention to a breach of such rights. This means that, where an employee stands up for their rights, this must not be followed by adverse consequences, for example, where an employee draws attention to the fact that the employer is failing to meet the working hours and rest period requirements, the employer must not impose adverse consequences on the employee.

The Bill will also amend the Civil Service Act and amend the set of data that will have to be provided to officials in the acts concerning the organisation of work and in the salary guides of authorities. At the same time, the Working Conditions of Employees Posted to Estonia Act will provide for the set of data of which the employer will have to inform the employer in writing in the event of a posting longer than one month, for example, information on the amount of and the currency to be used for the payment of remuneration, and repatriation. The Occupational Health and Safety Act will be amended by adding the obligation of the employee to ensure that their working or provision of services at other persons providing employment does not endanger the employee’s or other people’s life or health. The amendment is important for drawing employees’ attention to the importance of meeting the working hours and rest period requirements for health protection purposes.

During the debate, Aivar Kokk took the floor on behalf of Faction Isamaa.

The Bill on Accessibility of Products and Services (511 SE), initiated by the Government, will transpose the relevant European Union directive on the accessibility requirements for products and services.

The Bill will provide for assuring every person with special needs that they will not experience difficulties when using products and services but will find alternative formats to use products and consume services. Thereby the aim is to shape a more inclusive society in order to simplify the independent living of people with functional limitations.

The Bill will provide for the accessibility requirements for products and services falling within the scope of the Accessibility Directive, the obligations of economic operators to ensure accessibility, the assessment of conformity with the accessibility requirements, and the presumption of conformity and the state supervision and liability. It will also adopt terms that have not been legally defined so far and that will need to be defined in view of the definitions used in the transposition of the directive.

According to the Bill, for example, self-service terminals and automated teller machines will have to be made accessible so that they could be conveniently used by people in wheelchairs as well as children, short adults and the elderly.

The amendments provided for in the Bill concern economic operators who will have the obligation to meet the proposed requirements. The requirements will not be applied to service providers that are microenterprises, that is, enterprises which employ fewer than 10 persons and which have an annual turnover not exceeding EUR 2 million.

During the debate, Mart Helme took the floor on behalf of the Estonian Conservative People’s Party and Jüri Jaanson on behalf of the Reform Party Faction.

The Estonian Conservative People’s Party Faction moved to reject the Bill at the first reading. 16 members of the Riigikogu voted in favour of the motion and 48 voted against. Thus, the motion was not supported and the first reading of the Bill was concluded.

The sitting ended at 6.22 p.m. The additional sitting of the Riigikogu will start at 7.22 p.m.

Verbatim record of the sitting (in Estonian)

The video recording of the sitting will be available on the Riigikogu YouTube channel.
(Please note that the recording will be uploaded with a delay.)

Riigikogu Press Service
Merilin Kruuse
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Link uudisele: Riigikogu made amendments to Electricity Market Act