Kalle Palling

Kalle Palling is an Estonian politician, representing the Reform Party.

A new target for Estonia – a podium place in the global competition for talent

In order to be competitive also in the future global talent market, Estonia needs to build an attractive environment that provides everything necessary for people and their families near where they live, Kalle Palling, an Estonian MP, writes.

The future of work will be one of the greatest challenges in the coming years – what will be the relations between technology and people, and what will our work relationships be like. It is high time to consider this, because things that are “normal” for us today in the relations between the employer and the employee date from the period after the Industrial Revolution and have essentially remained unchanged. What’s more, the competition between countries for talents – for creating the best environment for the emergence of future jobs and for attracting the best companies – is in full swing. The question is: will we train ourselves for this race, or will we let things go their own way?

It is a fact that many of the traditional jobs will disappear, also in Estonia. On the one hand, it is influenced by the economic situation. On the other, the development of IT solutions has dramatically accelerated across the world in the last decades, and most of us were unable to predict the extent of many of those changes and their impact on Estonia. Who could have thought that Skype, a global telecommunication company, would be founded in Tallinn, or that Taxify, which will soon be the transport company with the most extensive scope, would also be governed from the Estonian capital?

Development starts from changing the way of thinking

Why should we talk about the talent hunt between the countries? If we do not think about it today and if we do not act systematically in the name of the competitiveness of the business environment, we essentially abandon the education of our children, the pensions and the financing of healthcare. If we don’t change anything now but want to improve and retain our quality of life, then – considering the demographic developments – we will have to collect more taxes from a smaller number of people in order to keep our state. Recently, I was a speaker at a conference where it was aptly said, “The greatest challenge for countries today is to get the citizens of other countries to pay for the welfare of their people.”

Cheap labour force is not something Estonia can use for staying in the competition at the European and also at the global level. The million-dollar question is what niche can we offer the most added value. Technology, innovation and creating the best growth environment for it come to mind. But we must start from changing the often-prevailing protectionist way of thinking – because talents and successful enterprises go where there is a good integrated environment.

The state can do a lot in the name of the environment, but local governments have the decisive role. The question therefore is: how many of our local governments participate in the global hunt for talents and cooperate with companies?

The development of technology creates new jobs

Economist Enrico Moretti from the University of California, Berkeley, has written in his book, “The New Geography of Jobs”, that each job created in the high technology sector will create additional five jobs in other sectors. Therefore, there is no reason to fear that the development of technology and digitalisation will take work away from people. On the contrary, thanks to the development of technology, wider introduction of its achievements and new opportunities, new jobs are created. We must grasp this possibility and develop Estonia into the best environment for high-added-value jobs and the additional jobs that are created with them.

The economic environment and the salary numbers certainly have an important role here, but in choosing the place of work, more and more attention is paid to whether there is everything that is necessary for a family. Or, once again, the right environment is more important for talent than ever before. For example, Harku Parish (a rural municipality, neighbouring Estonia’s capital, Tallinn) has a plan to establish an international school and kindergarten spots for the children of those families that have come from a foreign country and use their knowledge and skills for the development of the economy of our country.

The e-state shows the way

One of the indisputable advantages of Estonia is the as-digital-as-possible communication between the state and its citizens. Has this taken work away from the people? Quite the opposite, it has made the citizens’ communication with the state more convenient and enabled the public-sector employees to focus on what is important. It has also made it possible to pay them a better salary.

Estonia is known and acknowledged in the world for its developed digital society and the bold introduction of innovative solutions. We have every possibility to be the spokesperson and the pioneer of future solutions. Why not create in Estonia a safe platform for testing digital and technological developments? In a strong digital state like Estonia, the whole society is ready to test new solutions. But our e-state also needs constant renewal and developing, and some of the solutions that are being used now are already becoming outdated.

At the end of the last year, a report by McKinsey Global Institute recommended progressive states, among other things, increase the share of digital and automated work and to introduce new skills, particularly technical, social and creative skills, because the importance of such skills would grow.

Therefore, we do not need the Posted Workers Directive (an EU directive – editor), a basic income, greater social benefits. What we need is rapid implementation of technology, re-training of people and the education system that supports such development – especially if we consider Estonia’s ambition to build a global borderless digital state together with a community of e-residents.

Humanity and creativity become ever more important

To the joy of sceptics, it must be said that there are jobs that most probably can never be totally automated, because we need the human dimension in our daily lives – the dimension that, from the mechanical point of view, is inclined to make mistakes.

We can use education as an example here. We may have access to great teaching materials on the internet, but the internet will never replace a charismatic teacher. The same also applies to the sphere of culture and fine arts. Hopefully we will not be able to imagine going to a theatre where the text is presented by a robot. The moment of spontaneity and a certain risk that is a part of each cultural event makes them unique.

It is a matter of choice whether we will jog behind the development of technology and feel bad about missing the train – or be the country that others look at with a little envy and think, paraphrasing the former US president, Barack Obama, that they should have turned to the Estonians for advice when they invented a solution.

In conclusion:

The hunt for talent is ongoing. The question is – can the state and local governments see broader economic and social benefit in it and participate in it actively?

For a talent, the environment that provides everything necessary for their family is more important than salary. What are we ready to do in the name of a more attractive environment?

Digitalisation is the keyword of the coming years. Are we ready to take our e-state to the next level?

 

I

The opinions in this article are those of the author. The cover image is illustrative (Shutterstock).

Why is it important to foster the rapid growth of innovative transport startups?

The Estonian politician and MP, Kalle Palling (Reform Party), explains why it is important to foster the development of innovative transportation companies that transform public transport and logistics.

In less than one month, Estonia will pass a law that will transform the transport sector and help improve the environmental dimension of public behaviour. Why is it important to foster the development of Taxify, Uber, Wisemile, Starship and other tech companies that transform public transport and logistics in Europe?

The Estonian-founded transportation app, Taxify, recently launched its services in Paris and London. In the British capital, Taxify was forced to pull its services after a challenge from Transport for London. Right now, the situation is very promising and I hope it will not be long before Europe’s fastest-growing transport service manages to relaunch in London.

Innovative services make the general public happy

Taxi service in “old Europe” in particular, but actually in most countries, have been a luxury service where accessibility, ie the supply, has been artificially restricted by the power of the legislator and the local governments. This has led to higher prices for the consumers and high licence and certificate fees for the drivers. Only a select few have gained from the protected market.

Many well-travelled people remember how impossible it was to find a taxi in Paris or other large cities at night, even just a couple of years ago. This is exactly why novel technological platforms that offered traditional services appeared on the market, and the old protectionist racket was broken down in many large cities; while the grateful consumers embraced this immediately, the regulators and the legislators have taken much longer to find a fair balance between the public interest and the subjective interests of the players in the old protected market. What has been forgotten, however, is that the innovative services won because the general public – the consumers – wanted a quick, high-quality and sensibly priced public transport.

Now, years later, the Nordic countries – Finland, Estonia, Latvia, and Lithuania – have, to all intents and purposes, created an environment where convenient transport services can develop hand-in-hand with the needs. At the same time, other parts of Europe are coming up with various grounds for monopolising the old taxi services. The whole discussion revolves around pleasing the taxi companies, and less around pleasing the customers – the same people who like the fact that they can now request public transport with one click on their phones.

Why do people like the new transport applications? It is because the customers are taken from door to door without getting their feet wet and without wasting time. You don’t have to spend time to look for a parking spot, you don’t have to own a car and pay for the lease and the fuel, or the insurance, parking and car maintenance. You don’t have to calculate, rain or shine, whether the date is odd or even, and on which side of the street you must park that day. And the money that would otherwise be spent on owning a car could be used for other, fun things – entertainment or travelling, to name a few. After all, the car is the second-largest investment of families, right after housing expenses. And while real estate can actually be an investment, cars are always an expense for a household.

People are happy that every customer can finally contribute to improving public transport by providing immediate feedback. So far, despite strict regulations, most countries have failed in managing the quality of the service – it can only come about when the provider of the service is actually forced to concern itself with the approval of the consumers.

Three massive innovations are currently taking place in car transport: first, various collaborative economy services and platforms; second, the development of electric cars; and third, the arrival of self-driving cars on our streets. Every one of these contributes to transforming the sector in its own small way. But if we add the three together, we will take one big step forward. I believe in self-driving electric cars and robots that I can request through a convenient platform. I believe that all this will happen over the next five years.

“Three massive innovations are currently taking place in car transport: first, various collaborative economy services and platforms; second, the development of electric cars; and third, the arrival of self-driving cars on our streets.”

We talk a lot about the positive impact of technology on the economy – savings, cost-efficiency, freeing the time and the resources for other things; however, we have talked much less about its positive impact on the environment. The average family in the EU or the US spends an hour a day for shopping. Car rides to cover distances of just a couple of miles are extremely inefficient, not to mention harmful to the environment. Pollution, congestion and the wasted time could be eliminated if the already existing technology is made more accessible and taken into wider use.

Energy spent on arguing with the regulators

Quite often, I meet representatives of the European Commission who are responsible for greening the transport sector. Solutions that are often talked about include reducing the number of polluting engines and fuels and electric transport. Seemingly more difficult, yet actually more doable, is the overall reduction of cars in the urban space through a more efficient use of resources.

The concept of a car as a service would be a perfect political measure. It would already be possible today, if we allow the platforms that pool and share our car resources to grow and develop their ride sharing services. Today, it remains largely impossible because most of the energy is spent on arguing with the regulators and proving that the sensors in the back seat do not improve either safety or quality – or proving that the technology that allows the customer to always access the nearest car is more practical than a dispatcher would be.

In Estonia, we have been talking for ages about how to get self-driving cars to test-drive on our streets. I believe that in the near future we will see actual self-driving cars on our streets, in addition to Starship delivery robots. I think the ride-sharing that we practice today is only an interim stage before the arrival of self-driving cars. The platform will remain the same but the cars will drive on their own, and cars will be distributed as public transport to where they are needed by an electronic platform in the cloud.

Car as a service, and platforms as service providers that move people everywhere from point A to point B will become a reality over the next few years – but why wait that long?

One third of car rides are made for shopping. Estonian companies have already proposed a convenient solution to this as well: the delivery robots that bring your shopping bag home. Personally, I am a loyal customer of two supermarket chains that offer such deliveries. Starship – and no doubt soon its competitors – will make this even easier, ecologically sounder and cheaper for the consumer.

The opportunity to provide better and faster social services

One field where the potential of such services has been completely neglected so far is family care. Even today, many parents are using Taxify or Uber to send their children to school or back home. They can simply follow the route of the car on a phone screen.

In social care, the potential of this technology has been completely untapped. Drivers who use the platform to make extra money – or delivery robots – could deliver medicines or groceries to the homes of the elderly or the people who need assistance. This, in turn, also means improved quality of life because people could live longer at home instead of moving to care facilities. The opportunity to provide better and faster social services is the reason why the Estonian-made Starship robots were regulated so quickly in various regions of the US.

These platforms and robots are not only more convenient and time saving technologies, but also improve opportunities to make extra money. The additional income as a driver, or a shared ride from a suburb to the city centre saves time and money, and reduces the environmental impact. Delivery robots create opportunities for small bakeries, cafés and shops to extend their services and make them more accessible. Should you hanker for fresh juice and croissants on a Sunday morning, you simply order these through an app, and the goods are delivered to your doorstep just a short while later from the bakery in the next village.

All this makes it easier for people to start earning their own living and creating their own jobs. Just like technology allows regional artisans to reach a clientele far away from their village marketplace, it also gives urban dwellers a much needed extra income. But I have to admit that the cherry on the cake would be the increased potential of Estonia’s technological companies, positive development, more jobs in complex sectors that offer larger added value and the cumulative effect of all this on the digitalisation of our whole economy. This is the only way forward for a small nation.

I

Cover: A Starship delivery robot in Estonia. The opinions in this article are those of the author.

Kalle Palling: Why Estonia introduced a bill on ridesharing

Estonia has introduced a draft legislation that would regulate ridesharing platforms, such as Uber, for the first time in Europe. Kalle Palling, the head of the EU Affairs Committee at the Estonian Parliament, explains the motive behind the draft bill.

Political leaders from across Europe have great things to say about Estonia’s leadership on digital technology. They applaud our e-voting and e-tax systems. They praise our widespread access to high-speed Internet. And more than one cabinet minister has told me how envious he or she was of our paperless cabinet meetings. Estonia’s embrace of new technology is a model for Europe.

Lately, some of our fellow Europeans have seemed unsure about a recent technological development: ridesharing platforms, like Uber and Taxify, that are increasing transportation choices in cities across the EU and the world. But outdated regulations are holding Europe back. Governments, often under pressure from vested interests, have moved slowly toward the necessary reforms, even when the situation today is clearly not optimal for their citizens or their cities. As the Estonian president, Toomas Hendrik Ilves, has said, “We should reconceptualise law as the operating system of society. We’re trying to run Skype on MS-DOS.”

If well regulated, we stand much to gain from the growth of these platforms. Some people think this is a matter of new services like Uber disrupting traditional services like taxis. But it’s not about ridesharing vs taxi – it’s about ridesharing vs private cars. Today, four-fifths of all journeys taken in Estonia happen in a car. Our car ownership rate is growing quickly. And the average Estonian family now spends 12% of their income every month just on transportation.

Public transit is important and we should be exploring programs to develop a more efficient public transport scheme. But ridesharing services can help too. The technology behind these apps can match two people going in the same direction, who can share a ride and the cost. The ultimate vision is more people using fewer cars, and fewer people needing to buy a car to begin with. This is good for the environment; it can reduce congestion and can lower the cost of living.

Platforms like Uber, Taxify and Wisemile can also benefit the government’s balance sheets by bringing economic activity that was previously done off the books into the digital world where everything can be traced. Estonia is already a leader on simple electronic tax filings. Taking care of tax affairs diligently yet with minimal effort is intrinsic to us. Most Estonian citizens file their tax return with just a few clicks online. Earlier this year, the Estonian Tax and Customs Board announced a partnership with Uber to collaborate on a new e-tax system that would simplify the process of declaring taxes for people using these new platforms for work. In fact, in February, Estonia became the first country in the world where Uber drivers opted in to voluntarily share their tax related information and declare their taxes electronically.

As the Estonian prime minister, Taavi Rõivas, said last week, “These business models do not just mean better competition and better service levels, but they may also become a part of the solution to Estonia’s sparse population issue, and encourage a lot more people to become entrepreneurs.”

Here again, I hope Estonia can lead. Last week, we introduced a draft legislation that would regulate ridesharing for the first time in Europe. Our goal is to create rules that work in today’s world. The legislation would ensure digital platforms are given clear rules on how they can operate in Estonia, reduce people’s need to own their private car, create smarter ways to organise our cities, generate new economic opportunities for thousands of Estonians and ensure Estonia continues to lead Europe in digital implementation.

Technology allows us to make use of existing resources in smart and flexible ways. Regulations should be just as smart and flexible. As the Estonian prime minister said last week, “Europe must embrace the digital revolution and Estonia has a definite wish to be on the forefront of it. So wouldn’t it be reasonable – at a time when a large part of the world is finding protectionist reasons to prohibit the sharing economy – if we, Estonia, would be the first country to welcome Uber, Taxify and Airbnb?”

I

The opinions in this article are those of the author. 

Kalle Palling: #NotWelcomeToEstonia attitude will lead to rejecting everyone

The recent public debate around the European refugee crisis, and the letters many voters have sent to the political parties and members of parliament, are more and more resembling the situation in the early autumn of last year when the society debated passing the Cohabitation Act, writes MP and the chairman of the European Union Affairs Committee, Kalle Palling (Reform Party).

The refugee situation that has emerged in Europe does not depend on us, and hiding our heads in the sand won’t solve the problem for the society or the people concerned. Comparing the refugees who are escaping the war with same sex couples may seem arbitrary, but both have equally given rise to anger and conflict in the society.

In this case, the conflict and hatred are even more pointless because while the Cohabitation Act is within the sole competence of our politicians and society, the receiving of refugees is not. At least not when we have decided to belong to the European Union, show solidarity and be full-fledged partners there.

If we want to see Europe as a solidary and strong community of member states that can tackle the problems in each direction of the compass, be it east or south, we then have to understand the role of Estonia as a cooperation partner. These people – the refugees – would rather be in their homes, but it is not possible for them. They are escaping a war and looking for peace and the possibility to start a new life – and the alternative for them is a long, hard and hopeless life in a refugee camp.

The only option for Estonia is to show solidarity

All of our representatives in Brussels and Strasbourg, regardless of their political background, have noted that the only option for Estonia is solidarity with the rest of the EU. Without exaggeration: this can be the issue that determines the future of the EU or its dissolution. If not formally, then at least in essence. And we do not want to be left alone with our problems in the future, especially keeping in mind the recent security concerns.

But this coin also has the other side, the economic side. Most of the counterarguments depict the refugees as a mere source of expenditure – in addition to that, they are portrayed as a security threat and a threat to the survival of our nation. There is much less discussion about our low birth rate, shortage of labour and aging population. To make it simpler: if we want our pensions to rise also in the future, who will pay for it?

With zero migration, or if there was no immigration or emigration, in Europe the number of employees who are under 45 years of age would decrease by 10 per cent during the next 10 years. In Estonia, we would have around 60,000 less workers, and that is without any emigration at all.

An aging population hinders the growth of productivity in the economic sector and robots (luckily) cannot replace humans everywhere. Although mass immigration has put several EU member states under great social pressure and brought about conflicts in the society, the economists and politicians agree on one thing: Europe needs immigrants in order to guarantee the sustainability of economy and the tax money for future pensions and other social benefits.

Our emigrants should not be compared with the refugees

Immigrants, especially the refugees, should not be seen as “refugees of convenience” who would come here only to get a free ride – we all know that our system of social benefits is certainly not an attractive point in that respect. Emigration from Estonia is slowing down, but it is still one of our greatest reasons for concern. However, one should not compare our emigrants, who use their freedom of movement for development and self-realisation, with the refugees who are escaping from war, repressions and discrimination.

Speaking particularly of the refugees as a special type of immigration, it is a fact that the benefits and costs related to receiving them have been studied much less than those of other types of immigration. One of the reasons for this is that the real contribution of refugees to economy becomes clear over a considerably longer time period because when they arrive in their host country, they have much less resources and preparation for adapting.

On the one hand, it means that it is not clear how beneficial they are to the economy, but on the other hand, neither do we have grounds for claiming that they are just a burden to our economic environment and social system.

No detailed research on the impacts of immigration has been conducted in regard to Europe, but a few years ago, the International Organisation for Migration published a research paper on the impact of refugees on the economy of Australia. This paper busted several myths and stereotypes connected with the refugees.

The myth of uneducated, illiterate refugees

Many of our politicians and opinion leaders have described the refugees as illiterate, uneducated, lazy and violent. In reality, around 40 per cent of the refugees have finished high school and 20 per cent have university education, often they just do not have relevant documents to prove it, and they land on jobs where their skills go to waste and which do not motivate them.

The Australian experience shows that in comparison to the locals, the employment rate is lower among the first generation refugees but among the next generation, the employment rate is higher at each level of education.

The same research also indicates that the refugees are very entrepreneurial as well as successful: they are especially active in establishing small and medium-size enterprises, and the percentage of self-employed people is also higher among the refugees. Many refugees had been successful business people in their former homeland, and with the new perspective and attitudes they have brought to their host country, it is perhaps even easier for them to find their own niche on the market than it is for the locals.

Support to the immigration of refugees should partially proceed from their earlier work experience and language skills, because these are the things that ensure their easier integration into the society and the economic space. The example of Denmark has shown that enterprising immigrants also give an impetus to less-educated locals to contribute to educating and training themselves in order to be competitive on the labour market.

Quotas will not take us further

In Estonia, we should think of how to implement our legislation and institutions so that the transition period would be as painless and effective as possible, both from the standpoint of the refugees and the state. In the negotiations with the European Commission, we have honestly admitted that today our readiness for receiving refugees is almost non-existent; we simply have not been active in this issue.

Forced quota will not take us further, but this does not mean that we should not contribute to the readiness to voluntarily receive the number of war refugees that is similar to the original quota. But this requires the smooth cooperation of very many institutions, the state, local governments and the third sector.

As in Finland, the background check of the war refugees and other necessary procedures should be conducted already before their arrival in Estonia, so that the refugees would have the possibility to start with their new life from their very first day here. The Estonian Unemployment Insurance Fund has the know-how and experience in finding employment for people. It is then necessary to find housing in as many local governments across Estonia as possible, and, naturally, to teach the language. The best precondition for learning the language is motivating work in an Estonian-language environment.

A stimulus to the economy

We should be aware that we will receive refugees in any case, let their number be 10 or 1,000. We must contribute to the readiness to integrate them into our economic space, because if we learn from good examples, the refugees would not be an item of expenditure, but a possible new stimulus to our economy.

The rural regions that are far from the hubs need working hands and new breath in the communities so that the local life would not expire. The refugees who look for peace and a stable environment may be at least a partial solution to marginalisation of certain areas in Estonia, and to the problem of competitive businesses finding employees in rural regions.

All that we need for the successful receiving and integrating of refugees is to modernise our system – to reduce bureaucracy, make language teaching more effective and help them find a place in our society. Let’s find them a place among the Estonians and spare the future from today’s hostilities.

If our attitude toward the refugees is rejection, we also reject the talents, “refugees of convenience” and tourists, whom we usually look forward to receiving. Hatred and unfounded opposition to all that is new and unfamiliar is anything but attractive. The choice is between being an open country or not, and there are no exceptions here. Or should we implement a new image project, “#NotWelcomeToEstonia”, to replace the original slogan, “Welcome To Estonia?”. I disagree.

I

Cover: Hundreds of refugees and migrants aboard a fishing boat moments before being rescued by the Italian Navy. Photo: The Italian Coastguard/Massimo Sestini. The opinions in this article are those of the author.

Scroll to Top