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A competitive economy is a prerequisite for the success and development of the Estonian state

Why "Ambition is a Choice"?

The "Ambition is a Choice" call was launched by business organisations at a time when the Estonian economy had been in recession for more than two years and the state budget for 2023 was below budget. Tensions had grown in society because there were not enough resources to finance all the country's development needs.

The money to run the Estonian state and provide public services comes from businesses - our people go to work, drive businesses and pay payrolls and income taxes, and VAT on the consumption of goods and services.

Consumption and labour taxes account for 85% of national revenues.

The amount of these taxes that will be paid into the common budget depends on how high wages local companies can pay. This, in turn, depends on how competitive companies and the economic area are.

If we want to build an Estonian state that cares and thrives, it was time to join forces to relaunch the smart economy. If the economy does not grow, the growing expectations of society cannot be met - teachers' salaries cannot grow, health services and pensions cannot be provided, funding for culture and education cannot grow.

Ambition is a choice - it is a call for businesses and business organisations, as well as businesses, governments and policymakers, to focus together on economic development and to take the next necessary steps.

There was no better moment to adapt to change. The best moment to take the next step was now. All it took was the courage and the will to get started.

We proposed - ambition is a choice.

What change we wanted to trigger

Ambitious

Innovative

Sustainable

Exporting

Ready to cooperate

Ambitious

Innovative

Sustainable

Exporting

Ready to cooperate

Economic change must be enforced together

Proposal for a Memorandum of Understanding

Ambition is a Choice

Business organisations proposed a Memorandum of Understanding (MoU) on 14 March 2024 with the aim of achieving an ambitious, innovative and collaborative economy by 2035 to ensure the vitality and development of Estonia.

Social agreement seemed necessary because the Estonian economy, the country's capacity to develop and the well-being of its people had stagnated, and we needed a clear agreement on the strategic focus for a new leap forward. Both the private sector and the country need to make ambitious choices to kick-start economic change.

1. The basis for the sustainability of the Estonian state is a competitive economy, which ensures an increase in the incomes of working people and business income, and thus an increase in the tax revenues needed for the development of the state.

2. Big changes don't happen overnight, which is why we have made the development of a higher value-added economy a priority for the next decade across governments in Estonia.

3 Ensuring Estonia's development is not just a task for the state, but a social agreement and an agenda, where ambition is set by both private and public actors and everyone takes the next step.

As a result of our joint steps, we are moving more firmly towards the goal of increasing the productivity of Estonian companies to 110% of the European average, as set out in the Estonia 2035 strategy.

The next step for businesses

As an ambitious, innovative and collaborative company, the aim is to increase competitiveness through innovative products and services that increase added value and export volumes.

The next step for government

The goal of an ambitious and innovative Estonian economy at the national level is a competitive business environment that fosters structural change towards value-added growth.

FOOTWORK and COOPERATION are the key factors for change.

Everyone takes the next step!

The call aimed to

1.

Be a framework for political parties and governments and elections

2.

Choosing a focus from the Estonia 2035 vision

3.

Bringing public and private sectors together to work towards a common goal

5 steps for the private sector

The hallmark of an ambitious, innovative and collaborative company is an increase in international competitiveness through innovative and sustainable products and services that increase added value and export volumes.

Overall measure: Enterprise value added per employee. Target value: 10% annual growth in value added per employee.

Innovation performance indicator: assessment of the innovation performance of a company based on ISO 56001 or a standard-based model innotrepp.ee.

Each company chooses the steps and metrics that are right for them to meet the target:

1.Raising the ambition to develop innovative products and services

a. Develop differentiated products and services for export and increase the share of innovative, higher value-added products and services in total turnover by 10% per year.

2.Raising the ambition of innovation investment

a. We invest in new technologies and companies with higher added value potential.

b. Fulfilling our role in the Estonian Science Pact and allocating at least 2% of turnover, or at least €1 million for larger companies, to R&D every year.

3. Raising the ambition of export volume and scope.

a. We will increase our company's export ambition beyond our home market and neighbouring countries, with the aim of increasing exports by 10% per year or above the industry average.

4.Increase the efficiency and level of processes

a. We are developing the digitalisation and automation of the business with the aim of increasing labour productivity by 10% per year.

5.Improving the quality of leadership and cooperation

a. We are building a culture of innovation and improving the quality of management. 

b. We will work more boldly with universities, partners and other businesses to develop new products and services.

8 steps for the State

The hallmark of an ambitious and innovative Estonian economy at the national level is a competitive business environment that fosters structural change towards value-added growth.

To achieve the target, the state will focus on three steps to bring about ambitious change and five steps to ensure the basic conditions for economic competitiveness.

Steps to unleash the ambition of a higher value-added economy

Overall indicator: European Innovation Scoreboard ranking Target: Estonia becomes an innovation leader by 2035 (2022: moderate innovator).

1.Ensure public investment in innovation and R&D activities

a. We will increase national research and innovation policy investment to the level of 1.5% of GDP.

b. Dedicate 0.2% of GDP to private R&D through public subsidies and tax incentives, in line with the OECD average (Estonia 2020: 0.06%).

2. Ensure access to capital for higher value-added investments and Estonia's attractiveness for foreign investment.

a. Ensure access to capital. Access to capital of the European Central Bank survey at least 50% of companies have access to capital. estimate that access to external finance is not a problem (Estonia 2023: 18% of entrepreneurs).

b. Increase Estonia's attractiveness as an investment environment. Estonia ranks 6th in the EU in terms of foreign direct investment (Estonia 2022: 8th place).

3. Ensure the necessary measures for the export of goods and services with higher added value.

a. We will boost exports of Estonian goods and services by 10% a year, including higher value-added exports.

b. Ensure high-quality and modern infrastructure for the export of goods and services, including road, rail, air and digital connectivity.

Basic conditions for economic competitiveness

Overall metric: ranking in the IMD Global Competitiveness Ranking Target: Estonia will be in the TOP15 by 2030 and in the TOP10 by 2035 (rank 26 in 2022).

4.Maintain a simple, stable and competitive tax environment.

a. Keeping the tax burden among the 10 lowest in the EU (as a share of GDP).

b. Maintain long-term investment security and the first place in the TAX Foundation's international competitiveness ranking of the tax system.

5.Ensure the availability of highly skilled labour and the national education needs in line with the needs of economic development.

a. Facilitate the recruitment of foreign workers to cover labour shortages in OSKA projected areas, and make it easier for Estonia to recruit foreign workers. OECD Talent attractiveness indexs TOP10 (currently 21st out of 38 countries).

b.Ensure investment to increase the number of engineers and R&D staff in the private sector. Target: 4.53 employees per 1000 inhabitants (2022: 2.23 employees per 1000 inhabitants.).

 

6.Ensure the availability of competitively priced energy, which is a prerequisite for bringing production to higher added value levels.

a. We guarantee security of supply and the same final energy price as the Nordic region.

7.Reduce bureaucracy that hampers competitiveness and increase the efficiency of the public sector.

a. We will reduce the time it takes for state and local authorities to make decisions on planning and permits by three times , andreduce the reporting burden on businesses by 50% through automation, digitisation and smarter use of data (including the application of artificial intelligence).

8.We will implement the European Green Deal in a way that supports the competitiveness of Estonian businesses.

a. We will ensure that Estonian regulations do not go beyond those of the European Union and do not impose restrictions that undermine competitiveness.

b. The state supports the creation, development and deployment of environmentally friendly technologies through incentives and sustainable public procurement.

Ambition is the choice you proposed

Ambition is the call for choice and presentation at the Windward Flight conference

14 March 2024

Ambition has chosen

Ambition is the choice of the proposal's backers and companies next steps

"We will continue with activities for young people and prototyping for partners alongside the series work."
Radius Machining
"We aim to invest 2-4% annually in product and service development and are constantly looking for new export opportunities."
OIXIO Group
"I support mentoring small businesses in a practical and integrated way, with a special focus on women entrepreneurship. I am involved in networking and developing small entrepreneurs on a daily basis. I try to give a boost through different training courses. small>>bigger>>independent entrepreneur".
Maison Solutions
"Believing that big grows out of small, I support the development and the real achievement of the objectives of NGOs (which are mainly women-led) through my daily practical activities, by raising awareness of the support measures available and the ability to use them. The strength of the chain is determined by the weak - we try to raise awareness of the disadvantaged and weakened groups".
Do Nation Estonia
"We will continue to provide a top-quality electronics manufacturing service that will put Estonia on the world map and support the country's economic growth through the export opportunities it creates."
Incap Electronics Estonia
"Our aim is to represent Estonia through exceptional hospitality. We do this through three main pillars - developing our talent on a daily basis, continuing to digitise and automate our business, and contributing to the wellbeing of our community through sustainable entrepreneurship. As winners of the Tourism Ambassador Award, we are champions of the tourism industry's reputation for excellence and trendsetters for innovation."
HMP Hotels
"We support private and public sector leaders to become champions of change for the future. We help to put in place systems and processes in private and public companies where every person and team is constantly looking for ways to do things more simply, differently or more efficiently. If an organisation lacks a supportive support system, or culture, plans will fail to materialise."
Empowerment
Share your next step!
Employers' Innovation Start-upemployers@employers.ee
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The call "Ambition is a Choice" was launched in 2024 by the Confederation of Estonian Employers in cooperation with researchers, companies, professional associations and the public sector.