Analytics, Business, Estonia, Markets and Companies

The most negative assessment of all time of the government's economic policy reduces the confidence of entrepreneurs. According to results of the economic speedometer survey taken by the Institute of Economic Research, the Estonian economy developed in the second quarter of 2017 at a speed of 79 kilometers per hour, while without the government's actions the speedometer's result would have been 87 kilometers per hour, the confederation said.

The surveyed entrepreneurs mentioned several reasons for being discontent. For instance, in the second quarter a tax package took effect which increased the tax burden as well as the administrative burden of companies. Entrepreneurs consider the tax policy to be a measure to hastily cover the costs of the state budget.

Entrepreneurs would have liked to see the government analyze the impact of the tax package on the business environment and visibly weigh its alternatives before it was adopted. In the entrepreneurs' opinion the government does not have an understanding of how to activate the economy. The frequent changes in the tax system which leave little time to react increase the insecurity of entrepreneurs.

Another reason for the discontent of entrepreneurs is the annual migration quota which was exhausted in the second quarter this year. According to entrepreneurs, it was forecast that the quota would be exhausted in the middle of the year, but the government postponed solving the problem.

The number of working-age people decreases by about 6,000 people every year. The number of vacant positions in Estonia is the biggest in seven years. Estonia's industry has developed faster than Estonia's population has increased, therefore one in every five industrial companies is ready to use foreign workforce to alleviate the workforce shortage. Results of the economic speedometer survey show that there is a great wish for hiring employees in all business sectors.

For the past few years Estonia's annual immigration quota has equaled 0.1% of the country's permanent population, totaling 1,317 people this year. The first time the quota was exhausted was last December, while this year it exhausted already in the second quarter.

The most positive results of the economic speedometer survey concern the construction and retail trade sectors. In these sectors entrepreneurs forecast a price increase, and they also see as positive the previous quarter's sales volumes and the estimated sales values in the next quarters.

The Estonian Employers Confederation uses the quarterly economic speedometer index to measure entrepreneurs' assessment of the economic situation and satisfaction with the government's work to improve the business environment. The index is based on the replies of close to 1,000 entrepreneurs. The survey is conducted by the Estonian Institute of Economic Research. Conducting the survey is supported by the European Social Fund.