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HR SPECIFICITIES
Estonia : Social security & Pension system
Eligibility for social security and social assistance
rights in Estonia is primarily based on residence.
Nationality is not a criterion, so that the sizeable
foreign-born proportion of Estonia’s population
is also covered. The Estonian social protection
system is structured around three contributory
social security schemes: pension insurance, health
insurance and unemployment insurance. Pension
insurance and health insurance are financed from a
social tax, while unemployment insurance is funded
by unemployment insurance contributions.
The other schemes - family benefits, State
unemployment allowances, national pension, death
grants and social benefits for the disabled - are
non-contributory, being financed from general State
revenues.
Latvia : Pension system
Since July 2001, there is a 3 pillar pension system in
Latvia. It includes:
• 1st pillar -state compulsory unfunded pension
• 2nd pillar -state funded pension scheme
• 3rd pillar -private voluntary pension scheme
Since July 2001, there is a 3 pillar pension system
in Latvia. It includes the 1st pillar (state compulsory
unfunded pension scheme), the 2nd pillar (state funded
pension scheme) and the 3rd pillar (private voluntary
pension scheme). Functionality and purpose of each
pillar are different, in order to ensure the stability
of the pension system and reduce demographic or
financial risk for each pillar separately.
& Social security
The Latvian social security scheme comprises: care services, sickness insurance, maternity and
paternity benefits; benefits in the event of accidents at work and occupational diseases; funeral
allowance; disability pensions; old-age and survivors’ pensions; unemployment insurance; family
allowances.
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Pension is a regular payment
made in case of old age,
incapacity for work or loss of
provider. The aim of the Estonian
pension system is to help people
to maintain their standard of
living and monthly income when
they retire. The Estonian pension
system stands on three pillars:
I Pillar - State pension : As the
name says, the state pension is
a pension paid by the state, the
aim of which is to ensure regular
monthly income for the persons
who have reached the retirement
age, have become incapable for
work or have lost their provider.
II Pillar - Mandatory funded
pension : The aim of the second
pillar is to direct a part of the
salary of the people who are
working towards their personal
pension, so that people would
have, in addition to the constantly
financed state
additional pension that they
accrue themselves.
III Pillar - Supplementary funded
pension : The aim of the third
pillar is to direct a part of the
salary of the people who are
working towards their personal
pension, so that people would
have, in addition to the constantly
financed state pension, an
additional pension that they
accrue themselves.
HR SPECIFICITIES
IN LATVIA AND ESTONIA
IN LATVIA AND ESTONIA
At first blush, when you talk about Eastern countries, you think of relatively poor
countries where employers rule as leaders and employees earn 10 times less than
the French minimum wage. So, in your opinion, fake or reality?
Here are the general specificities of employment in Latvia and Estonia.
Employment contract Social security
Just like in France, in those countries, there are Estonian employees do not contribute to social
both permanent and fixed-term contracts. However, security, either for health nor pension. Only employers
permanent contracts are more common in Latvia as and self-employed workers finance it! However, they
fixed-term contracts shall only be used in specific contribute to the costs by paying outpatient fees of 5
cases such as seasonal or occasional jobs. A verbal € maximum. They also pay for their medicines, but at
contract is possible in Estonia only if the duration is reduced prices.
no longer than two weeks!
In Latvia and Estonia though, all legal residents,
whether they are locals or not, are covered by social
Duration of work security! Nationality is not a criterion. They only
recognise residency. Therefore, you and I, if we both
In both Latvia and Estonia, the average duration of move out to one of these countries, we can be covered
work is 5 days of 8 hours, being 40 hours a week. by social security and stay healthy!
In Latvia, an employer can increase the duration to
consulted staff representatives. However, in this case, Paid leave
42 hours a week for 6 days but only after having
the working day on Saturday will have to be shorter!
Talking about reduced working time, did you know In Latvia and Estonia, the law obliges employers to
pension, an that Estonians work 3 hours less the day before New grant a minimum of 4 calendar weeks of paid holidays.
Year, National Day (24th February), Victory Day (23rd Unexpected fact #2: holidays are all granted at a
June) and Christmas Day? specified time. In Estonia for example, around January,
Unexpected fact #1: legal duration of work also applies employers fix their working calendars and plan
to minors. Indeed, young adolescents are authorised holidays of their employees in advance for the whole
to work, from 15 hours per week at 7 years old to 35 year. They shall listen to employees’ wishes but they
hours per day at 17! What do you think of that? are not bound to follow them! Of course, paid leave
may be requested outside the planning period, but
with the agreement of the employer.
Salary
Fun fact #2: in Latvia, employees must to take 2
consecutive weeks of holidays. The employer cannot
A national minimum wage has been legally instituted refuse. Also, compensation of paid holidays in cash is
in both Latvia and Estonia. It is 370 € per month for not allowed (except when your contract is terminated):
a full-time job in Latvia, against 470 € per month in therefore, Latvians have to take all of them!
Estonia. Fun fact #1: in Latvia, employers are legally
bound to pay salary each month in two settlements
in paper money! Of course, employers and employees
can agree on one settlement via a transfer on bank Remember that these are only the 5 general items
accounts though. Most of big companies use bank in HR. We look forward to visiting companies in the
transfer. In 2016, the average salary in Latvia and Baltics so we can share practices and see how they
Estonia were respectively 845 € and 1 073 €. manage and motivate their employees!
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